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Houston-area chemicals projects land some of $6B decarbonization funding

March 26, 2024

Three chemicals projects near the Houston area and the Texas Gulf Coast have been selected for federal funding to drive their decarbonization goals forward.

Spring-based Exxon Mobil Corp. (NYSE: XOM), Denmark-based Ørsted and Germany-based BASF Corp. will negotiate funding for their projects through the Department of Energy’s $6 billion Industrial Demonstrations Program. The money comes from the 2021 Bipartisan Infrastructure Law and the 2022 Inflation Reduction Act.

The projects selected to move forward with negotiations are:

  • Exxon Mobil’s Baytown Olefins Plant Carbon Reduction Project, which plans to use hydrogen in place of natural gas to produce ethylene, a feedstock used for textiles and synthetic rubbers. Exxon is negotiating with the DOE for up to $331.9 million, and the project is expected to create 400 new jobs.
  • An Ørsted subsidiary is developing the Star e-methanol plant on the Texas Gulf Coast, which could receive up to $100 million from the DOE. The project will use captured carbon dioxide to create up to 300,000 metric tons of e-methanol annually. It is estimated to create 300 construction jobs and 50 permanent positions.
  • BASF Corp. is leading the development of the Syngas Production from Recycled Chemical Byproduct Streams project, which uses liquid products to create syngas, a low-carbon feedstock to replace natural gas-fired incineration. The project is expected to land up to $75 million in DOE funding.

The three projects in the Houston area and the Texas Gulf Coast use either hydrogen, captured carbon or renewable power to decarbonize their industrial processes, aiming to tackle sectors that have difficulty reducing their carbon emissions due to a previous lack of alternative options. The award continues a trend of Houston-area projects and companies landing funding through President Joe Biden’s energy transition agenda.

Exxon Mobil awarded its first contract for the hydrogen production unit at the Baytown complex in January 2023, selecting Technip Energies for the front-end engineering and design of the project. The new facility would produce so-called "blue" hydrogen, the term for hydrogen produced from natural gas feedstock while capturing and permanently storing the CO2 created as a byproduct. Exxon said the CCS infrastructure developed as part of the project would be made available for third-party emitters in the Houston region as well.

"This project allows us to offer significant volumes of low-carbon hydrogen and ammonia to third-party customers in support of their decarbonization efforts," Dan Ammann, president of ExxonMobil Low Carbon Solutions, said when announcing the Technip contract.

The Star e-methanol project, meanwhile, involves building new onshore wind and solar projects to power the production of green hydrogen, which will then be used to produce e-methanol.

“The production of e-methanol will be critical to achieving rapid decarbonization for the most hard-to-electrify sectors, and we are thrilled to have the U.S. Department of Energy’s support to develop and scale this new industry,” said Melissa Peterson, head of onshore and P2X Americas at Ørsted.

The funding announcement follows Ørsted opening its first Houston office last week. The new 1,000-square-foot office is in downtown's 3 Houston Center, also known as the Fulbright Tower, at 1301 McKinney St. About 30 Houston employees supporting both onshore and offshore projects on the Texas Gulf Coast will be based out of the new office. Employees will also work on projects in the power-to-X sector, a term that refers to projects converting electricity into synthetic chemicals that can be used for fuel or other purposes.

Both Exxon Mobil and Ørsted are industry partners in Houston's HyVelocity Hub, another network of projects created by a separate award from the DOE. The consortium of projects is intended to establish a market for hydrogen on the Texas Gulf Coast. The White House has estimated that 45,000 jobs could be created in the area through construction and operations.

By Jishnu Nair, Houston Business Journal
https://www.bizjournals.com/houston/news/2024/03/26/exxon-orsted-basf-chemicals-federal-funds.html