ExxonMobil advances USGC blue hydrogen plant, awards contract to Technip Energies

ExxonMobil's blue hydrogen production facility planned for Baytown, Texas, took another step forward Jan. 30 when the company awarded a front-end engineering and design contract to Technip Energies.

With a targeted production capacity of 1 Bcf/d, or 2.36 million kg/d, the Baytown facility is expected to be the world's largest hydrogen plant once it comes online in 2027 or 2028. Some of that hydrogen will be used in ammonia production, and some will be used to replace natural gas feedstocks in its olefins plant, which will reduce the plant's scope 1 and scope 2 emissions by 30%.

The contract awarded to Technip Energies, a French engineering and technology company, puts the project on pace to reach a final investment decision by 2024, pending regulatory permits.

The plant's production process is expected to have a carbon capture rate of 98%, generating around 7 million mt CO2/year. These capture rates would make the plant eligible to receive higher-end hydrogen production tax credits created by the Inflation Reduction Act.

A kilogram of hydrogen produced with between 0.45 kg and 1.5 kg of CO2 emissions will earn a $1 tax credit, while a kilogram of hydrogen produced with a carbon intensity level of less than 0.45 kg earns up to $3. An ExxonMobil spokesperson said that the company does not yet know what the carbon intensity levels will be for the hydrogen produced at the Baytown facility at this early stage of the project.

"This project allows us to offer significant volumes of low-carbon hydrogen and ammonia to third-party customers in support of their decarbonization efforts," President of ExxonMobil Low Carbon Solutions Dan Ammann said in a statement.

Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen produced by PEM electrolysis in the US Gulf Coast at $2.75/kg (including capex) Jan. 27, while that produced using alkaline electrolysis was assessed at $1.93/kg. Conventional hydrogen, or that produced using natural gas without carbon capture additions, was assessed at 88 cents/kg.

Carbon capture operations

In addition to capturing CO2 generated from its own hydrogen production processes, the facility is also designed to be a CO2 offtaker for other third-party industrial emitters along the US Gulf Coast.

The facility will have a CO2 transportation and sequestration capacity of 10 million mt CO2/year, which will more than double ExxonMobil's current carbon capture and sequestration capacity of 9 million mt CO2/year.

During a 2021 lease sale of oil and gas tracts in the Gulf of Mexico, ExxonMobil placed bids on 94 inexpensive tracts with depleted oil and gas reserves in the shallow waters near the Texas and Louisiana coast. Because of their close proximity to the planned Baytown facility, experts said that the purchase of those tracts were likely for carbon storage operations, although the company never confirmed its intent.

Demand for CO2 offtake services was also boosted by the Inflation Reduction Act, which expanded tax credits for emitters who choose to capture and store their CO2. The IRA increased carbon capture subsides from $50/mt CO2 captured and stored to $85/mt.

In order for USGC emitters to take advantage of those credits, they would pay ExxonMobil or other carbon management companies to transport their captured CO2 via pipeline and store it underground. Other large international oil companies like Occidental Petroleum, Chevron and BP have also announced plans to make major investments in carbon sequestration hubs.