ExxonMobil Increasing CCS, Hydrogen, Biofuels Investments

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Exxon Mobil Corporation is prioritizing carbon capture and storage (CCS), hydrogen, and low emission fuels rather than renewable energy like solar and wind, as it pursues its rigorous climate goals.

The largest U.S. oil producer has also made headway in driving down emissions despite a portfolio that remains dominated by hydrocarbons, Evaluate Energy data shows.

Scope 1 GHG emissions dropped from 109 million tonnes of CO2e in 2016 to 96 million tonnes in 2021, though it has not always followed a straight, downward trajectory.

Exxon also reduced Scope 1 and 2 emissions intensity in operated assets by more than 10 per cent, it noted in its 2023 Advancing Climate Solutions Progress Report, resulting in an approximately 15 per cent absolute reduction through year-end 2022 vs. 2016 levels.

Methane emissions intensity on operated assets, and absolute methane emissions, have been cut by more than 50 per cent over the same period.

After issuing its first sustainability report over 20 years ago, Exxon is stepping up the pace of activity.

The company said it plans to invest $17 billion on lower-emission initiatives between 2022 and 2027 — a 15 per cent spending hike from a year ago — as CEO Darren Woods sets about reshaping the business as part of a broad, long-term decarbonization effort.

That includes tripling the size of the Low Carbon Solutions unit, pointing at a major structural realignment to come over the next decades.

In forward modelling, capex on low carbon projects will broadly match that of traditional oil and gas by 2030, the company estimates, and eventually dominate spending by 2040.

Carbon capture & storage

The company’s Low Carbon Solutions unit has singled out CCS as a major thrust of this investment. It is an area in which Exxon already has decades of experience.

While CO2 captured for storage has been stable for years, reaching seven million metric tonnes per annum in 2021, mainly from the LaBarge facility in Wyoming, this is expected to accelerate with projects such as Pecan Island in Louisiana.

Current CO2 storage capacity is closer to nine million tonnes, according to information on the Low Carbon Solutions website.

A flurry of new initiatives is taking shape, including plans to expand LaBarge by up to one million more tonnes a year, starting in 2025.

Exxon is also helping the industrial sector to decarbonize, signing contracts with major partners such as Linde, and most recently steel producer Nucor Corporation, for assistance with CO2 storage.

The project with industrial gases group Linde will capture, transport, and permanently store up to 2.2 million tonnes of CO2 a year from Linde’s new clean hydrogen production facility in Beaumont, Texas, with operations starting around 2025.

The Nucor project, expected to launch in 2026, means Exxon has now agreed to transport and store a total volume of five million tonnes of CO2 per year for third-party customers.

Hydrogen investment

Hydrogen is another target area for Exxon, which, unlike many of its peers, is steering away from big renewable energy investments in solar and wind power.

In January, it awarded front-end engineering and design work to Technip Energies on what will be the world's largest low-carbon hydrogen facility at planned start-up in 2027-2028.

The hydrogen, ammonia and CCS plant in Baytown, Texas, is expected to produce one billion cubic feet of hydrogen a day, with a final investment decision expected by 2024.

More than 98 per cent of associated CO2 produced by the facility — around seven million tonnes per year — is expected to be captured and permanently stored.

The CCS network developed for the project will also be made available for use by other third-party CO2 emitters in the area.

It reflects a broad aim to a forge a new business model making money helping others to decarbonize their operations and reduce greenhouse gas emissions.

Exxon’s own targets are to achieve net-zero operated Scope 1 and 2 GHG emissions by 2050 — and by 2030 for its unconventional Permian Basin operated assets.

It is working to electrify operations with lower-emission power, including wind, solar and natural gas, as well as expand methane detection and mitigation, eliminate routine flaring, upgrade equipment, and employ high-quality emissions offsets, including nature-based solutions.

At the same time, Exxon will be tested in keeping a lid on emissions with production from major new upstream projects coming onstream.

These include the Uaru development in Guyana, which will add 250,000 boe/d of gross capacity in 2026.

Exxon’s overarching strategy is that all energy sources will remain important in the coming decades, with oil and gas still accounting for 55 per cent of the world’s energy mix in 2050.

But it hopes its new focus areas can become key pillars of growth in the years ahead as the hydrogen sector and carbon markets continue to evolve.

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