Exxon freezes plans for major hydrogen plant amid weak customer demand

Exxon Mobil has halted plans to build one of the largest hydrogen production plants in the world due to low customer demand, CEO Darren Woods said in an interview with Business Insider on Friday. The project's suspension, which was already delayed, reflects the slowdown of efforts by oil and gas companies to switch to cleaner energy sources, as many initiatives are struggling to make a profit. Donald Trump, the U.S. president, had also cut funding for green projects to concentrate on fossil fuels.

Exxon, the oil major, announced in 2022 plans to build a plant in its Baytown, Texas refinery and chemical complex. The goal is to produce 1 billion cubic feet of blue hydrogen per day, a fuel that burns cleanly, producing water. Woods stated that potential customers are hesitant to use hydrogen because of the cost. He added that the industrial slowdown in Europe and the economic uncertainty have also slowed demand.

Woods stated that it was a challenge to find customers willing to sign contracts.

Exxon plans to store the underground carbon dioxide produced by the natural gas production process. Woods says that this is more expensive than producing hydrogen without carbon dioxide. Not enough customers are willing to pay for the higher price. Exxon, along with its partners, Abu Dhabi National Oil Company and others, has invested around $500 million in the project, which is estimated to be worth several billion dollars. Woods declined to provide a specific figure.

Woods said that Exxon could restart the project if there was enough demand on the market, but it's unclear when this might happen.

Woods stated, "We are convinced that this project will meet the need and that it is a good one." Sheila Dang reported from Houston, and Nathan Crooks edited the story.

(source: Reuters)