Exxon Mobil CEO Darren Woods announced on Friday, November 21, that the company has paused plans to build what would have been one of the world’s largest hydrogen production facilities in Baytown, Texas, citing weak customer demand.
Reuters reported that the suspension of the multi‑billion‑dollar project reflects a wider trend of traditional energy firms struggling to transition profitably to cleaner‑energy initiatives.
The company and its partners, including Abu Dhabi National Oil Company (ADNOC), have invested about $500 million into the project so far. However, according to Woods, a sustained challenge exists in establishing committed customers willing to provide off-take contracts for the fuel.
The proposed facility, announced in 2022, was slated to produce 1 billion cubic feet per day (cf/d) of blue hydrogen. Blue hydrogen is a clean fuel produced from natural gas, where the resulting carbon dioxide is captured and stored underground.
Woods explained that potential customers remain hesitant due to the higher cost associated with using hydrogen produced with carbon capture technology. He added that an industrial slowdown and economic uncertainty in Europe have further exacerbated the demand challenge. Despite the pause, Woods remains convinced of the project’s long-term viability.
“We remain convinced that one, it will be needed, and two, this will be an advantageous project to meet that need,” Woods told Reuters.
Exxon confirmed it can restart the project when market demand is sufficient. The slowdown comes amid a wider context of reduced government funding for green initiatives, which have faced prioritization shifts toward fossil fuels in the US.
