< Previous150 SEPTEMBER 2024 S I T E S EL E C T I O N Could Texas become an epicenter for U.S. hydrogen production? Ideal ingredients — location, workforce, availability of clean energy resources, geological storage potential and over 900 miles of installed hydrogen pipelines — present a promising recipe for commercial success. ExxonMobil has operated on 3,400 acres outside of Houston in Baytown for more than 100 years. The site has become one of the globe’s largest integrated advanced petroleum and petrochemical complexes. With sustainability at the forefront of corporate decision- making, the company’s Texas operations will soon welcome a new hydrogen production plant, representative of the world’s largest carbon capture and storage project to date. “It’s exciting but expected, given ExxonMobil’s industry leadership and dominance over time,” says Baytown-West Chambers County Economic Development Foundation President and CEO B.J. Simon. In April 2023, the U.S. Department of Energy announced a $34.15 million award to engineering company John Cockerill for the construction of a new electrolyzer gigafactory in Baytown, producing technology that uses electricity to split water into hydrogen and oxygen. “We anticipate we’ll see what we’ve always seen vis- à-vis the economic impact and multiplicative cascading e ects of a project of this magnitude and scale,” says Simon. “In addition to the Blue H2 Project, we have a growing cluster of hydrogen- related manufacturers locating in the Baytown – Chambers County region.” Unlike many green hydrogen projects in the works globally — which use renewable energy to power operations — this blue hydrogen facility will use natural gas. ExxonMobil states that the project is anticipated to produce up to 1 billion cubic feet of hydrogen per day and store up to 10 million metric tons of carbon dioxide annually. In order to meet oxygen demand, ExxonMobil selected Air Liquide to establish a new low-carbon industrial gas platform. With $850 million in hand, the company has made its largest industrial investment in history to construct four Large Modular Air separation units at the Baytown site. The platform will produce 9,000 metric tons of oxygen and 6,500 metric tons of nitrogen per day for ExxonMobil, in addition to gases such as argon, krypton and xenon to be made available to Air Liquide customers. “This partnership with Air Liquide further strengthens our Baytown project by enabling hydrogen distribution through existing networks and securing key feedstocks,” said ExxonMobil Low Carbon Solutions President Dan Ammann. As of press time, ExxonMobil has not disclosed its fi nal investment decision. — Alexis Elmore BAYTOWN GOES FOR BLUE HYDROGEN ExxonMobil’s Baytown site will soon hold the world’s largest low-carbon hydrogen project to date. Photo courtesy of ExxonMobilFor its part, CenterPoint Energy said it brought in over , utility workers from outside Houston to help restore power to million customers, but could not do so until it was safe to send them in. CEO Jason Wells told reporters that over , utility poles were damaged during the storm and that more than , trees had to be removed from power lines. Following the governor’s letter, CenterPoint Energy issued this response: “We have work underway to address the governor’s requests and are committed to collaborating with the state, local government, regulators and community leaders to increase the resiliency of the electric grid. is work is integral to ensuring that we are creating and sustaining an environment in Texas where people want to live and build their businesses.” e company announced on July that it had restored power to nearly % of impacted customers and remained on track to restore power to all customers by July . e company also released a three-pronged strategy to mitigate outages next time. e plan includes resiliency investments; improved customer communications; and closer alliances with various governmental agencies. Perryman estimates that total losses nationwide due to Beryl were at least $ billion, with about $ billion of that economic loss coming in Texas alone. For now, Texas lawmakers are surging full speed ahead to fund new power plants. ey recently passed legislation authorizing $ billion to fund low- interest loans to fi rms that plan to build gas-fi red power plants. Earlier this year, Gov. Abbott said that for Texas to keep up with growing demand for power, the state would need to grow its supply of electricity by as much as % each year. e problem is that it takes three to fi ve years to plan, permit and build new transmission lines in Texas, and that is about half the time needed in most places in the U.S. “With current expectations, these (Continued from page 145) e impetus for STEP Ahead is the unprecedented growth in Southeast Texas.” — Eliecer Viamontes, President and CEO, Entergy Texas e impetus for STEP S I T E S E L E C T I O N SEPTEMBER 2024 153 projects must receive priority status,” says Perryman. “ e crypto and data center users are also working to limit consumption in peak hours while running continuously at other times, which can facilitate the situation because Texas does not have a capacity market in the deregulated areas and thus generators only receive revenue when they sell power. Large users that are active most of the time can create a market incentive to develop new generation resources.” Entergy Texas, which operates in the Midcontinent Independent System Operator (MISO) power grid and is not part of ERCOT, released its STEP Ahead grid modernization plan on July . e plan includes a $ million investment in the Southeast Texas power grid. Entergy has also proposed the construction of two new power plants in Southeast Texas: $. billion to build the Legend Power Station, a -megawatt combined-cycle combustion turbine facility in Port Arthur; and a $-million investment to build a -megawatt combustion turbine plant near Cleveland, Texas, on the northern outskirts of metro Houston. Eliecer Viamontes, president and CEO of Entergy Texas, tells Site Selection that “the impetus for STEP Ahead is the unprecedented growth in Southeast Texas. We have one of the largest industrial corridors in the nation, and more large projects are being added to the region. is leads to the need for additional generating capacity. ere is a need for % additional capacity in four e Texas economy and its growing population require increases in electric generation and transmission capacity well beyond what was expected even a few years ago.” — Ray Perryman, Economist, Waco e Texas economy projects must receive priority status,” says Perryman. “ e crypto and data center users are also working to limit 154 SEPTEMBER 2024 S I T E S EL E C T I O N more years. We must stay a step ahead of that growth because we produce the electrons needed to serve it. We saw Hurricane Beryl affect our territory. It highlights the need to add capacity. That is what STEP Ahead is all about.” Viamontes says that Entergy selected its locations for new power plants based upon where the increased demand is originating. Most of the new demand, he says, is coming from the Golden Triangle — an area of southeast Texas between Beaumont, Port Arthur and Orange. He adds that Entergy chose natural gas-fueled power plants because his company is “technology agnostic. Energy needs to be affordable, reliable and sustainable. It is about helping our customers achieve their goals.” Perryman: The Time to Invest is Now Ray Perryman says the state has no choice but to supply more power: “Texas no doubt faces a daunting task, but the scope of what will be required has been acknowledged and work is underway to meet the need.” Newmark’s Susan Arledge says that only an “all of the above” strategy will work in Texas. “Where the power is coming from is a major concern for everybody,” she says. “Texas is lucky in that we have many providers. We are not going to be able to meet demand the way we are currently generating power. Texas has stood alone because we have gas, wind, coal, nuclear and solar. We have been able to generate more wind energy than most. We are going to have to increase how that energy is generated and transmitted.” Arledge adds, “The number one conversation I have with a large power user now is about power. Right now, if I am on a site tour with a client, we want the utility provider on site to explain how they will deliver power. We want to know what is realistic and how much time it will take. That is impacting site selection right up front from day one.” With a 36-MW to 50-MW substation costing $10 million to build, and transmission lines costing $2 million per mile, lead times are more critical now than ever. “I have seen projects delayed two to three years solely because of the power issue,” says Arledge. “Getting power to remote sites can be expensive. There will be companies that will be unable to open a plant because they cannot get power.” 158 SEPTEMBER 2024 S I T E S EL E C T I O N GREATER PHOENIX INTELLIGENCE REPORT: INFRASTRUCTURE You know a state commerce department is doing something right when it achieves ,% of its goal for capital investment from growing companies. at’s what the Arizona Commerce Authority reported on the fi nal day of June , as corporate end users during the fi scal year committed to more than $ billion in expansions that will create more than , jobs. “Since ,” the Authority stated, “Arizona has successfully landed , companies that have committed to creating more than , projected new Arizona jobs and investing over $ billion in new capital statewide.” e Greater Phoenix metro area can take credit for the lion’s share of that success, as one big project after another — led by the resurgent American semiconductor sector — lands in such communities as Mesa, Buckeye, Scottsdale, Tempe, Goodyear and the City of Phoenix itself. Since , says the Commerce Authority, “Arizona has won more than semiconductor expansions representing over $ billion in capital investment and over , direct industry jobs.” Beyond the tens of billions of dollars already being invested by Intel and TSMC, among the most recent is Amkor’s commitment to invest $ billion and create , jobs at an advanced packaging and testing facility in Peoria. at’s the same niche no less than the U.S. Department of State has identifi ed as an area in which Greater Phoenix and Arizona State University can off er workforce development expertise to near-shore and off shore allies as the country knits together a complete semiconductor supply chain. But there is already quite a cluster right there in the Valley. “We’ve had suppliers come to Arizona since ,” says Greater Phoenix Economic Council President and CEO Chris Camacho, noting that a regional delegation just visited TSMC’s home country of Taiwan and met with dozens of suppliers there looking at the U.S. market. “People think this happened overnight,” Camacho says, “but our work intentionally started in around this semiconductor ecosystem.” It’s been strong enough that the area, along with Texas, was evaluated by Micron for the $ billion fab investment that ultimately went to New York. But even that runner-up fi nish was a net positive, he says. “ e scale of that investment, the fact they are in that memory and logic space and they’re a foundry — they would have competed head to head with Laying the Foundation for Innovation by ADAM BRUNS adam.bruns@siteselection.com Infrastructure such as the expanding Valley Metro transit system and steady expansion of roads is integral to Greater Phoenix’s enviable commute times and to positive experiences at the city’s impressive string of major sporting events. Photos courtesy of Valley MetroNext >