The Airco legacy
Cryostar is located in France in the small town of Hesingue near Basel, close to the Swiss and German borders.
Created in 1966, Cryostar was a 50:50 joint venture between the US industrial gas company Airco Inc and Burckhardt, a Swiss compressor manufacturer. Shortly afterwards Sulzer, which acquired Burckhardt, exited the business, leaving Airco with sole ownership.
In 1966 Cryostar was a cryogenic pump manufacturer, and a part of the Airco Cryogenics division. “Around the early 70’s, Airco Cryogenics was already manufacturing turbo expanders for air separation and compressors for LNG ships,” says Meyer. “It was more or less a natural move for Cryostar here in Europe to do exactly what Airco Cryogenics was doing, but for the European market. We moved from being a pure pump manufacturer to being a pump, plus compressor, plus turbine manufacturer because it was a natural move.”
In 1978 Airco was taken over by BOC, and Cryostar was integrated into the BOC group.
“The same happened last year when BOC was taken over by Linde – Cryostar was never sold or transferred as a stand alone deal,” Meyer adds. In 1983, Airco BOC decided to sell Airco Cryogenics, which was in decline – although it retained the Cryostar business, which was doing well. Airco Cryogenics Division was taken over by Cryogenic Industries, who kept the abbreviation ACD, effectively creating a direct Cryostar competitor. Under the terms of the deal, Cryostar was prohibited from selling in ACD territories (the US and SE Asia). “The new owners of ACD wanted Cryostar out of their territory – what could we do? We were not in these markets when the deal was made.”
When the deal restriction expired, Cryostar was free to move into Asia and the US. Cryostar Singapore was opened in 1991 and a US sales office in 1993. “We extended our presence in the US by opening a service centre in California in 1997,” Meyer adds. Cryostar paid special attention to differentiating its offering (from that of ACD and other competitors), for instance by improving existing and developing new cryogenic centrifugal and reciprocating pumps and turbines.
In 1972 Airco wanted to expand its European Cryostar production. The company was in Pratteln, Switzerland at the time, and considered the South of Germany and France – according to Meyer. France was chosen due to inexpensive land and proximity to the airport, which led to the inception of the Hesingue site in autumn 1973. For some time the two production sites worked in tandem, until 1975 when the company moved production entirely to Hesingue and management, engineering and sales activities to Basel. After two decades Meyer decided to close the Swiss operation and bring Cryostar under one roof at the French site, to reduce costs and inefficiencies.
“Until around 1988, Cryostar dealt exclusively in industrial gases, and particularly around traditional products such as cryogenic pumps and turbines,” says Meyer. “When there was a slowdown in industrial gases we looked around for other opportunities, and would sell hydrocarbon turbines, for instance.”
Around the end of the 1990’s the company began to more deliberately diversify its product portfolio. “We thought we could do something around filling stations, for which we already supplied the high-pressure reciprocating pumps.” Cryostar won out over rival ACD in its bid to purchase Elintec, a specialist in gas cylinder filling systems based in Capdenac in Central France in 2001. “This strategic move meant that we could offer a complete filling station,” Meyer explains. “When we took over Elintec we transformed it into Cryostar Automation, our cylinder filling station and natural gas fuelling station entity.”
Cryostar gained the Capdenac personnel’s expertise, while industrial gas customers reaped additional benefits as Cryostar became a one-stop shop for pump activity and filling stations, as well as customers dealing with one person for both products. The technical advantage is that Cryostar’s piston pumps are an integrated part of cylinder filling stations.
Across the Atlantic, Cryostar USA began in 1993, initially as a sales office, and eventually extending activities to include a service centre for repairs. The company now offers service centres on the East and West coasts, in Santa Fe Springs near Los Angeles and in Bethlehem, Pensylvania. “Our intention was to gain market share in the US. Then we had these two opportunities to make two relatively small asset acquisitions from CCI and CVI.” Cryostar gained product lines, the customer bases and a base for spare parts through these acquisitions, which were integrated into the West Coast facility. The move injected new life and profitability into these activities.
“In our business, service is very important. Rotating machines need maintenance, and the closer you are to your customer the better it is from a service and marketing point of view,” says Meyer.
When Cryostar arrived in China, it replicated its US strategy. “We now have a centre in Hangzhou near Shanghai, where we employ around 15 people,” Meyer says, adding, “It was a natural move.” Cryostar also has operations in the UK, in Singapore and in Brazil, where it commissioned the first LCNG refuelling stations for public use, swiftly followed by a boom in vehicles converting to CNG and LNG fuel to benefit from these new assets. “We think there is a lot for Cryostar to do in South America, not only in industrial gases but also in natural gas. We are going to do the same in Brazil as we have done in the US and China. We are looking for a workshop to establish a maintenance and service facility,” Meyer says. Cryostar will follow suit in other geographical areas, too, he suggests.
Expansion at the company’s site in Hesingue, France, continues to keep pace with new project requirements. The company added a €2.5m 1200m2 assembly hall complete with heavy lift cranes in February 2006, and completed a new €3.5m test facility dedicated to re-liquefaction units and large hydrocarbon turbines last spring, complete with a small conference room. Building work was very much in evidence – a new restaurant had just opened and engineering office and stockroom were being built too.
Reassuringly, the BOC takeover by Linde has not altered Cryostar’s day-to-day business. “Cryostar was always very autonomous within BOC, acting at an arm’s length basis. Indeed, this was an advantage in the marketplace when dealing with BOC competitors such as Air Liquide.” Meyer thinks Linde has understood that Cryostar’s success requires this autonomy, and Linde’s senior management supports this. “Even before the Linde takeover, we had a good relationship with Linde,” he adds.
Cryostar was organised around core competencies over a decade ago, outsourcing functions such as machining and welding. Cryostar’s core activity today is engineering; in fact Meyer says, “Cryostar considers itself more of an engineering than a manufacturing company. You won’t see any machine tools here in the workshop – we work with a network of subcontractors and then focus on assembling and testing.”
The portfolio trajectory
“At the beginning, Cryostar was only in the cryogenic pump business. In the 1970’s, as part of the Airco Cryogenic division, we went in to the turbine business and made submerged motor pumps for hydrocarbon applications,” says Meyer. Cryostar’s product portfolio expanded.
From reciprocating pumps for cylinder filling stations and centrifugal trailer pumps, the company moved into reciprocating and centrifugal process pumps, for instance for air separation units (ASUs), and added new types of turbine. Cryostar also collaborated with Air Liquide to develop centrifugal VP pumps for internal oxygen compression plants, and on turbines with BOC. Cryostar has also added compressors and heat exchangers for LNG ships to its portfolio, and magnetic bearing turbines for hydrocarbon applications, which also find uses in industrial gas applications.
Cryostar is by far the largest company in this market, and has higher development potential in terms of reacting to new customer requirements, Meyer suggests. “Cryostar is perceived as an innovative company, that can respond to specific and perhaps difficult problems for industrial gas companies, which of course have their own engineering strengths,” he says. Is development the result of a technology push from the gas companies? “Yes, very often - to which Cryostar adds its own expertise.”
At Cryostar, technology has evolved incrementally, but not fundamentally. “There are efficiency gains for turbines and pumps, progressively as a result of new engineering or machining tools. In magnetic bearing turbines, for instance, we have integrated another technology into our machines – it’s a progressive refinement and addition of technologies we integrate into our machines. It’s also progressive in terms of the gas companies’ needs.”
Cryostar is active in four business segments: distribution, process, LNG ships and clean energy.
In LNG ships, Cryostar supplies boil off gas compressors, heat exchangers and vaporizers, and recently full reliquefaction systems for boil-off gas. The boil-off gases can be used to feed the ship’s engines or can alternatively be reliquefied and returned into the tanks, thus eliminating any transported LNG losses. Dubbed EcoRel (economic ecologic reliable boil-off gas reliquefaction), Cryostar’s onboard reliquefaction technology is an innovation in response to the unprecedented scale of LNG ships for major new investments in Qatar. These are designed to undertake longer journeys, particularly to US markets. There are other exciting potential uses for the reliquefaction technology going forward, hinted at by Meyer, but he declined to give gasworld further details at this stage. “Our products can be relatively easily adapted. The same turbine being used for air separation can be adapted with minimal engineering for clean energy purposes,” he noted.
“We can adapt existing turbine technology to create clean energy from geothermal heat or from wasted pressure drop in pressure letdown applications,” says Meyer. The turbine plays the same role. Transporting natural gas by long-distance pipeline, pressure is reduced from 70-80 bar to 5 bar when it reaches a city network at a pressure letdown station. Replace the pressure letdown valve with a turbine coupled to a generator, and this yields energy to create additional electricity. Cryostar’s Lo-C technology aims to do just that, offering a source of sulfur-free and carbon-free electricity.
There are thousands of pressure letdown stations worldwide. The success of these applications is subject to three parameters, Meyer suggests: capital cost, clean electricity prices (which may be higher and require subsidies), and the number of months per year the facility is running. The return on investment is clearly greater for a plant that is used all year round rather then just in winter months. Interest in investment in clean energy among national pipeline operators will be a determining factor in deciding whether this technology is adopted.
Meyer estimates the worldwide cryogenic pump business for industrial gases may be worth €50m, of which Cryostar has more than 50%. “Before 2003 it was relatively quiet compared to today,” Meyer agrees. “The change has come about due to increasing applications such as GTL or coal-to-liquid, that are demanding more and larger equipment.” A single industrial gas project today can net Cryostar close to €10m – this was not the case 5 years ago.
LNG ships have been the main driver for recent Cryostar growth. This is due to a recent boom in ship construction and more recently the introduction of reliquefaction units for larger ships which have significantly boosted Cryostar’s turnover. The revenue generated by this technology is 4-5 times that of previous Cryostar scope for smaller LNG ships. After 2009 Meyer suggests there will be a slowdown in LNG ship demand, but is confident that new opportunities are on the horizon. “We are expecting that the LNG ships will represent less business for us in the near future – but there are other applications around LNG and NG that Cryostar can pursue.”
Another leap in growth is coming from industrial gases, with a recent trend for around 50% of orders originating in China. Cryostar wants to do more in China, and is looking at larger facilities in the US.
Meyer says that Cryostar monitors opportunities in new technologies, such as carbon sequestration for instance, but its participation is very much determined by whether industrial gas companies become involved and decide to come to Cryostar to develop specific equipment.
“Natural gas or LNG is an energy of the future – there will be more projects worldwide; there will be more produced, transported and consumed. We are confident about this market.” He mentions Russia as one country attracting interest from industrial gas companies. “We have to be present when they are there – there’s also a lot happening around natural gas that makes that country interesting,” he says.
“In industrial gases, we now have 4 companies, which dominate the world market. You have to be present, close to these companies to be able to react when they need something. We have to be reactive to their needs.”
The potential hiccough on the horizon, according to Meyer, is “deciding which project to go for, in case we don’t pursue an even better one”. A position many companies would no doubt relish.
French national Daniel Meyer, 60, trained in business and joined Cryostar as Finance Director in 1974.
In 1988 he became General Manager, Cryostar France, and has been President of the Cryostar Group since 1996.
Married with two children, Meyer enjoys sport, especially cycling.