Can Hydrogen Be Produced Cost-Effectively from Heavy Oil Reservoirs?

Chinedu J. Okere () and James J. Sheng ()
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Chinedu J. Okere: Department of Petroleum Engineering, University of Houston, Houston, TX 77004, USA
James J. Sheng: Bob L. Herd Department of Petroleum Engineering, Texas Tech University, Lubbock, TX 79409, USA

Energies, 2025, vol. 18, issue 20, 1-30

Abstract: The potential for hydrogen production from heavy oil reservoirs has gained significant attention as a dual-benefit process for both enhanced oil recovery and low-carbon energy generation. This study investigates the technical and economic feasibility of producing hydrogen from heavy oil reservoirs using two primary in situ combustion gasification strategies: cyclic steam/air and CO 2 + O 2 injection. Through a comprehensive analysis of technical barriers, economic drivers, and market conditions, we assess the hydrogen production potential of each method. While both strategies show promise, they face considerable challenges: the high energy demands associated with steam generation in the steam/air strategy, and the complexities of CO 2 procurement, capture, and storage in the CO 2 + O 2 method. The novelty of this work lies in combining CMG-STARS reservoir simulations with GoldSim techno-economic modeling to quantify hydrogen yields, production costs, and oil–hydrogen revenue trade-offs under realistic field conditions. The analysis reveals that under current technological and market conditions, the cost of hydrogen production significantly exceeds the market price, rendering the process economically uncompetitive. Furthermore, the dominance of oil production as the primary revenue source in both methods limits the economic viability of hydrogen production. Unless substantial advancements are made in technology or a more cost-efficient production strategy is developed, hydrogen production from heavy oil reservoirs is unlikely to become commercially viable in the near term. This study provides crucial insights into the challenges that must be addressed for hydrogen production from heavy oil reservoirs to be considered a competitive energy source.

Keywords: hydrogen production; heavy oil reservoirs; economic feasibility; technical challenges; energy efficiency (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
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