Exxon Mobil (XOM) is delaying plans to build what would be one of the world’s largest hydrogen production facilities due to weak customer demand, CEO Darren Woods told Reuters in an interview Friday.
Exxon (XOM) unveiled plans in 2022 to build the plant at its refining and chemical complex in Baytown, Texas, with a goal of producing 1 billion cf/day of blue hydrogen.
But potential customers have stayed on the sidelines due to the higher cost of using hydrogen, as well as an industrial slowdown and economic uncertainty in Europe, Woods told Reuters.
“There’s been a continued challenge to establish committed customers who are willing to provide contracts for offtake,” Woods said.
The suspension of the project, which already had been hit with delays, also reflects a wider slowdown in efforts by traditional oil and gas producers to transition to cleaner energy sources as many of the initiatives struggle to turn a profit.