CEH Report

Table of Contents

Abstract

The industrial gas industry has been in the midst of consolidation for the past ten years and is now highly concentrated. The top five producers account for 70–80% of the global market. In 2007, the following four companies dominated the industry worldwide—Air Products and Chemicals, Inc. (United States); L'Air Liquide, S.A. (France); The Linde Group PLC (United Kingdom); and Praxair, Inc. (United States).

Primary factors in the growth of industrial gases are the growing Asian economy, high energy costs, and climate change initiatives. Increasing demand from the iron, steel and chemical industries, as well as demand for gasification of coal and coke for clean energy, is expected to significantly increase demand for industrial gases. Improvement in the global economy and growth in Asia led the industrial gas business to a strong performance in recent years. The Chinese industrial gas market has almost doubled in value in the past few years. India and the Republic of Korea are expected to double their consumption volume in the next few years. Demand from petrochemical, chemical and refining operations is making the Middle East a significant player. The emerging economies in the Eastern European regions are also creating a major market. However, the relative slowdown in industrial production in the United States and Western Europe has somewhat tempered global demand. The industry saw increased revenues as well as mergers and acquisitions that refined approaches to smaller, more profitable markets. The fall of the dollar against the euro was illustrated by the rise in revenues calculated in U.S. dollars. The U.S. market for goods has increased to offset the reduction in imports caused by currency fluctuations and has contributed to an increase in industrial gas usage.

The growing need for alternate sources of energy is increasing demand for industrial gases. Large-scale gasification plants and oxygen-based gas-to-liquids, coal-to-liquids and coal-to-chemicals plants need enormous quantities of oxygen. Increasing volumes of liquid natural gas (LNG) have led to considerable demand for nitrogen. Increased spending on infrastructure development is also a strong area of growth for industrial gases. Innovations in current technology are ongoing to reduce capital costs and drive up process efficiency.

Africa and the Middle East are growing in importance for air separation gases. The gas-to-liquid (GTL) process plants that are being constructed and planned will be consuming significant quantities of oxygen in the near future. In 2006, Linde was awarded a contract by Qatar Shell GTL to supply eight large air separation plants that will produce over 860,000 cubic meters of gases per hour, scheduled to come on stream in 2010. Elixier, a 51/40 joint venture between Abu Dhabi National Oil Co. (ADNOC) and Linde, plans to construct two large air separation plants with a combined capacity of 670,000 cubic meters of nitrogen per hour to be supplied to a utility and also pipelined for onshore condensate injection at Habshan, Abu Dhabi. Operations are expected to start in 2010.

The size of air separation units has increased dramatically in recent years with units of up to 3,500 tons per day being built. Blast furnaces for the steel industry and oxygen-fed gasification units are examples of two applications that require large quantities of gaseous oxygen and can support plants of this size. In the gasification sector, oxygen-based units are preferable to air because the piping and capital costs associated with air would be much greater than using oxygen from a nearby air separation unit. Currently, industrial gas companies are building multiples of 1-3 thousand ton-per-day plants in place of one single plant to factor in redundancy and also eliminate problems associated with building and commissioning.