Producers of Industrial Gases Continue to Invest in New Capacity

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Researched by Industrial Info Resources (Sugar Land, Texas). Producers of industrial gases have remained profitable more consistently than most any single segment of the chemical processing industry (CPI) in recent years proving it is less susceptible to the ups, downs and extremes of feedstock and energy costs than most of its industry peers. Industrial Info is currently tracking over $600 million in capital and maintenance project activity planned to begin construction during 2007 in this segment of the CPI, up sharply from an estimated $319 million in construction activity started last year. Looking ahead to next year, another $227 million in project activity has already been identified not including several rumored major unit additions that could increase total spending dramatically.

Click on the image at right to view a breakdown of North American industrial gases project spending by year.

A significant portion of this increased activity is the direct result of demand for hydrogen from the petroleum refining industry to support hydrotreater projects related to clean fuel initiatives. Industrial Info is tracking hydrotreater projects valued at more than $1.6 billion planned to begin construction this year in North America. Overall investments in hydrogen capacity will equal almost half of the total spending for the industry segment while representing only a third of the total project activity with 14 capital and maintenance projects. The largest of this activity being a grassroot plant planned by Praxair Incorporated (NYSE:PX) to be located in Richmond, California; a major plant addition in Rodeo, California by Air Liquide America Corporation; and a major No. 3 unit addition in Port Arthur, Texas planned by Air Products & Chemicals Incorporated (NYSE:APD).

The traditional gases of this industry segment oxygen, nitrogen, carbon dioxide and others are also experiencing consistent growth including the construction of several grassroot plants and major unit additions. Growth in these products isn’t limited to just the big player in this market. Aspen Air US Corporation (Calgary, Alberta), a relative newcomer to this market, has recently began construction of its first commercial scale, 150 ton per day air separation plant in Billings, Montana. At least five other grassroot plants are planned to begin construction this year with a combined value of nearly $165 million.

Industrial gases play a key role in the production process for thousands of chemicals and with the current level of confidence in the CPI exceeding 70%, the momentum for industrial gases producers to continue their trend of investments appears to be strong. Confidence in the industry is something that Industrial Info monitors routinely by measuring the number of active and completed projects against cancelled project activity over a five-year span to determine the level of confidence in future projects maturing and moving forward, also referred to at the Confidence Factor. By continually updating the progress or lack of progress for each project included in the North American Project Database, Industrial Info maintains the ability to anticipate spending by region and even within specific industry segments.

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Industrial Info Resources (IIR) provides marketing communication services ranging from industrial database solutions to market forecasting, custom analytics, and specialty promotions that support high-level image campaigns.