ExxonMobil’s Hydrogen Hub Draws Billions from Major Investors

Amid widespread skepticism about the future scalability of the hydrogen industry, whether it’s green, blue, gray or some other imaginary color, ExxonMobil certainly has no problem finding big investors in its planned blue hydrogen hub at its Baytown, Texas, refining and chemical complex.

In the past few weeks, the project — which ExxonMobil says will be the largest of its kind in the world once it’s up and running — has brought news of a pair of major investors in both the plant itself and its production. Baytown’s plans remain controversial in the climate-alert industry, given that it plans to use natural gas from the Baytown refinery as a feedstock for so-called “blue” hydrogen. ExxonMobil’s plans include using some of the hydrogen as fuel to reduce the Baytown plant’s carbon footprint, with most of it going to be used to produce low-carbon ammonia.

A week ago, ADNOC, Abu Dhabi’s national oil company, agreed to buy a 35% stake in the facility itself, which is still in the complicated process of obtaining the necessary local, state and federal permits to enable its eventual completion. Neither company was willing to disclose the value of the deal at this time.

His Excellency Dr. Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology and ADNOC Group Managing Director and CEO, said: “This strategic investment is a significant step for ADNOC as we expand our low-carbon energy portfolio and execute our international growth strategy. We look forward to partnering with ExxonMobil on this low-carbon, technologically advanced project to meet growing demand and help decarbonize high-emitting sectors.”

Darren Woods, Chairman and CEO of ExxonMobil, said: “We appreciate the support of His Highness Sheikh Khaled bin Mohamed bin Zayed Al Nahyan for this groundbreaking partnership. This is a world-class project in a new global energy value chain. Finding the right partners is key to accelerating market development and we are pleased to add ADNOC’s proven experience and global market insights to our Baytown facility.”

In the latest major deal involving the Baytown facility, Mitsubishi Corp. announced Friday that it and ExxonMobil have agreed on a framework under which Mitsubishi will not only invest in a stake in the facility but also sign a long-term agreement to buy back a stake in the low-emission ammonia it will produce. Ammonia is a key ingredient in fertilizer, another industry that is hard to curtail. ExxonMobil says the Baytown facility will produce more than 1 million tons of low-emission ammonia per year.

“We are excited to be working closely with ExxonMobil to develop low-carbon hydrogen and ammonia supply chains that will connect the United States and Japan. We are also working with Idemitsu Kosan Co., Ltd., which is developing an ammonia center near ours and intends to participate in ExxonMobil’s hydrogen facility with us. Together, we will lead this joint initiative to help accelerate the transition of hard-to-reduce sectors to clean energy,” said Masaru Saito, CEO of the Environmental Energy Group at Mitsubishi Corporation.

“Demand for ExxonMobil continues to grow^TM “Low-carbon hydrogen and ammonia,” said Dan Ammann, president of ExxonMobil Low Carbon Solutions. “We look forward to continuing to expand our leadership position alongside Mitsubishi Corporation to globally advance low-carbon hydrogen and ammonia, helping the world achieve a lower-emissions future.”

Mitsubishi said in its press release that ExxonMobil expects to make a final investment decision (FID) for the facility in 2025, with commissioning scheduled for 2029.

Summary

While many experts and investors remain skeptical about the possibility of using hydrogen of any color (the element itself is colorless) as a fuel or production feedstock, major companies like ExxonMobil, ADNOC and Mitsubishi are apparently willing to invest billions of dollars in efforts to make such use a reality.

Whether the hydrogen hub model will ultimately develop into a profitable enterprise in the United States remains an open question, but ExxonMobil’s history with large projects like the Baytown facility provides some cause for optimism. With FID now expected in 2025, the world will soon find out.