Plans for Future Hydrogen Capacity Reach Lowest Level in Years

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial gas companies providing hydrogen over the fence to petroleum refiners invested billions in hydrogen capacity additions during the last decade to support refinery expansions and hydrotreater unit additions. This year, two major projects are expected to come online, including a grassroot plant by Air Products and Chemicals Incorporated (NYSE:APD) (Allentown, Pennsylvania) in Baton Rouge, Louisiana, and a new unit addition planned by Praxair Incorporated (NYSE:PX) (Danbury, Connecticut) in Whiting, Indiana. Each of these projects equals more than 100 million standard cubic feet per day of new capacity. Air Products is hopeful that commercial operations of the new Baton Rouge plant will begin within a few weeks.

Recently, there were as many as eight of these major expansions under way at one time. As economic constraints began to stack up over the past two years, so did the momentum for new capacity and the prospects of future demand. Despite the very uncertain picture surrounding demand from the domestic refining industry, there are still four very large future hydrogen capacity projects planned to begin during the next two years, with a total investment value of more than $600 million.

Two of those projects could begin construction later this year. Air Liquide Industrial U.S. LP (Houston, Texas) recently began site work for a new hydrogen unit at its Pasadena, Texas, plant site, with a capacity estimated at 120 million standard cubic feet per day. Civil construction is being performed by Beard Construction Group LLC (Port Allen, Louisiana). Air Products also recently began site work for a planned grassroot hydrogen plant in Detroit, Michigan. Technip Incorporated (Claremont, California) provided engineering for the project as part of its long-term alliance for developing hydrogen projects, and John E. Green Company (Highland Park, Michigan) will provide mechanical construction support, which is expected to begin this summer.

Chemical Industry investments have slowed significantly in the past two recessionary years, and the industrial gases segment of the industry has fared better than most others with only a marginal decrease in total investments. With overall chemical industry spending expected to continue strengthening in 2011 and 2012, the expectation is that demand is also improving, and this could equal a growing number of future capacity projects being announced later in the year.

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