Houston, Texas – November 21, 2025 – Exxon Mobil (XOM) has suspended plans to build one of the world’s largest hydrogen production facilities, citing weak customer demand, CEO Darren Woods told Reuters on Friday. The decision reflects broader challenges facing traditional oil and gas companies attempting to transition to clean energy solutions, where many projects are struggling to secure committed buyers or turn a profit.

The planned hydrogen facility, part of Exxon’s refining and chemical complex in Baytown, Texas, was originally announced in 2022. The project aimed to produce 1 billion cubic feet per day of blue hydrogen, a low-carbon fuel generated from natural gas with carbon dioxide captured and stored underground. The plant is designed to provide a cleaner alternative to fossil fuels, producing water rather than greenhouse gases when burned.

Reasons for the Project Pause

According to Woods, the suspension was driven primarily by insufficient market demand. Potential industrial customers have been reluctant to commit to contracts due to the higher costs associated with blue hydrogen compared to conventional fuels. Factors contributing to the slow uptake include:

• Higher production costs for hydrogen with carbon capture compared to traditional hydrogen
• Industrial slowdown and economic uncertainty in Europe
• Limited incentives for companies to pay a premium for clean hydrogen

“There’s been a continued challenge to establish committed customers who are willing to provide contracts for off-take,” Woods said.

Exxon and its partners, including Abu Dhabi National Oil Company (ADNOC), have already invested approximately $500 million into the project, which is estimated to cost several billion dollars once completed. Woods did not provide an exact total cost for the facility.

Clean Energy Transition Challenges

The pause highlights broader energy transition hurdles for major oil companies. Many initiatives in clean fuels and hydrogen have been delayed or downsized due to financial, regulatory, and market challenges. Hydrogen, particularly blue hydrogen with carbon capture, remains a promising technology, but it is more expensive than traditional energy sources, slowing adoption by commercial customers.

President Donald Trump’s previous policy moves, which withdrew funding for certain green initiatives in favor of traditional fossil fuel development, also contributed to slower market incentives for clean energy projects in the U.S.

Future Prospects

Exxon maintains that the project could resume when market demand strengthens, though a timeline for restarting remains unclear. Woods emphasized the strategic importance of the facility:

“We remain convinced that one, it will be needed, and two, this will be an advantaged project to meet that need.”

The Baytown hydrogen plant, once operational, could play a significant role in meeting future low-carbon energy demand, supporting industrial decarbonization, and contributing to global efforts to reduce carbon emissions.