Chevron has announced plans to develop its first green hydrogen plant at the Lost Hills oil field in Kern County, southern California.

This project will draw on power from an existing 29MW solar array, which the US oil major estimates currently meets 80% of the oil field’s annual energy demand, to produce up to 2.2 tonnes of H2 a day from a 5MW electrolyser from early 2026.

Chevron plans to use “non-potable” water that is a by-product from its operations at the oil field, which is non-drinkable but can still be used as a feedstock for green hydrogen production.

The Lost Hills project will supply H2 for a refuelling network in California. In 2022, Chevron and Japanese oil firm Iwatani agreed to co-develop 30 hydrogen filling stations across the state by 2026. However, while Iwatani lists four H2 refuelling sites as operational on its website, it has claimed in a lawsuit with technology supplier Nel that another six stations were too defective to continue to operate or start up.

Fellow oil major Shell has exited the market for suppling hydrogen fuel to light-duty passenger vehicles in California, although it has kept open three sites dedicated to serving trucks.

Chevron also notes that starting up the 5MW Lost Hills electrolyser will depend on a number of factors, including policies and regulations at both federal and state levels being “flexible and supportive”.

This could refer to the final guidance for the 45V clean hydrogen production tax credit, which offers $3 per kilo as long as carbon intensity is no higher than 0.45kgCO2e/kgH2.

The draft rules released by the Treasury in December include criteria for zero-carbon power supply to come from new assets built within three years of the hydrogen facility, rather than drawing from existing renewables or nuclear, and for electricity used by electrolysers to be matched with renewable energy on an hourly basis from 2028.

While environmental groups and analysts have argued that these guardrails are necessary to prevent zero-carbon electricity to be taken away from the grid, requiring its replacement with fossil-fired power generation, industry voices have argued that these rules will make green H2 more expensive, making it impossible for the 45V tax credit to fill in the cost gap with fossil-fuel-derived grey hydrogen or diesel (ie, in transport).

On a state-level, California requires a third of the hydrogen supplied to subsidised refuelling stations to be renewable. An assembly bill that would have set additionality and hourly matching requirements as a matter of legal compliance for this H2 died in early February during a third reading.

While the Lost Hills project will be the first solely developed by Chevron, this will not be the first electrolyser project in the US oil major’s portfolio to start up.

Last September, Chevron bought a majority stake into the ACES Delta development in Utah, a 220MW project with salt-cavern storage for 11,000 tonnes of H2, which will supply a nearby 840MW gas-fired power plant. The electrolysers have already been delivered, with first production likely to start in 2025.

Chevron also owns 50% of a waste-to-hydrogen facility to be built in northern California this year, from which it also plans to supply refuelling stations in the state.

This article was published first by Hydrogen Insight