Exxon Mobil has suspended its plans to build a major hydrogen production facility due to weak customer demand, CEO Darren Woods told Reuters in an interview.
Exxon announced plans in 2022 to build what would be one of the world’s largest hydrogen production facilities capable of producing one billion cubic feet per day of so-called blue hydrogen, a clean fuel that produces water when burned.
Woods said that potential customers have stayed away due to the higher cost of using such hydrogen, while economic uncertainty in Europe have also led to depressed demand.
“There’s been a continued challenge to establish committed customers who are willing to provide contracts for off-take,” Woods said.
Exxon and its partners on the facility, which would have been built on the company’s refining and chemical complex in Baytown, Texas, have already invested US$500 million on the project, the CEO said.
Adding to the potential costs of the project, Exxon had planned to capture the carbon dioxide produced from generating hydrogen from natural gas.
The carbon dioxide would have been stored underground. The entire process carries a higher cost than hydrogen produced without containing carbon dioxide. Customers, however, were not willing to pay the premium, Woods said.
Exxon is willing to restart the project if there is enough market demand, but Woods is unclear when that could be.
“We remain convinced that one, it will be needed, and two, this will be an advantageous project to meet that need,” Woods said.