Exxon, Abu Dhabi’s ADNOC to partner in delayed Texas hydrogen project By Reuters

By Sabrina Valle

HOUSTON (Reuters) – Abu Dhabi National Oil Company (ADNOC) will acquire a 35 percent stake in ExxonMobil Corp (NYSE: ) has proposed a low-carbon hydrogen project in Texas, with the companies announcing a one-year delay to the launch to 2029.

ADNOC’s investment shows a sign of confidence in a multibillion-dollar project that Exxon has threatened to cancel if the U.S. government restricts tax credits for it. A final investment decision has been pushed back to 2025 from 2024.

Exxon and ADNOC declined to disclose the value of the deal.

“It’s a very significant investment, and the partners it’s attracting give an idea of ​​the momentum that’s building around this project,” Exxon Low Carbon Solutions President Dan Ammann told Reuters.

TAX INCENTIVES

In 2022, Exxon unveiled plans to build the world’s largest low-carbon hydrogen facility at its Baytown, Texas refinery. Hydrogen is a fuel that produces water when burned.

The project would be powered by , with associated CO2 captured and buried underground. It was announced on the back of clean energy tax incentives proposed by US President Joe Biden’s administration.

But the government has limited incentives for natural gas plants. Exxon CEO Darren Woods earlier this year said the project could be canceled without similar tax credits for hydrogen facilities powered by renewable fuels.

AMMONIA BOOST

Estimated production of the project has been revised since the initial announcement. Initially, it was set to produce 1 million tons of hydrogen annually.

Now the goal is to produce 900,000 tons of low-carbon hydrogen and more than 1 million tons of low-carbon ammonia, a well-established industrial product commonly used as a fertilizer.

Ammonia, which has three hydrogen atoms in its composition, is also used as a carrier for hydrogen, allowing it to be exported by ship in liquid form.

Exxon earlier this year signed an agreement with JERA, Japan’s largest energy producer, to explore selling about 500,000 tons a year of low-carbon ammonia.

“The timing (for the hydrogen project) depends on supply, demand and supporting regulations coming together in sync,” Ammann said.