Abu Dhabi National Oil Co. (ADNOC) has agreed to take a 35% stake in ExxonMobil Corp.’s proposed hydrogen project in Baytown, Texas, which is likely to be the world’s biggest once built, Bloomberg reported on Sept. 4.
The backing from the United Arab Emirates’ national oil company is “another proof point of the overall momentum” behind the project, Dan Ammann, President of Exxon’s Low Carbon Solutions division, said in an interview. Exxon sees the plant starting up around 2029, about a year later than originally planned in part due to a disagreement with the Biden administration over whether the facility qualifies for tax credits under the Inflation Reduction Act.
ADNOC is the third major industrial partner to join Exxon’s project, which would produce 1 billion cubic feet of hydrogen per day and 1 million tons of ammonia a year. JERA Co., Japan’s biggest power provider and a joint venture between Tokyo Electric Power Company Holdings and Chubu Electric Power Co., signed a non-binding agreement in March to buy half of the ammonia (GM March 15, p. 27). In June Air Liquide SA said it could use its pipelines.
The project will provide hydrogen for the refinery and local users and ammonia for export, said Michele Fiorentino, ADNOC’s Executive Vice President for Low-Carbon Solutions and Business Development.
“We’re really looking at building a portfolio of blue hydrogen supply capabilities,” Fiorentino said. “We’re developing production capacity in what we estimate being the most cost competitive regions to do so,” which he said are the US and ADNOC’s home in the Persian Gulf.
This would be ADNOC’s second acquisition in the US after the UAE oil giant in May agreed to buy a stake in NextDecade Corp.’s liquefied natural gas export project in Texas. The UAE, first among major Gulf oil producers to declare a 2050 net zero target, is looking to technologies like hydrogen and carbon capture to help cut emissions even as it looks for ways to keep selling hydrocarbons to new industries.
The main sticking point for the Texas facility remains the government’s 45V tax credit. Under the current guidelines, incentives are earmarked for projects that produce so-called green hydrogen by using water and renewable energy. Exxon’s plant will produce blue hydrogen from natural gas, which creates carbon dioxide emissions. Still, executives believe it should qualify for the tax credits because an accompanying carbon capture project would remove 98% of those emissions.
“We think that the policy and the incentives in place to support the creation of these new value chains should be technology agnostic,” Ammann said. “They should be focused on which projects can deliver what levels of carbon intensity regardless of the means by which they get there.”