Exxon Mobil Corporation (XOM), a U.S. oil and gas giant, stated that it has put a hold on its plans for the construction of the blue hydrogen facility in Baytown, TX, intended to be the largest of its kind, as customer demand for the same is currently weak. In 2022, XOM announced its plans to build a hydrogen production plant at the site of the refining and chemical complex in Baytown. The target was to produce 1 billion cubic feet per day (bcf/d) of blue hydrogen.
Blue hydrogen is a cleaner fuel that produces water when burned. ExxonMobil intended to produce hydrogen at the plant from natural gas and store the carbon dioxide generated during the process underground. However, this entails a greater cost compared to hydrogen produced without capturing the carbon dioxide in the process. ExxonMobil’s CEO stated that not enough customers are willing to pay the higher price.
The company has also mentioned that it may resume the project in the future if demand strengthens. Currently, the demand for blue hydrogen is weak due to the higher cost associated with it. Additionally, the economic uncertainty of Europe has further suppressed demand.
Per Reuters, XOM has also stated that the company has struggled to secure offtake agreements from customers, which are necessary to continue advancing the project. ExxonMobil has previously faced numerous delays and setbacks with the construction of the hydrogen production facility, which highlights the broader challenges faced by oil and gas companies as they shift toward lower-carbon businesses.
XOM’s Zacks Rank and Key Picks
XOM currently carries a Zacks Rank #3 (Hold).
Some top-ranked stocks from the energysector are Oceaneering International OII, Canadian Natural Resources Ltd. CNQ and FuelCell Energy FCEL. While Oceaneering and Canadian Natural Resources currently sport a Zacks Rank #1 (Strong Buy) each, FuelCell carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. The company is a leading provider of offshore equipment and technology solutions to the energy industry. OII’s proven ability to deliver innovative, integrated solutions supports ongoing client retention and new business opportunities, ensuring steady revenue growth.
Canadian Natural Resources is one of the largest independent energy companies in Canada engaged in the exploration, development and production of oil and natural gas. The company boasts a diversified portfolio of crude oil, natural gas, bitumen and synthetic crude oil. It has delivered 25 consecutive years of dividend increases, one of the longest streaks among global oil producers.
FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.
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Exxon Mobil Corporation (XOM): Free Stock Analysis Report Oceaneering International, Inc. (OII): Free Stock Analysis Report Canadian Natural Resources Limited (CNQ): Free Stock Analysis Report FuelCell Energy, Inc. (FCEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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