US major ExxonMobil has paused plans to develop a large-scale blue hydrogen production facility in Baytown, Texas, due to insufficient customer demand, Reuters reported on Friday.
The company aimed to produce 28.3 mcm (1 bcf) per day of blue hydrogen at its Baytown refining and chemical complex, with captured carbon dioxide stored underground. However, high production costs and a lack of committed off-take contracts have led the company to suspend the project.
Initially announced in 2022, development of the hydrogen facility faced delays in 2024 and now joins a broader trend of cancelled or paused hydrogen projects as companies globally struggle to find profitable development arrangements.
In an interview with Reuters, CEO Darren Woods cited economic uncertainty and an industrial slowdown in Europe as factors limiting demand. “There’s been a continued challenge to establish committed customers who are willing to provide contracts for offtake.”
The company remains confident in the potential of the project once market demand picks up. “We remain convinced that one, it will be needed, and two, this will be an advantaged project to meet that need,” concluded Woods.
ExxonMobil and its partners in the project, which include Mitsubishi and ADNOC, have invested around USD 500 million towards the project. Total investment is estimated to reach several billion dollars, although precise figures have not been announced.