I have been digging into the themes that PYR participates in that are attracting billions of dollars of investment, like: deep decarbonization, energy transition, climate tech.
Following the 2021-12-08 Press Release (“PyroGenesis Announces the Launch of a New ZCE Hydrogen Production Process Following the Filing of International Patent Applications”), I acquired a new theme to look into: “methane pyrolysis”.
In PYR’s press release, the comparison is made between the costs of green hydrogen (produced via electrolysis of fresh water using renewable electricity) and the lower costs of turquoise hydrogen made by cracking hydrogen and carbon black from methane using “an energy-efficient and reliable plasma process.”
With the help my assistant (OK, it was a web search), I turned up a couple of interesting things on methane pyrolysis.
There are established players who have been working on methane pyrolysis for a long time (decade+). For instance, the German company BASF leads a consortium that includes Linde, ThyssenKrupp, the German government, and other players. (Source.: ARPA-E's Methane Pyrolysis – a potential new process for hydrogen production without CO2 emission).
In North America, Azimuth Capital Management are backing Monolith Materials, a methane pyrolysis company in Nebraska (https://monolith-corp.com/), based in part on the fact that “[the] energy required to release hydrogen from methane or natural gas is approximately 7X less than the energy required to release hydrogen from water.” (This appears to validate the cost thesis in the aforementioned PYR press release - which posits a 3x cost advantage over elctrolysis.) SOURCE: greenchemistryconference.com/speaker/clean-hydrogen-from-methane-pyrolysis/
So, PYR is not creating a market thesis out of whole cloth. That’s good if it means there are potential customers/off-takers and financiers. But also means that there are competing methane pyrolysis providers to think about — incuding one that uses hot plasma! (That would be Monolith. See: www.luxresearchinc.com/blog/technology-landscape-key-players-in-methane-pyrolysis).
On the website of the US Energy Department’s Pacific Northwest National Laboratory (PNNL), there is a story about a methane pyrolysis research project between PNNL, West Virginia University, and Southern California Gas Company. In it they say: “Today, methane pyrolysis remains largely in the research phase because the gas isn’t very reactive; this makes it hard to pyrolize—the hardest, in fact […]. The conversion requires high operating temperatures and therefore a lot of energy. My takeaway: The state of play on turquoise hydrogen is not settled and there appears to be room for new entrants. SOURCE: www.pnnl.gov/news-media/new-clean-energy-process-converts-methane-hydrogen-zero-carbon-dioxide-emissions
That leads to an interesting comparison that was NOT made in the Dec 8 Pyro press release. What is the cost differential BETWEEN methane pyrolysis solutions (as opposed to pyrolysis v. steam methane reforming or pyrolysis v. electroysis). If turquoise hydrogen customers can choose between Monolith’s methane pyrolysis or PYR’s, I suppose they’d choose on cost. And Monolith has the advantage of already existing in commercial form.
So .. are we looking at another signature PyroGenesis play when choosing a new space to enter? Could be! The Company aims at creating zero carbon energy storage and basic chemical production solutions (as both the H2 and carbon black are valuable commodities) AND it does so through the redemption of a problematic but incumbent technology (natural gas production) where incumbents have skin in the game and much to lose if they mismanage the energy transition. Here comes PYR to protect balance sheets by cleaning dirty capital assets ... and the planet, too. Plus, I have to imagine that PYR would make its plasma based methane pyrolysis solutions “play nicely” with its other renewable gas solutions like landfill gas conversion processes.
But I will be watching for how PYR's methane pyrolysis offering develops as compared to the other players before I get too carried away with the commercial possibiities for PYR. That said, this is a right place, right time kind of capability to be bringing to market, which is encouraging to this small-fry investor. Also... competition can be good to build the space... the way Coke and Pepsi's competition built the soft drink space. Time (and execution) will tell.
I can recommend this source as an interesting and pain-free way into the topic: the Monday 10 Jan 2022 episode of the The Catalyst with Shayle Kann podcast (“Inside the Energy Department’s loan deal to back hydrogen”) where the guests are Rob Hanson, the CEO and co-founder of the above-mentioned Monolith, and Jigar Shah, the Director of the Loan Programs Office at the US Energy Department.
It’s worth a listen for historical context, for the story of Monolith’s capital raise, where hydrogen fits into the energy transition picture, where demand growth is going (for both H2 and carbon black), the vital role of governmental contributions to the development of decarbonization tech, and the size of their plasma torch..
These quotes from the Monolith CEO caught my ears:
— “If you can build one of these primary climate tech companies with real hard technology, you are going to have outsized returns in the long run.”
—"The key to our process is you've got to get this really high temperature heat generated electrically. And so we use the plasma torch and we've now built the largest plasma torch in the histpory of the world, over 16 Megawatts, over high 90s percent efficiency and we can heat all these gases to super high temperatures."
—"When you're trying to sell clean hydrogen at a good price point there is no shortage of demand for it. So we've got something like 45 projects in the pipeline, almost all of them anchored by a customer who's currently producing hydrogen in a CO2 intensive saying 'Why don't you come build a plant next to ours and we'll buy your hydrogen and clean up our process: ammonia, refining, RD, etc. etc.'"
Cheers.