The US Department of Energy (DOE) has selected ExxonMobil’s Baytown, Texas, olefins plant carbon reduction project to receive up to USD331.9 million in funding under the USD6-billion Industrial Demonstrations Program (IDP), said Chemweek.
The announcement comes one month after a report in the Houston Chronicle that ExxonMobil might have to cancel the project if proposed federal tax incentives for the production of clean hydrogen exclude the use of carbon capture and sequestration (CCS).
The project, which ExxonMobil announced in March 2022, would include construction of a plant capable of producing 1 billion cubic feet of hydrogen per day from methane, with the associated carbon dioxide emissions to be captured and stored underground. ExxonMobil would use this “blue” hydrogen to fuel its olefins plant, which is currently fueled with natural gas. The company expects to make a final investment decision this year, with startup planned for 2027-2028.
At the time of the project announcement, ExxonMobil estimated that the project would reduce integrated site carbon dioxide emissions at Baytown by up to 30%. DOE, in its IDP announcement, said the project would reduce the olefins plant’s emissions by over 50%, or 2.5 million metric tons per year.
On February 22, the Houston Chronicle reported that executives at ExxonMobil were warning that the project might not proceed. Proposed federal tax rules would grant tax credits of $3 per kilogram for “green” hydrogen produced using power from wind and solar farms, whereas “blue” hydrogen produced from methane with CCS would only be eligible for tax credits of 60 cents per kilogram, the paper reported.
The newspaper quoted Mark Klewpatinond, global business manager for hydrogen at ExxonMobil. “If we’re not able to differentiate natural gas production, it’s highly unlikely Baytown would proceed,” he reportedly told the Chronicle. “It needs to compete for capital against other projects we have.”
We remind, QatarEnergy and ExxonMobil are on track to commence LNG production at their Golden Pass LNG export terminal, situated on the US Gulf Coast near Sabine Pass, Texas, during the first half of 2025. QatarEnergy, a state-owned entity, holds a substantial 70 percent stake in the Golden Pass project, which boasts a capacity exceeding 18 million metric tons per annum (mtpa). Notably, QatarEnergy will offload 70 percent of the terminal's capacity. In parallel, ExxonMobil, a prominent US-based energy firm, possesses a 30 percent share in the venture.
mrchub.com