Chevron Corp., a U.S.-based oil and gas giant, is reportedly planning to construct a huge blue hydrogen and ammonia plant in Port Arthur, reported Zacks Equity Research.
Chevron has made necessary filings for tax abatements to support the construction of this plant under the Jobs, Energy, Technology and Innovation Act (JETI).
JETI was created with the passage of House Bill 5 (88th Legislature, Regular Session) to help Texas stay competitive by attracting new jobs and investment to the state.
The JETI program enables a company, school district and governor’s office to enter into an agreement for a 10-year school district maintenance and operations (M&O) tax appraised value limitation pursuant to statutorily mandated job creation and investment minimums.
The investment associated with this large-scale blue hydrogen and ammonia plant is nearly $5 billion.
Apart from tax benefits, Chevron is also seeking funding for the project through the HyVelocity Hub initiative. This initiative, which is federally funded, is expected to reduce the total Chevron Corporation investment in this low-carbon energy project.
Chevron’s development, named Project Labrador, is expected to start construction in 2027. The plant is slated to begin commercial operations in 2032.
The project could qualify for tax exemptions, provided the construction begins as per schedule.
Chevron is targeting the 10-year 45V clean hydrogen production tax credit, which has an expiration date of Jan. 1, 2028.
If the development of Project Labrador proceeds on time, it could meet the deadline to access this valuable incentive. The 45V clean hydrogen production tax credit should provide up to $3 per kilogram of clean hydrogen produced for 10 years.
An August 2023 McKinsey & Co. report titled “Unlocking Clean Hydrogen in the U.S. Gulf Coast” estimated approximately 11 million metric tons of blue hydrogen would be consumed by industrial users — refineries, petrochemical plants, ammonia producers and cement and steel manufacturers — while about 2.3 million metric tons would fuel ground transportation applications, reported the Engineering News-Record.
An additional 1.5 million metric tons is forecast for marine and aviation fuels, and about 1.6 million metric tons for power‑generation uses, including grid blending and long‑duration energy storage.
