- within Energy and Natural Resources topic(s)
- with readers working within the Pharmaceuticals & BioTech industries
In this Energy Horizons episode of the Greenberg Traurig E2 Energy Law Podcast, host and of counsel Nikki Wise is joined by Bill Garner, co-chair of the firm’s global Energy Practice, for a practical, lawyer-focused examination of the legal and contractual framework surrounding natural hydrogen exploration and production in the United States.
The conversation begins with a comparison of traditional oil and gas leases and the emerging natural hydrogen-specific lease, walking listeners through the core provisions common to both: the granting clause, habendum clause, royalty clause, and delay rental provisions. Bill explains why the specific language of the granting clause is especially consequential for natural hydrogen, noting that whether hydrogen is covered by an existing oil and gas lease is far from settled and depends heavily on the precise contractual language used. Drawing on analogies to historical helium litigation, he cautions that companies exploring for hydrogen without clear title rights risk trespass claims, and that hydrogen must either be explicitly named or captured by sufficiently broad language such as "all gases."
Bill then outlines the distinguishing features of hydrogen-specific leases, including the absence of an obligation to drill or produce during the primary term, the right to surrender the lease at any time, and the critical inclusion of provisions addressing environmental attributes such as carbon credits, government grants, and tax incentives, which he notes can be significant drivers of project economics.
The discussion turns to practical development challenges unique to natural hydrogen, including the need for specialized equipment, hydrogen's distinct safety profile and its potential to cause steel pipeline embrittlement, regulatory gaps at the state and local level, and the still-developing market for hydrogen offtake. Bill also addresses transportation and storage considerations, covering dedicated pipelines versus tube trailers, federal Department of Transportation and pipeline regulations, rights-of-way acquisition, the feasibility of repurposing existing oil and gas pipelines, and storage options ranging from above-ground facilities to salt caverns.
The episode closes with Bill's practical guidance for those looking to enter the natural hydrogen space: engage counsel experienced in both oil and gas law and hydrogen-specific issues, ensure leases explicitly address hydrogen rights, think through the full value chain from production to end use, and monitor the rapidly evolving federal, state, and local regulatory landscape.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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