ExxonMobil may be unable to meet its yearend target for reaching a final investment decision (FID) on its Baytown, Texas, blue hydrogen project because of concerns that a newly shortened federal deadline leaves insufficient time for offtakers to materialize.
"We're not going to [FID] it until we've got secured offtakers so that we have a lot of confidence in the returns we're going to generate," chief executive Darren Woods said Friday in the company's second-quarter earnings call. "We may slip versus the original timing. It's a little early to tell, but that's certainly a strong possibility."
Chief among the challenges facing the project is a shorter deadline to qualify for the 45V production tax credit, said Woods. President Donald Trump's recently passed tax and energy law forces developers to begin construction by the end of 2027 to benefit from the incentive, shaving off five years from the original expiration date laid out by the administration of former president Joe Biden. While blue hydrogen is still expected to serve as the launching point for a US low-carbon hydrogen industry, regulatory uncertainty and delays in even the nations most committed to decarbornization has slowed progress and pushed out previous forecasts that envisioned a functioning market by 2030.
ExxonMobil can meet the new 45V deadline, Woods said, but "we're concerned about the development of a broader market, which is critical to transition from government incentives. If we can't see an eventual path to a market-driven business, we won't move forward with the project."
The company, which lobbied to save 45V when it looked like it may be abolished entirely by the Trump administration, was "disappointed" by the shorter timeframe, Woods said.
"We're now working to determine if the combination of 45Q and a shortened 45V will provide the support needed to catalyze a broader low-carbon hydrogen market," he said.
The company is working to turn offtake agreements into firm sales contracts, including exports of ammonia to Asia and Europe and US hydrogen sales, Wood said. In May, Exxon agreed [to supply 250,000 metric tonnes/yr] of ammonia (https://direct.argusmedia.com/newsandanalysis/article/2686167) to Japan's Marubeni, and European trading company Trammo said it plans to buy up to 500,000 t/yr of ammonia.
ExxonMobil intends to make roughly 1mn t/yr of ammonia and 900,000 t/yr of hydrogen at the facility that the company says would be the largest low-carbon hydrogen and ammonia production facility in the world.
