Exxon Mobil Targets $2B More Earnings from Low Carbon Solutions

Exxon Mobil Corp. says its Low Carbon Solutions business focused on lithium, hydrogen and carbon capture and storage (CCS) has the potential to bring in about $2 billion more in earnings by 2030 compared to 2024.

The prospective was shared during Exxon Mobil’s recent corporate plan update, which detailed the company’s pursuit of up to $30 billion in low emissions opportunities through the end of the decade. The pace and execution of the opportunities will, however, depend on policy, regulation, technology and market development, executives said.

Traditional oil and gas players like Exxon Mobil have been adding to their energy offerings as the world seeks out lower-carbon energy to reduce greenhouse-gas emissions. The efforts also come as companies work to meet growing demand for affordable, reliable energy.

“Exxon Mobil is not defined by the products, but by our capabilities. Evolving society needs and a potential energy transition do not represent threats. They are tremendous opportunities,” Exxon Mobil CEO Darren Woods said. “In any future, Exxon Mobil will have an important role providing needed solutions and creating substantial shareholder value.”

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CCS

The company’s first CCS project is on track to start in the first half of 2025 with other customers coming aboard in 2026, said Kathy Mikells, senior vice president and CFO for Exxon.

“We have 6.7 million tons annually under contract for transportation and storage with third-party customers, and that is far more than any other company,” Mikells said. “We’re on our way to meeting our aim to having 30 mta by 2030.”

Located on the Texas Gulf Coast, the CCS effort is part of Exxon’s hydrogen project planned for the company’s Baytown plant.

Hydrogen

Exxon has plans to produce up to 1 Bcf/d of hydrogen, half of which will be used for its own facilities and the rest for third parties. It will use natural gas as feedstock from its Permian operations. “The project will also bring 7.5 mta of carbon into our carbon transportation and sequestration network,” Mikells added. “The strength of our project has attracted a number of interested global third parties, including ADNOC, purchased a 35% stake in the project.”

Exxon aims to take a final investment decision on the project in 2025, targeting startup in 2029. However, an FID is “subject to translation of the IRA 45V policy into actionable technology,” Mikells said, referring to the Inflation Reduction Act’s final guidance on its hydrogen production tax credit not yet released.

Lithium

Executives also said they see a growing opportunity for lithium battery anode materials. The company is active in Arkansas’ Smackover where it uses direct lithium extraction technology to separate lithium from saltwater.

“We’ve developed an advanced coke product that can lead to 30% higher capacity, faster charging time and extended battery life,” Mikells said. “We’re currently working with automobile manufacturers to test this new product, and our plan is to have our first commercial scale unit up and online by 2028 to meet the growing demand for lithium batteries.”

Power

Exxon sees additional opportunity in power besides providing natural gas to fuel systems. The CCS network, which added more than 1,300 miles of CO2 pipeline in 2023 with Exxon’s $4.9 billion acquisition of CCUS company and E&P Denbury Inc., could pave the path toward additional decarbonization opportunities. These include lower-carbon power for data centers, executives said.

Exxon would use carbon capture units to trap CO2 emissions from power generation. The captured carbon would then be taken via pipeline to sequestration sites for sequestration.

The company has already developed 5.5 gigawatts of power projects within its existing businesses since 2001 and 800 megawatts of fully islanded power, operating independently from the power grid, according to Mikells. “That means they’re independent of utility timelines, so they can be installed at a pace that other alternatives, including U.S. nuclear, just can’t match,” she said.

Woods later added that Exxon is not looking at being power generators. “That’s not the game here. If we need to facilitate this, we’re certainly capable of doing it. But it will be done in facilitation of the molecule value of the equation. That’s how to think about it.”

Looking ahead

Combined with Exxon’s carbon materials and product solutions business, including Proxxima, the company said it could generate $3 billion of earnings in 2030, executives said.

“By 2040, with the right policy and strong business development, we think that number could easily be $13 billion. That would be a 15% CAGR from 2030 out to 2040,” Mikells said.

However, many moving and uncertain parts would have to fall in the right place. Executives acknowledged market and regulatory uncertainty as it eyes long-term growth opportunities.

“We’re going to pace these investments to minimize the downside at the same time that we’re establishing advantaged positions to maximize the upside potential,” Mikells said.

Exxon recognizes the need to move with the demands and needs of society, Woods said.

“There’s a lot of uncertainty and the path to transition is very unclear because it has to be made at a societal level,” he said. “No one company can drive the transition. No one country can drive it … You’ve got to maintain some level of optionality and flexibility.”

The pace of growth will vary with each opportunity set being driven by a different set of factors. For new materials, the qualification process impacts pace. CCS is a function of customer demand and how aggressive their decarbonization efforts are, Woods said. How quickly the tech sector wants to grow and decarbonize will drive data center energy and CCS needs.

“With lithium, we’ve got a challenge to make sure that it’s on the left-hand side of the cost of supply curve. So brand new technology, brand new approach,” Woods said. “We see huge potential here. We see a growth market not only for EVs, but in batteries in general. … Think of it as energy security opportunities in that space. But we’ve got to demonstrate that that technology applied with some of our capabilities positions us where we need to, and we're early in that process.”

The 45V tax credit will inform Exxon’s decisions when it comes to blue hydrogen, he added.

“At the end of the day, we don’t know exactly how all those will play out, but we see the real potential there,” Woods said. “We want to make sure we’re focused on those and have got a line of sight to how we progress those based on a set of assumptions. But then we’re constantly monitoring to see: Are those assumptions playing themselves out? Where do we need to potentially pull back? Where do we need to potentially lean in further? And that’s what we’re trying to do.”

(Source: Exxon Mobil)