Exxon Suspends Texas Hydrogen Project Due to Demand Shortfall

Post by : Bianca Suleiman

Exxon Mobil has decided to pause its plans for a major hydrogen production facility, one of the largest in the world, due to weak demand and economic uncertainties. Initially expected to be constructed at the company’s Baytown, Texas site, this project now faces an indefinite halt after previous delays.

Unveiled in 2022, the facility was intended to generate 1 billion cubic feet of “blue hydrogen” daily. This cleaner variant distinguishes itself by capturing carbon dioxide during the production process and storing it underground, although it is more costly.

CEO Darren Woods noted that the financial burden of blue hydrogen has left potential customers cautious. “We are still facing challenges in securing committed customers for off-take contracts,” he stated, pointing out the slowdown in industrial activities and economic instability in Europe as additional factors dampening demand.

The initiative had garnered investments from Exxon and collaborators, including the Abu Dhabi National Oil Company, with approximately $500 million already invested. The total projected costs were expected to run into billions, though a precise figure has yet to be disclosed.

While hydrogen is seen as pivotal for a sustainable energy future, Exxon’s decision highlights the struggles faced by traditional oil and gas companies in pivoting towards low-carbon alternatives, particularly when market demand is slower than technological developments.

Woods expressed hope that the project could resume once there’s a resurgence in demand, although he did not specify a timeline. He remains optimistic about hydrogen’s long-term importance and the strategic value of the Baytown initiative.