Source: PaxForex Premium Analytics Portal, Fundamental Insight
Hydrogen holds vast potential as a low-carbon fuel, addressing climate change while fulfilling increasing global energy demands. Deloitte estimates that the green hydrogen market could grow to $1.4 trillion by 2050, with the overall low-carbon market for molecules possibly reaching $6 trillion by then.
ExxonMobil aims to seize this significant market opportunity. The energy giant is developing the world's largest low-carbon hydrogen project, part of its strategy to meet the rising demand for cleaner energy.
Recently, ExxonMobil announced a partnership with Air Liquide to support its low-carbon hydrogen and ammonia project in Baytown, Texas. This collaboration will enable Exxon to distribute low-carbon hydrogen via Air Liquide's existing pipeline network. Air Liquide will also build and operate four large modular air separation units to supply oxygen and nitrogen, primarily using low-carbon electricity.
ExxonMobil's planned hydrogen production facility is set to be the largest in the world, capable of producing 1 billion cubic feet of low-carbon hydrogen daily, enough to power 1.5 million homes. It will also produce over 1 million tons of ammonia annually, capturing more than 98% of the project's emissions. Through this partnership, Exxon can supply low-carbon hydrogen to Gulf Coast markets, aiding industrial customers in reducing their carbon footprint by replacing fossil fuels.
Dan Ammann, President of ExxonMobil's low-carbon solutions business, highlighted the growing momentum for the world's largest low-carbon hydrogen project and the emerging hydrogen market. He noted that the partnership with Air Liquide enhances the Baytown project by facilitating hydrogen distribution through existing networks and securing essential feedstocks.
ExxonMobil plans to make a final investment decision on the Baytown project this year, with the facility potentially becoming operational by 2028. The project requires government approval and supportive policies to ensure a sufficient return on investment. This initiative represents nearly 10% of the Biden administration's clean hydrogen goal.
The Baytown facility is one of many low-carbon energy projects ExxonMobil is pursuing, with plans to invest over $20 billion from 2022 to 2027. This is in addition to the $5 billion spent acquiring Denbury Resources for its carbon dioxide infrastructure and expertise.
ExxonMobil is taking a comprehensive approach to low-carbon energy, investing in hydrogen, carbon capture and storage, lithium, and renewable fuels.
The company has partnered with CF Industries, Linde, and Nucor to develop carbon capture and storage infrastructure to reduce carbon emissions. Exxon anticipates its first projects will be operational by 2026, capturing and storing 5 million metric tons of carbon dioxide annually for these three customers, equivalent to replacing 2 million gas-powered cars with electric vehicles (EVs).
ExxonMobil also plans to become a leading supplier of lithium for EV batteries. It intends to extract lithium from brine reservoirs on land it controls in southern Arkansas, aiming to produce enough lithium by 2030 to meet the needs of 1 million EVs annually. The company has recently agreed to supply up to 100,000 metric tons of lithium to SK On, a prominent global EV manufacturer.
These investments in the low-carbon energy sector significantly expand ExxonMobil's market opportunities. The company estimates that the market for molecules (carbon capture, hydrogen, and biofuels) could reach $6 trillion by 2050.
ExxonMobil is fully embracing the transition to low-carbon energy, planning to invest billions over the next few years to develop several low-carbon energy platforms. The company is making progress towards constructing a massive hydrogen production facility to tap into the $1.4 trillion market opportunity. This is part of its broader strategy to capture a share of the larger $6 trillion future market for low-carbon molecules. These investments could yield significant returns for investors, ensuring ExxonMobil's growth even as demand for fossil fuels potentially declines in the future.
As long as the price is above 115.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 118.46
- Take Profit 1: 123.00
- Take Profit 2: 127.00
Alternative scenario:
If the 115.00 level is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 115.00
- Take Profit 1: 112.00
- Take Profit 2: 109.00
