Chemical Profile Hydrogen

2003/02/24

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HYDROGEN   February 24, 2003

PRODUCER

CAPACITY*

Merchant Cryogenic Liquid Hydrogen
Air Products, New Orleans, La.

26,800

Air Products, Pace, Fla.

11,500

Air Products, Sacramento, Calif.

2,300

Air Products, Sarnia, Ontario, Canada

11,500

BOC, Magog, Quebec, Canada

5,900

HydrogenAl, Becancour, Quebec, Canada

4,200

Praxair, East Chicago, Ind.

11,500

Praxair, McIntosh, Ala.

11,500

Praxair, Niagara Falls, N.Y.

15,000

Praxair, Ontario, Calif.

8,500

Total Merchant Cryogenic Liquid

108,700

Merchant Compressed Hydrogen Gas

Air Liquide, Dallas, Tex.

830

Air Liquide, Freeport, Tex.

15,000

Air Liquide, Honolulu, Hawaii

7

Air Liquide, Lake Charles, La.

50

Air Liquide, Odessa, Tex.

165

Air Liquide, Portland, Ore.

200

Air Liquide Texas Pipeline:
     Corpus Christi, Tex.

50,000

     Ingleside, Tex. (2 units)

700

     LaPorte, Tex.

1,000

Air Products, Butler, Ind.

1,800

Air Products, Carson, Calif.

100,000

Air Products, Cincinnati, Ohio

2,300

Air Products, Delaware City, Del.

1,500

Air Products, Gallatin, Tenn.

750

Air Products, Hannibal, Mo.

960

Air Products, Martinez, Calif. (2 units)

125,000

Air Products, Midland, Mich.

750

Air Products, New Orleans, La.

60,000

Air Products, Port Arthur, Tex.

100,000

Air Products, South Charleston, W.Va.

3,600

Air Products, Tuscola, Ill.

750

Air Products, Wilmington Calif. (2 units)

160,000

Air Products Louisiana Pipeline:
     Convent, La.

N/A

     Geismar, La.

35,000

     Plaquemine, La.

30,000

     Taft, La.

21,000

Air Products Texas Pipeline:

     Baytown, Tex.

12,000

     Clear Lake, Tex.

27,000

     LaPorte, Tex. (2 units)

52,000

     Mont Belvieu, Tex.

29,000

     Pasadena, Tex.

80,000

BOC, Asbestos, Quebec, Canada

6,100

BOC, Clear Lake, Tex.

N/A

BOC, Crawfordsville, Ind.

1,080

BOC, Lima, Ohio

13,000

BOC, New Castle, Del.

1,500

BOC, Weirton, W.Va.

1,080

Brown Industries, Bradley, Ill.

150

Brown Industries, Conway, Kan.

190

Brown Industries, Salina, Kan.

120

Equistar, Channelview, Tex.

80,000

Gaspro Airco, Honolulu, Hawaii

7

General Hydrogen, Natrium, W.Va.

200

Holox, Augusta, Ga.

400

Industrial Gas Products, Sauget, Ill.

1,500

Javelina, Corpus Christi, Tex.

35,000

Jupiter Chemicals, Westlake, La.

35,000

Lagus, Decatur, Ala. (2 units)

10,000

MG Industries, Kalama, Wash.

290

MG Industries, Rockport, Ind.

720

MG Industries, St. Marys, Pa.

290

Praxair, Barberton, Ohio

N/A

Praxair, Belle, W.Va.

3,000

Praxair, Belvedere, N.J.

430

Praxair, Butte, Mont.

290

Praxair, Deepwater, N.J.

6,000

Praxair, Escorse, Mich.

1,440

Praxair, Fairless Hills, Pa.

1,920

Praxair, Geismar, La. (2 units)

95,000

Praxair, Lake Charles, La. (3 units)

126,000

Praxair, Norcross, Ga. (2 units)

3,980

Praxair, Seymour, Ind.

760

Praxair, Westlake, La..

35,000

Praxair, West Leechburg, Pa.

1,920

Praxair, Whiting, Ind.

4,800

Praxair Texas Pipeline:
     Channelview, Tex.

40,000

     LaPorte, Tex.

25,000

     Mont Belvieu, Tex.

29,000

     Texas City, Tex. (3 units)

75,400

Prime Gas, Delaware City, Del.

200

Rohm and Haas, Deer Park, Tex.

N/A

T&P Syngas Supply, Texas City, Tex.

32,400

Total Merchant Compressed Gas

1,580,529

Total Merchant Product

1,689,229

*Thousands of standard cubic feet (SCF) per day merchant hydrogen from steam reforming of light hydrocarbons or recovered as by-product from chloralkali plants or chemical synthesis operations. Another 3 billion SCF per day of captive hydrogen capacity exists at 145 locations in the US. Last month, BOC acquired Celanese's captive hydrogen/carbon monoxide syngas plant at Clear Lake, Tex. BOC will supply Celanese with carbon monoxide and serve other customers with hydrogen. Last year, four new plants were announced for supplying hydrogen to hydrotreating units at petroleum refineries. In December 2002, BOC announced it had begun construction on a new hydrogen plant at Citgo Petroleum Corp.'s Lemont, Ill., oil refinery. The plant is expected on line in the second half of this year. A month earlier, Air Products announced a long-term hydrogen supply agreement with ConocoPhillips. As part of the deal, Air Products will build, own and operate a new hydrogen facility in Lake Charles, La., with a capacity in excess of 100 million cubic feet per day. Air Products will link the new facility to its existing hydrogen pipeline network. About the same time, Praxair revealed an agreement with BP to supply hydrogen to BP's Texas City, Tex., chemicals and refinery complex. Praxair disclosed it would build two new hydrogen plants, each 100 million cubic feet per day, on the US Gulf Coast to supply BP. The estimated start-up of the plants is in the second half of 2004. In spring 2001, Air Products commissioned a 100 million cubic feet per day hydrogen plant at Port Arthur, Tex., to supply an adjacent Premcor refinery. Air Products is also constructing a 40 million cubic foot per day hydrogen unit at New Orleans, La., for start-up in the third quarter of 2003. The plant will support El Dorado, Ark.-based Murphy Oil's hydrocracker at Meraux, La. HydrogenAl, Becancour, Quebec, Canada, is a joint venture between Hydro Quebec and Air Liquide. Gaspro Airco, Honolulu, Hawaii, is a subsidiary of BOC. Holox, Augusta, Ga., is a 63/37 joint venture between Linde (Germany) and Hoek Loos, the Netherlands. Lagus, Decatur, Ala., is owned by Linde. T&P Syngas Supply, Texas City, Tex., is a joint venture between Texaco and Praxair. Profile last published 1/29/01; this revision 2/24/03.

DEMAND
2001: 421 billion SCF; 2002: 460 billion SCF; 2006: 675 billion SCF, projected. Demand equals production plus imports (2001: 4,137 million SCF; 2002: 4,960 million SCF) less exports (2001: 13,965 million SCF; 2002: 14,402 million SCF). Roughly 8 percent of the merchant market demand is served with cryogenic liquid product and 92 percent with compressed gas. Estimated demand excludes hydrogen produced by captive plants, production by ammonia dissociation and hydrogen consumed as fuel.

GROWTH
Historical (1997-2002): 9.5 percent per year; Future: 10 percent per year through 2006 for merchant hydrogen. Future growth for total hydrogen (merchant and captive) is 4 percent per year through 2006.

PRICE
Historical (1997-2002): High, $2.60 per 100 SCF, compressed gas, tube trailer, f.o.b.; low, $1.25, same basis. Current: $1.70 to $2.60 same basis; $1.15 to $1.80 per 100 SCF, cryogenic liquid, tank truck, f.o.b.; $0.18 to $0.80 compressed gas, pipeline, dlvd. Hydrogen market prices exhibit great variation depending on the form of delivery, consumed volume, location and contract length. For the largest customers, pipeline supply is the most economical supply method.

USES
Petroleum refining, 66.8 percent; petrochemicals, 26.2 percent; other, 7 percent, including: metals, 2.7; electronics, 1.5; US government (NASA), 1.2; edible fats and oils, 0.7; float glass, 0.3; utility power generation, 0.2; miscellaneous, 0.4.

STRENGTH
More hydrogen plants are being constructed because of demand growth from the refinery sector, which uses hydrogen to upgrade fuels to meet mandates for low-sulfur gasoline and diesel, as well as for processing higher-sulfur crude. US refining hydrogen demand totaled 1.4 trillion SCF per day in 2000, and is growing at 4 percent per year. Although aggregate hydrogen consumption is growing at about 4 percent annually, growth in the merchant hydrogen business is significantly higher, perhaps 10 percent, as refineries change their sourcing strategy. In the past, refineries met their hydrogen requirements with recovered material or they built, owned and operated their own hydrogen plants. But refineries are increasingly strapped for cash, making them receptive to buying hydrogen from single and multiuser pipelines owned and operated by industrial gas companies.

WEAKNESS
The soft economy has resulted in reduced hydrogen demand in metals, electronics and float glass production. The impact, however, is only marginal as these segments combined represent only about 5 percent of merchant demand.

OUTLOOK
Hydrogen has remained strong despite the weakened economy in recent years and this situation should prevail regardless of when the economy turns around. The industrial gas majors, Air Products, Praxair, Air Liquide and BOC, have all raised their prices for hydrogen, based on the strong demand. This pricing trend is expected to continue. With the cost of sweet crude oil increasing, refiners are processing more heavy sour crude, which requires additional hydrogen for sulfur removal. Moreover, legislation planned to reduce sulfur content in gasoline in 2004 and in diesel in 2006 will require refiners to use more hydrotreating process steps. As a result, US hydrogen demand should grow at 4 percent per year during the next four years. While some refiners own and operate their own hydrogen plants, industrial gas companies have seen an increase in their on-site business as refiners view hydrogen as a utility and allow the gas companies to build, own and operate the hydrogen plants. This trend will produce double-digit growth in the merchant hydrogen sector.