Exxon and Abu Dhabi's ADNOC will partner in the delayed Texas hydrogen project

The Abu Dhabi National Oil Company will purchase a 35% stake in Exxon Mobil Corp.'s low-carbon hydrogen project proposed in Texas. Both companies announced a one-year delay in the start-up until 2029.

ADNOC's investments show a confidence in the multi-billion-dollar project, which Exxon had threatened to abandon if the U.S. Government restricted tax credits. The final investment decision was pushed back to 2025 from 2024.

Exxon-ADNOC refused to reveal the value of the deal.

Dan Ammann, Exxon's President of Low Carbon Solutions, said: "This is an important investment. The partners that it has attracted give you a sense of the momentum building around this project."

Tax incentives

Exxon announced plans in 2022 to build the largest low-carbon hydrogen facility on its refinery site in Baytown, Texas. When burned, hydrogen produces water.

The project will be powered by gas and the CO2 that is produced would be captured, buried underground, and then re-used. The announcement was made in response to the clean energy tax incentives that were proposed by U.S. president Joe Biden's administration.

The government has limited the incentives available for facilities that run on natural gas. Exxon CEO Darren Woods said earlier this year that the project would be canceled if similar tax credits were not offered to hydrogen fuelled facilities using renewable fuels.

AMMONIA BOOST

Since its announcement, the project's production estimate has been revised. The project was originally set up to produce 1,000,000 tons of hydrogen per year.

The goal now is to produce 900 000 tons of low carbon hydrogen and more than 1 million tons low-carbon ammonia. Ammonia is a widely used industrial product that's commonly used as fertilizer.

Ammonia is a hydrogen carrier that contains three hydrogen atoms. It can be shipped in liquid form.

Exxon signed an agreement earlier this year with JERA, Japan’s largest power generator, in order to explore the possibility of selling about 500,000 tons annually of ammonia low in carbon.

Ammann said that the timing of (the hydrogen project) is dependent on supply, demand, and supporting regulations coming together at the same time.

(source: Reuters)