ExxonMobil Emphasizes Hydrogen, CCS In Low Carbon Solutions Spotlight

During a session highlighting its Low Carbon Business Solutions (LCS) business unit Tuesday, executives from ExxonMobil
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highlighted major opportunities located in Texas and Louisiana in the unit’s current business plan, with a special focus on hydrogen and carbon capture and storage (CCS) projects along the Gulf Coast. The session coincided with the announcement of a deal with Linde
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to capture and store carbon emissions from Linde’s blue ammonia production facility in Beaumont, Texas.

Before getting into the discussion highlighting specific projects, company CEO Darren Woods emphasized the important role played by government policies to encourage the innovation and scaling-up of carbon reduction technologies. “Over a century of sustained economic and population growth has resulted in the world’s current level of greenhouse gas emissions,” Woods said. “Looking forward, getting on a path to net zero will require unprecedented innovation and collaboration among governments, companies, universities and others, something that is not happening today,” he added, pointing to the carbon reduction incentives and subsides contained in last year’s Inflation Reduction Act and the likely impacts they will have going forward, as illustrated in the chart below.

Both Woods and Dan Ammann, President of the LCS unit, took care to emphasize the fact that the IRA and other U.S. policies have resulted in most of the company’s current set of opportunities being domestic in nature, in contrast to what they described as a more restrictive policy environment currently in place in Europe. It is well-known that, due to a variety of geological, policy and commercial factors, the Texas and Louisiana Gulf Coast region represents by far the largest potential prize where CCS is concerned.

“It’s our immediate priority to build what we call our foundational projects,” Ammann said. “These are projects that work with today’s policies, today’s technology and today’s infrastructure, and to demonstrate that these policies can attract customers and earn solid returns.”

Both Amman and Woods pointed out that the company’s carbon reduction efforts today are focused both on its own operations (where Exxon recently announced it would eliminate 100% of its incidental natural gas flaring in the Permian Basin) and on sectors that are hard to decarbonize, such as heavy industry, commercial transportation and power generation. Ammann emphasized that, taken together, those sectors account for about 80% of global energy-related CO2 emissions, as shown in the chart below.

“While light vehicle electrification is important and gets a lot of the headlines, it’s worth noting that the industrial sectors we’re focused on contribute roughly eight times as much to emissions than does light vehicle transportation, and therefore they must be tackled. And that’s where our capabilities come in,” Ammann said.

The following chart illustrates that the Gulf Coast region is an opportunity-rich environment for these targeted sectors, especially where CCS and hydrogen projects are concerned. In addition to the company’s planned major CCS hub project centered on the Houston Ship Channel corridor, where it is currently developing plans to capture and store emissions from dozens of heavy industrial facilities, Amman and his team see other potential hubs along the coast in places like Beaumont, Lake Charles, Louisiana, and the Baton Rouge/New Orleans corridor along the Mississippi River Delta.

In addition to its own blue hydrogen project in Baytown, Texas, whose construction is currently underway with an anticipated startup date in 2027, Ammann discussed the new venture with Linde. There, ExxonMobil will capture emissions at the plant’s tailgate and transport them for permanent storage in an underground formation.

“Clean hydrogen is a key enabler of industry’s transition to a low-carbon economy,” said Dan Yankowski, Senior Vice President Americas, Linde. “Working with ExxonMobil as the carbon dioxide off-taker at our Beaumont project supports Linde’s strategy to decarbonize customer processes while safely and reliably supplying low-carbon hydrogen at scale.”

In its release, Linde said that its new facility has a start-up date of 2025, and will be integrated into the company’s already-extensive Gulf Coast industrial gas infrastructure. The Beaumont facility will also supply clean hydrogen to other new and existing off-takers across the network. In total, the agreement announced Tuesday specifies that ExxonMobil will transport and permanently store up to 2.2 million metric tons of carbon dioxide each year from the Linde facility.

Bottom Line

Woods and Amman outlined big plans for ExxonMobil’s growing LCS business, with their development funded by a $17 billion capital budget through 2025. As I’ve written frequently here over the past few years, the Gulf Coast of Louisiana and Texas represents the perfect combination of factors for these kinds of projects.

No company seems better situated and equipped to exploit these factors in a profitable way than ExxonMobil. As Ammann put it, “Our customers, many governments and other stakeholders recognize the unique combination of experiences, skills and capabilities that ExxonMobil brings to help meaningfully reduce the emissions of others.”

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