Exxon Baytown FID Prospects Increasingly Slim For 2025

Darren Woods, CEO of Exxon Mobil, stopped short of formally postponing the company’s 2025 timeline for a final investment decision (FID) on its flagship Baytown blue hydrogen and ammonia project, but his remarks to the Energy Intelligence Forum suggest the prospects are grim.

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“We haven't made any final decisions on that, but I would tell you the market forming bit of it — where the supply comes on in a critical mass — and the customer's willingness to pay are two big hurdles that we have yet to overcome,” Woods told the annual London gathering.

“Our view is that the world is ultimately going to need” the project, which is set to become the world’s largest blue hydrogen scheme if advanced, Woods said. “So if we don't FID that and move forward with it, we'll put it on the shelf and come back when the markets are there and the customers are there.”

The sentiments expressed by Exxon’s boss point to little improvement over the past several months in the medium-term outlook for low-carbon hydrogen development in the US — and thus the major’s willingness to sink several billion dollars into a domestic- and export-focused project that would produce nearly 880,000 tons per year of blue hydrogen and 1 million tons per year of blue ammonia. “Blue” refers to the project’s use of natural gas as a feedstock but with carbon capture and storage (CCS) deployed to minimize emissions.

Woods first raised a “strong possibility” of a delayed FID in early August on the company’s second-quarter earnings call. Now, three months later, he cited the same “big hurdles” as remaining in play.

“Unfortunately, despite the rhetoric that's out there, there are very few companies who are willing to pay a premium for low-carbon products,” Woods argued.

Exxon Mobil signed a firm offtake deal in May with Japan's Marubeni Corporation for one-quarter of Baytown's ammonia output — the project's first such agreement. However, further firm sales deals have remained elusive. Announced accords with Trammo, Abu Dhabi National Oil Company (ADNOC), Mitsubishi Corporation, and JERA all still remain as heads of agreement.

At the same time, Woods said recent US policy changes affecting hydrogen production tax credits will have a negative impact on the overall pace with which a low-carbon hydrogen ecosystem can develop — a key consideration for the US major given its insistence that Baytown's economics must quickly work beyond government subsidies.

“They shortened the amount of time that its incentives are available. That doesn't affect our project, but it does undermine the development of the broader market,” Woods said, referring to the One Big Beautiful Bill Act passed in July. The legislation cut five years off the eligibility window for so-called “45V” credits largely offered to green hydrogen developments to end-2027. Blue hydrogen projects seeking to tap “45Q” credits for CCS are still available through end-2032.

“I don't believe that any sustainable market will be built purely on government subsidies. That's a good way to get started, but you've got to get off government subsidies and then move to market forces. So that was the basis on which we put this project together,” Woods said.

Shale Second Life

Striking a more positive note, Woods spoke optimistically about the running room left for US tight oil production, even if the country's crude output indeed plateaus around 13 million barrels per day, as many industry players and forecasters suggest.

Despite rising concerns over the competitiveness of remaining drilling inventories, Woods sees technology once again extending the runway for the longer term.

Back in 2018, Woods challenged the engineering team at Exxon Mobil to double recovery rates from shale, which typically range around 5%-10%.

“At the time, they told me it wasn't possible. What they would tell me today is, ‘We can see it,’” Woods told the Forum.

“We have developed a pipeline of technology opportunities, and not all of them will work, but … they can see the potential, and so I would say we’ve made significant progress in applying new technologies to increase recoveries,” the Exxon Mobil boss said.

Woods acknowledged that not all US shale producers will be positioned to follow Exxon Mobil’s path, with implications for overall US crude oil production levels. But for the US major at least, “We continue to see well into our future growing production.”

Exxon Mobil is the largest producer of crude oil and NGLs in the US, at 1.456 million b/d in the first half of 2025 — equivalent to around 17% of US oil output.