Exxon freezes plans to build hydrogen plant due to weak demand

Exxon Mobil has suspended plans to build one of the world’s largest hydrogen production plants due to weak consumer demand, CEO Darren Woods told Reuters.

In 2022, Exxon announced plans to build a plant at its refining and chemical complex in Baytown, Texas. The plant was expected to produce 1 billion cubic feet of “blue” hydrogen per day. The company intended to capture and store the carbon dioxide produced in the hydrogen production process, which made the process more expensive.

According to Woods, potential customers are staying away because of the higher cost of using hydrogen. In addition, demand has been further reduced by slowing industrial growth and economic uncertainty in Europe. The company continues to search for those willing to sign off-take agreements.

Exxon and its partners in the facility’s construction, including the National Oil Company of Abu Dhabi, have already invested approximately $500 million in the project. Its total cost is estimated at several billion dollars.

The company may restart the project if there is sufficient market demand, Darren Woods said, but the timing remains uncertain.

As a reminder, US steel producer Cleveland-Cliffs officially canceled its hydrogen-based steel production project in Middletown, Ohio, this summer. Instead, the company will extend the life of its existing coal-fired blast furnace. Cliffs CEO Lorenço Gonçalves cited delays in hydrogen production and expectations of changes in the Trump administration’s policy as the main reasons for the decision.