Hydrogen Market Overview

The world economy currently consumes more than 42 million tonnes of hydrogen (H2) per year and the demand is projected to increase by 20% in the next five years. About 60 percent of the produced H2 becomes feedstock for ammonia production and subsequent use in fertilizer. Petroleum refining consumes another 23 percent, which is used primarily to remove sulfur and to upgrade the heavier fractions into more valuable products. Another 9 percent is used to manufacture methanol and the remainder goes for chemical, metallurgical, and space purposes. Canada is the largest per capita producer and user of H2 in the Organization for Economic Co-operation and Development (OECD) countries and likely in the world. Each year, Canada consumes more than 3 million tonnes (over 80% is in Western Canada) of H2. On the other hand, the United States uses more than 9 million tonnes of H2 each year for a wide range of applications. It is important to point out that the United States is producing grossly significantly below its current energy need and H2 will offer a viable option to break free from dependence on foreign oil since it can be produced from domestic sources with the added benefit of significantly reducing greenhouse gas emissions. If large quantities of H2 can be produced at competitive costs and without undue carbon release, the use of H2 would offer marked advantages over other secondary fuels. This will transform the energy system and enable H2 to displace petroleum and carbon-releasing fuel cycles.

The HTC Edge

HTC's hydrogen production technology presents significant advantages related to environmental stewardship and the safe and economical distribution of H2 into the marketplace. Current H2 production relies on processes using fossil fuels as feed-stocks; they include steam reforming of natural gas and coal gasification. These approaches both have the disadvantage of generating large emissions of CO2 and other problematic greenhouse gases (GHGs). HTC's technology is scalable and highly adaptable in terms of feed-stocks. These key features provide a viable solution to the problem of H2 distribution to end-use markets. By demonstrating scalability we will offer the potential for the marketplace to adapt an infinite range of sizes and feed-stock choices for H2 plants to fit each client's needs. This adaptability effectively becomes the H2 distribution network in that the H2-module and feed-stocks are distributed to production sites so H2 can be offered to 'on-site' and/or close-by end-users. This 'close-by' production capability solves the problems of pipeline metal embrittlement, costly compression and transportation safety related to transporting H2 by pipeline and compressed gas bottles.

HTC's commercialization plan will target existing and future bio-energy producers, such as ethanol, biodiesel and bio-digester operations and natural gas producers that reform methane (CH4) to H2; in Canada and around the world. Consistent with our 'business model' we will offer the combination of physical products (reformer, catalyst, storage and dispensing/transfer facilities) and services products (technology and IP licensing, engineer/procure/construct (EPC), monitor command control (MCC), start-up operating management and others) that best meets the needs of the client. The over-riding aspect of our plan will be our 'Project Development' approach with clients; this allows the client flexible access to the products, services and expertise to ensure their H2 production facility is built and operating.

HTC's Target Markets

The following represent an overview of the HTC's market penetration strategy associated with the various hydrogen production plant sizes.

Central (very large scale)

This is for hydrogen production requirements of more than 1000 tonnes per day. Target clients for HTC's 'H2 Reformer' (Dry Reforming and bio-reforming) systems will be larger scale field natural gas producers (sub-quality and stranded), flare gas generators and the very large biofuel plants, oil refineries, ammonia fertilizer producers, heavy crude oil up-graders, crude oil pipeline companies (pipe-liners), industrial chemical producers and others. The System selected will be based on access to low cost feed stocks (i.e. methane from sub-quality natgas, stranded natgas, flare gas, bio-sources and natural gas). Entry into this market will also depend on the proven success of smaller systems and the cost economics that have been worked out over time.

Midsize Scale

This is for hydrogen production capacities from 20 to 999 tonnes per day. Target clients for HTC's 'H2 Reformer' system will be various natural gas producers (sub-Qual & Stranded), flare gas generators, biofuel plants and small electrical generating facilities. 'On-site/own use' production can be part of the business model but it will not be the strategic focus of the business. These businesses will market their H2 to larger volume nearby clients like crude oil processors, ammonia fertilizer producers, metal processors, glass manufacturers and to 'merchant gas suppliers' like Air Liquide, Praxair and Air Products. There is a growing market for 'over the fence' H2 supply, whereby a large H2 producer/consumer like an industrial chemical plant or refinery may need to supplement its H2 supply with outside suppliers. The H2 product may come direct from the producer or indirectly through a merchant gas company. Geographical areas around the world with 'stranded natural gas' probably fit this market segment and will be an excellent fit for HTC's Reformer H2 production system.

Distributed (small scale)

This is for hydrogen production requirements of less than 20 tonnes per day. Although this market is substantially smaller than the large energy markets for hydrogen previously identified, HTC has selected this market as our initial target as we will be able to enter this market due to cost advantages in the HTC Process/CapEx costs. Industry references have identified this market as the 'Distributed' H2 market because the H2 production technology is small enough to be taken to the market versus the past strategy of transporting H2 to the market.

Target Clients for HTC's 'H2 Reformer' System:

• HTC's "Dry reforming" system: Sub-quality CO2, stranded CO2 and flare gas producers.
• Bio-fuels production facilities: Ethanol, Biodiesel and Methane from a bio-digester.

It is anticipated that targeted clients will wish to reform methane and biofuel products 'on-site' into H2 primarily for 'own use' as an alternative to natural gas energy source, with excess production marketed as industrial H2 and electricity via the grid and small volume high value H2. This segment will require a scale-up of HTC's H2 Production Demo Plant (1 kg H2/hr) in the range of 20 kg H2/hr (20x) to 200 kg H2/hr (200x). As the 'Hydrogen Highway' becomes commercial it will fit into this market segment. Markets for the 'excess' H2 produced beyond 'On-site/own-use' needs will be in the following sectors:

• Crude oil processing and other industrial gas uses
• Peak electricity
• Thermal/transportation energy
• Merchant gas
• The food/science/medical industries.
  
  
• Small industrial hydrogen users: Users that are currently having their hydrogen delivered to their facilities on-site via commercial gas companies/other more expensive mini-steam reformers, hydrogen fill stations.