- Head of low-carbon business touts South Korea deal and opportunities in Japan
According to Nikkei Asia article published on February 23, 2023, Exxon Mobil will export ammonia to Asia, Dan Ammann, the head of its low-carbon solutions business, told Nikkei, anticipating demand for the clean-burning fuel from Japan and South Korea.
The oil supermajor plans to start up what Ammann said would be the world's largest low-carbon hydrogen production facility as early as 2027 near Houston, Texas. It awarded the early design contract for the plant last month, and plans to make a final investment decision next year.
"We think hydrogen is going to play a critical role in decarbonizing heavy industry," he said. Ammann, who joined Exxon last year, is a former president of General Motors, where he helped oversee the automaker's turnaround. He was an unusual outside pick at Exxon, which has many company veterans in top management.
The Texas facility will make "blue" hydrogen, extracting it from natural gas and capturing carbon dioxide emitted in the process. This will then be converted to easier-to-transport ammonia, which can be shipped to Asia on chemical tankers.
Ammonia could be an effective way to reduce greenhouse gas emissions in Asia, where coal is still widely used, as it can be burned alongside the more carbon-intensive fuel in boilers.
SK Materials, part of the SK Group conglomerate, said Wednesday it had signed a basic agreement on purchasing "blue" ammonia from Exxon.
The plan is to start shipping ammonia around 2027 or 2028, to be blended with coal for electricity generation, according to Ammann. Although he gave no details about the scale or duration of the agreement, he said he expects long-term agreements like those in the LNG business.
"Essentially we're witnessing the creation of a new energy value chain here with this very first off-take arrangement" with SK, Ammann said.
Amman, who recently visited Japan to meet with potential customers, sees "a very similar opportunity, maybe even larger" there.
"The overall objectives of where the Japanese government and industry are working together is consistent with the kinds of projects that we're building," he said. The Japanese government's energy plan calls for generating 1% of the country's power from hydrogen and ammonia in 2030.
Power companies like JERA look to blend ammonia with coal as part of a push toward net-zero emissions, and IHI is partnering with General Electric to develop turbines that can run entirely on ammonia. Japanese trading houses are pursuing opportunities in North America to develop ammonia projects as well.
While Europe has led the way on investing in shrinking the energy sector's carbon footprint, U.S. players are starting work to catch up.
Exxon's plan for the five years through fiscal 2027 calls for spending $17 billion on lower-emission initiatives, with 40% going toward building new profit drivers such as hydrogen, carbon capture and biofuels, and the remainder invested in cutting its own emissions.
The company is teaming with Mitsubishi Heavy Industries to develop carbon capture and storage technology, aiming to bring down the cost and market it to other companies. Mitsubishi Heavy has designed the carbon capture equipment at a coal-fired power plant in Texas.
"We wanted to partner with a leading capture technology provider that has broad application," Ammann said.
As emissions abatement costs go down, rising carbon prices along with policies like the expanded subsidies for carbon capture and storage in the U.S.'s Inflation Reduction Act are "going to significantly expand the market," he said.
