Adnoc to buy 35% stake in ExxonMobil’s blue hydrogen plant

Abu Dhabi-based energy company Adnoc has agreed to acquire a 35% equity stake in Exxon Mobil’s (NYSE:XOM) proposed low-carbon hydrogen and ammonia production facility in Baytown, Texas , according to various media reports.

The project is set to become the “largest” of its kind in the world, with a production capacity of up to 1 billion cubic meters per day of blue hydrogen, with around 98% of carbon dioxide removed, as well as more than 1 million tons of low hydrogen. -carbon ammonia per year, Adnoc revealed in a statement on Wednesday. The company will reach a final investment decision for the project in 2025, with operations expected to begin in 2029.

“This strategic investment is a significant step for Adnoc as we grow our portfolio of low-carbon energy sources and realize our international growth strategy,” said Dr. Sultan Al Jaber, Adnoc Group Managing Director and Chief Executive Officer, as reported by Reuters.

“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.

Blue hydrogen is produced primarily from natural gas through a process known as steam reforming, which involves combining natural gas with steam with hydrogen generated as the primary product, while carbon dioxide is produced as a byproduct and captured.

Currently, the vast majority of hydrogen demand is met by fossil fuel-based steam reforming of methane without carbon capture, called gray hydrogen. The Baytown plant will have access to “cheap” gas from the US Gulf Coast via pipelines.

Demand for blue hydrogen is expected to see strong growth in the coming years, a trend that will continue to drive demand for natural gas. According to McKinsey, by 2050 blue hydrogen production could require about 500 billion cubic meters of natural gas (between 10 and 15% of global natural gas demand) and the ability to capture and store 750 to 1,000 megatons of CO2.

Almost all hydrogen consumed today (about 90 million tons per year) is gray hydrogen. However, demand for gray hydrogen is expected to decrease as demand for clean hydrogen increases and the cost of green hydrogen decreases.

By Alex Kimani for Oilprice.com

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