Chevron mulls US$5 bn blue ammonia plant in Texas hydrogen hub

US oil/gas firm Chevron is intending to build a massive US$5 billion low-carbon hydrogen and ammonia plant in Port Arthur, Texas, and has made the necessary filings for tax abatements to support the construction of this plant.

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 CVX investment in this low-carbon energy project.

Chevron’s Project Labrador development is expected to start construction in 2027. The plant is slated to begin commercial operations in 2032.

Chevron is targeting the 10-year 45V clean hydrogen production tax credit, which has an expiration date of 1 Jan 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 US$3 per kilogram of clean hydrogen produced for ten years.

The construction of this blue hydrogen and ammonia plant in Port Arthur underscores Chevron’s commitment to low-carbon energy projects in the US.

CVX has made the required filings that enable it to utilize the tax incentives to reduce the costs associated with the construction of this low-carbon hydrogen facility. By leveraging federal funding through the HyVelocity Hub and available tax policy benefits, Chevron aims to improve the financial feasibility of Project Labrador.