The search for a solution to our energy crisis is in full swing. It is no wonder that a billion-dollar partnership was recently formed. We are talking about the Abu Dhabi state oil company (Adnoc) and the American giant ExxonMobil, whose focus is to change the low-carbon energy map completely. This partnership is intended not only to innovate in the energy sector but also to impact the geopolitical scenario because the search for new solutions has been putting a lot of pressure on countries to seek alternatives to conventional oil.
The new oil endeavor: Baytown Project
The name given to this billion-dollar partnership is: Baytown Project. It is so promising that it could even become the largest low-emission hydrogen plant in the world. Experts are designing it to produce up to 1 billion cubic feet per day of blue hydrogen, which is nothing more than a type of hydrogen made from natural gas, but with CO₂ capture.
And that is the key point of this partnership: it is this gas, which is buried underground in the American state, that gives rise to the fuel nicknamed by many as “the new oil”. What is the difference between traditional oil as we know it? Well, in it, hydrogen is not extracted as a dark liquid that gushes out; in green, it is refined with precision and technology, silently, and has the potential to supply refineries in Europe and power plants in Japan and Korea.
The goal of this partnership is to remove up to 98% of the carbon emissions generated in the process, which could also generate the production of 1 million tons of low-carbon ammonia annually. Why is this important? Well, ammonia is also a promising commodity for the global energy transition.
Even though it is promising, is the project at risk?
And from which American state will this gas be extracted? Well, through billion-dollar investments, the United Arab Emirates has already sunk stakes in the heart of Texas, and wants to take a 35% stake in this entire project. And that is exactly where a counterpoint to this project comes into play, since its future still depends on a political variable: subsidies from the American government.
Even without any clear guarantee about tax incentives for blue hydrogen plants in the US, Adnoc agreed to join the project. In addition, ExxonMobil even threatened to abandon the project in early 2024, when the preliminary guidelines from the US Treasury did not mention blue hydrogen (another different color of hydrogen, as in this discovery) as eligible for tax credits. However, this scenario may change after the new American election.
What does this project mean for the energy crisis?
Even with some doubts about whether the project will go ahead or not, this program means a lot to our energy crisis. This is because, in addition to being a commercial transaction, the agreement represents a milestone in the internationalization of transitional energies. The company Adnoc aims to achieve zero emissions by 2045, so it can gain a strategic asset in the United States. Exxon ends up further reinforcing its position as a global leader in carbon capture technologies and the production of cleaner, safer fuels.
Oh! And in addition to the benefits for these companies, the project foresees local benefits for the Texan economy, such as job creation, regional development, and support for nearby communities. So, if the project really goes ahead, the goal is to begin operations in 2029. Who knows, this partnership could become the most valuable in the world, even surpassing the recent alliance between China and Russia, which was announced as the most important of the century.
