ExxonMobil has halted plans to build what would have been one of the world’s largest hydrogen production facilities, citing weak customer demand and uncertain market conditions. CEO Darren Woods said that despite years of planning, the company has been unable to secure enough long-term off-take commitments to justify moving forward.

Announced in 2022, the project was intended for Exxon’s Baytown, Texas refining and chemical complex and was designed to produce 1 billion cubic feet per day of blue hydrogen—hydrogen made from natural gas with carbon emissions captured and stored underground. However, Woods said potential customers have been reluctant to adopt hydrogen because its cost remains significantly higher than competing fuels, particularly when carbon capture is included. Economic headwinds, including an industrial slowdown and uncertainty in Europe, have further reduced demand.

The pause highlights a broader slowdown in oil and gas companies’ efforts to invest in lower-carbon technologies, many of which are struggling to become commercially viable. The shift also comes as U.S. President Donald Trump has cut federal support for green initiatives in favor of fossil fuels.

Exxon and its partners—including the Abu Dhabi National Oil Company—have already invested about $500 million in the project, which is expected to cost several billion dollars overall. While Exxon says it can restart development once market demand improves, the company has offered no timeline.

Despite the freeze, Woods said Exxon still believes large-scale hydrogen facilities will ultimately be needed and that the Baytown project remains well-positioned to serve that future demand.