ExxonMobil plans to build world's largest low-carbon hydrogen production facility

As such, hydrogen has enormous potential. This low-carbon fuel could help address climate change concerns while meeting the world's growing energy needs. While estimates vary, Deloitte believes the market for green hydrogen could reach $1.4 trillion by 2050. This is just the tip of the imaginary iceberg. The potential size of the market for low-carbon molecules could reach $6 trillion by 2050.

ExxonMobil $XOM wants a share of this huge market opportunity. The oil giant is currently working to develop the world's largest low-carbon hydrogen project. This is one of several steps the oil company is taking to tap into the potentially lucrative demand for low-carbon energy.

Partnership on groundbreaking hydrogen project

ExxonMobil recently announced that Air Liquide is joining its low-carbon hydrogen and ammonia project at its facility in Baytown, Texas. The agreement will allow Exxon to transport low-carbon hydrogen through Air Liquide's existing pipeline network. In addition, Air Liquide will build and operate four large modular air separation units that will supply oxygen and nitrogen to the company's facility. These units will primarily use low-carbon electricity to power their operations.

Exxon's planned hydrogen production facility would be the largest in the world. It could produce 1 billion cubic feet of low-carbon hydrogen per day, enough energy to power 1.5 million homes. In addition, it would produce more than 1 million tons of ammonia annually. Exxon plans to capture more than 98% of the emissions associated with the project. By partnering with Air Liquide, Exxon could deliver low-carbon hydrogen to markets along the Gulf Coast to help industrial customers decarbonize their operations by replacing fossil fuels.

"The momentum continues to favor the world's largest low-carbon hydrogen project and the emerging hydrogen market," said Dan Ammann, president of ExxonMobil's Low Carbon Solutions business, in a press release announcing the agreement. He noted: "This partnership with Air Liquide further strengthens our Baytown project by enabling hydrogen distribution through existing networks and securing key feedstocks."

The company hopes to make a final investment decision on the project this year. If so, the Baytown facility could be operational by 2028. The project will require government approval and supportive policies to generate a high enough return to justify the investment. This project alone represents nearly 10% of the Biden administration's clean hydrogen goal.

Building a low-carbon energy giant

The Baytown facility is one of many low-carbon energy projects Exxon is pursuing. It plans to invest more than $20 billion between 2022 and 2027. That's on top of the $5 billion it spent to acquire Denbury Resources for its infrastructure and carbon dioxide expertise.

The oil company is taking a comprehensive approach to low-carbon energy. It is investing in hydrogen, carbon capture and storage, lithium and renewable fuels.

The company has agreements with CF Industries, Linde and Nucor to support the construction of carbon capture and storage infrastructure to reduce their carbon emissions. Its first projects are expected to be operational in 2026. Exxon could capture and store 5 million metric tons of carbon dioxide per year for these three customers. This is equivalent to replacing 2 million gasoline-powered cars with electric vehicles (EVs).

Exxon also plans to become a leader in supplying the lithium needed to power EVs. The company plans to produce lithium by drilling into salt tanks on land it controls in southern Arkansas. It plans to produce enough lithium to meet the needs of 1 million EVs per year by 2030. Exxon recently agreed to supply up to 100,000 metric tons of lithium to SK On, the world's leading EV manufacturer.

The company's investments in low-carbon energy significantly expand its overall addressable market opportunity. It estimates that the market for molecules (carbon capture, hydrogen and biofuels) could reach $6 trillion by 2050.

Source: Yahoo Finance, CNN.

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