 |
HyTerra Plan -
Part 5 |
 |
|
HyTerra’s
Future Development of Power Generation
Markets
On November 9 I watched an interview on Farid Zakaria’s GPS program with Andrew Ross Sorkin, who has written a book on the 1929 stock market crash and was describing the similarities to today’s equities markets. The interview is well worth watching and occurred 29 minutes into the hour. Sorkin said that while there are substantive differences between 1929 and 2025, the common factor is that overvaluations arise from bubbles. Ours is an AI bubble, and the greatest limiting factor to its continued expansion is the availability of electrical power. Put another way, if the Trump administration wants to keep citing the surging stock indexes as a measure of economic success, we’ll need much more electrical power generation. Anyone who can meet the need will be in demand, whether the prime mover is coal, petroleum, natural gas, nuclear fission, solar, wind, tidal or hydrogen. How do we know that HyTerra holds large amounts of hydrogen? It’s the leases. In August of 2024, HyTerra received a $22 million investment from Fortescue, an Australian mining company. With that funding, they expanded the number of leases from 9,607 to over 80,000 acres. Now, if I were managing a company that had not been able to produce revenues in 20 years, I might use an investment like that to show how revenues could be generated. Instead, they went out and secured leases. That’s miner thinking, probably dating back to the 2nd century BC, when tin and copper were first mined on the Cornwall coast. When you strike riches, go grab all the nearby leases you can. Fortescue would not have made such an investment without convincing evidence that HyTerra has found vast quantities of hydrogen. The leases alone are probably worth a few multiples of the current share price, but convincing investors requires a showing that the hydrogen can be extracted, purified, distributed and used. That showing is needed as soon as possible. One other issue is involved in measuring the value of HyTerra’s holdings, and I haven’t seen it discussed anywhere else. I don’t know the answer and maybe nobody does, but here goes. If you drill an oil well and pump out all the petroleum, you cap the well and go drill another one. Once it’s gone, it’s gone. Sure you can frack it, but that’s terribly expensive and environmentally nasty. But what happens when you empty a hydrogen well? The hydrogen is produced by geologically active processes. Does the well start to refill as you pump it out? Do you cap it and wait two years for it to refill, or 2000 years? The answer affects the value of the enterprises that control the best well sites. It is important to note that HyTerra is not limited to the petroleum industry model that requires building pipelines from the wells to a refinery and from the refinery to the customers. Building that kind of infrastructure has been expensive in the past and is becoming almost prohibitively expensive now. Perhaps in the long run that will prove the most lucrative method, but to get started, some alternative models are available. One promising alternative is the solar and wind farm model of producing electrical power, where the power is generated on site and distributed to the customers via the electrical grid. The downside is that obtaining interconnection rights is a notoriously tricky process that requires approval by the Federal Energy Regulatory Commission and coordination with the regional and local utilities that operate the grid. Building pure hydrogen pipelines is actually more expensive that building natural gas pipelines because hydrogen has a greater tendency to leak. The pipelines can be built from the same materials, but the seals are more costly because of the specs required. The most recent information I can find says that there are about 1600 miles of hydrogen pipelines in the US, and none in Kansas. A key question is the scalability of purification methods. If the hydrogen can be purified and stored in above-ground tanks at the drill site or at a local processing center serving a number of closely located drill sites, then the solar farm model may be the least costly distribution method. A cost analysis should be done to determine whether generating at a local processing center and investing in interconnection rights or building a single pipeline to a Kansas Power Pool generating facility is the most profitable strategy. Another possible solution is to build data centers right on top of the prime mover. Data center developers have tried to build near high voltage transmission lines but that hasn’t always worked out. The centers have proven unpopular in local communities not only because of the noise, but because they suck up all the electrical power available locally. The costs of expanding the national grid are huge, and time constraints are an issue in maintaining the American lead in AI. The Farid Zakaria interview mentioned instances of data centers being built and subsequently becoming nonoperational because sufficient electrical power could not be obtained. Where subsurface hydrogen is present in vast quantities, a single short pipeline from the local HyTerra processing center to the data center would enable the data center to autogenerate without depriving nearby communities. A recent article illustrates the problems faced by the data centers. Their electrical power supply from the grid is so unreliable that they must maintain large numbers of diesel generators for backup. These produce noise and fumes that bother adjacent communities. The article recommends using propane generators instead. If the data centers were built near hydrogen deposits on the Nemaha ridge, and could count on a constant supply of hydrogen to generate their own power, clean hydrogen could serve as the primary source of power and the grid as a backup, eliminating the diesel pollution and resulting in a lower cost. https://propane.com/2026/02/11/diesel-power-gen/ Another alternative is blending. In some European countries, hydrogen from steam formation plants is inserted into existing natural gas pipelines in concentrations up to 35 percent. The same could be done with subsurface hydrogen purified at drilling centers. Early models de-blended the hydrogen from the natural gas at the destination, but Jenbacher has built turbines that operate on the blend of 25% hydrogen and 75% natural gas and are available for sale. Kawasaki is also entering the market for blending, as noted in Part 1. https://www.jenbacher.com/en/energy-solutions/energy-sources/hydrogen/ Perhaps a cluster-based strategy is the best long-term approach. In areas where wells produce hydrogen and helium, create a processing center based on the model of a computer-controlled hydrogen steam plant, where gases are separated with air separation units, hydrogen is stored in liquid form and can be transferred to liquid hydrogen truck and railroad tankers to serve industrial customers, and blended into existing natural gas pipelines to serve power generation customers. In areas where hydrogen is plentiful but occurs in lower concentrations, create a processing center to serve local data centers, using palladium membrane processing to separate hydrogen from flare gas, and delivering both via a short pipelines to the data centers, where both outputs can be used to generate electrical power using Jenbacher’s available hydrogen and flare gas turbines. https://www.jenbacher.com/en/energy-solutions/energy-sources/flare-gas/ In areas that are remote and the cost of long pipelines prohibitive, create a small private pipeline network from the wells to a processing center where the hydrogen would be purified if necessary. Jenbacher has had such success with building turbines with a wide variety of prime movers that they
|