Chevron pulls out of Utah hydrogen hub backed by DOE

Chevron USA Inc. is pulling out of a renewable-powered hydrogen project in Delta, Utah, just weeks after the U.S. Energy Department issued a $504.4 million loan guarantee for the project, dubbed the "world's largest green hydrogen hub."

The Chevron Corp. subsidiary said in September 2021 it would acquire an equity interest in the Advanced Clean Energy Storage, or ACES, project. A few days later, Chevron unveiled a broader strategy to spend $10 billion through 2028 in ventures to reduce greenhouse gas emissions, including renewable fuels, carbon capture and hydrogen projects.

But the company is walking back its plan to acquire a stake in ACES, Chevron confirmed to S&P Global Commodity Insights on June 23.

Chevron said in an emailed statement that "commercial agreements must meet certain thresholds" before its low-carbon business opportunities can proceed.

"Unfortunately, our opportunity to acquire an equity interest in ACES Delta LLC no longer meets our requirements," a spokesperson said. "We continue to explore hydrogen opportunities — including in the western United States where we have established an early and growing business — and remain committed to identifying and pursuing lower carbon solutions and providing affordable, reliable, ever-cleaner energy."

ACES, a collaboration of Mitsubishi Power Americas Inc., Magnum Development, LLC, Haddington Ventures LLC and Black & Veatch Holding Co., aims to produce hydrogen using 220 MW of electrolyzer machines and store it in two underground salt caverns.

The clean-burning gas will be used as a feedstock for industry, transportation and power generation, including the Intermountain power station. There, the hydrogen will be converted into electricity serving municipal utilities in Utah and California, including the Los Angeles Department of Water and Power California.

"We expect this opportunity to generate attractive returns and to provide cost-effective entry into a scalable hydrogen production platform with existing and future demand sources," Jeff Gustavson, president of the company's Chevron New Energies division, said during a September 2021 call.

In May, Chevron confirmed it had put another of its low-emissions projects on hold. The company withdrew its permit application at the U.S. Environmental Protection Agency for a carbon capture and storage facility in Mendota, Calif.

Chevron's emissions-reduction strategy differs from that of its European oil and gas peers in not including wind and solar power generation projects. The company is instead focusing on "managing molecules," Chevron CEO Michael Wirth said recently.

But investment in Big Oil may be risky as companies bet on unproven technologies like carbon capture, according to the Carbon Tracker Initiative, a London-based think tank.

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