In a week full of quarterly financials and the broader backdrop of a year so clearly dominated by Covid-19, it would have been easy to miss the significance of two key stories recently concerning the basic building blocks of the industrial gases industry.
That’s exactly what was served up last week: two stories with air gases and ASUs at their core, both from Air Liquide, and both momentous in their own right.
On the face of it, the big story is that Air Liquide is to acquire the world’s biggest oxygen production site located in Secunda, South Africa from integrated energy and chemical company Sasol.
A real Editor’s Pick of a story, it’s a development that will see the French industrial gases group now operate the 16 air separation units (ASUs) on the site, with an installed capacity of around 42,000 tonnes per day (tpd) of oxygen. All of which will be in addition to the unit it already operates there today.
That unit is of course the €200m ASU revealed by Air Liquide in February 2015, at the time a milestone in the history of industrial gas production as an ASU as a mega ASU boasting a total capacity of 5,000 tonnes of oxygen per day (equivalent to 5,800 tonnes per day at sea level).
The ASU was also significant for many other reasons, one of which has arguably led to last week’s announcement. Not only did it continue to ensure security of supply for Sasol’s expanding operations at the Secunda site around 140km east of Johannesburg, it added a new source of oxygen and argon supply for the growing industrial gas market in South Africa and essentially provided a proving ground for the state-of-the-art efficiencies, reliability and safety of the technology.
Further still, it opened the door to a path in outsourcing at the Secunda site for Sasol.
Present on the site since 1979, Air Liquide has built and sold to Sasol the other 16 ASU’s the group is now acquiring. The contract of supply from the newer mega ASU, however, represented the first time that Sasol would outsource its oxygen needs to a specialist of industrial gas production at its Secunda site. Air Liquide even noted in its announcement back in 2015 that ‘this contract represents an important step forward in this partnership’.
Five years later, we now see that the entire supply at the Secunda site is essentially to be outsourced in a complete conversion of captive supply.
That network is to be invested in too. Air Liquide revealed multi-year plans to modernise these facilities, in an initial South African Rand 8.5bn (€440m) investment, and provide a solution, in coordination with Sasol, that would reduce CO2 emissions arising from the oxygen production by 30% to 40% by 2030.
Gases meets renewables
Which brings me neatly to that other significant development last week, a further example of industrial gases meets sustainability. I think this could be an even bigger development in the long-term.
Air Liquide signed a long-term power purchase agreement (PPA) to source renewable electricity to power some of its industrial and medical gas production assets in Spain. The contract marks the first PPA for renewable energy in Europe – illustrating Air Liquide’s commitment to lower its carbon footprint and supporting its climate objectives to increase purchase of renewable electricity by nearly 70% by 2050.
Read more: Air Liquide signs renewable power agreement
This is the key point. Industrial gases are an energy-intensive industry; one of the biggest requirements and arguably cost curves behind ASUs and therefore the air gases business, is the sheer power generation that it takes. We’re used to seeing examples of our industry’s incredible efforts in creating a cleaner, greener and more sustainable world for the future (think hydrogen, think carbon capture, think biogas or LNG), but we’re not so used to seeing such stories of renewables behind the power of the ASU. That’s what makes this development so interesting.
Under the ten-year agreement, Air Liquide said it will use renewable electricity equivalent to 15% of the group’s current consumption for its Spanish activities. To support the agreement, a wind farm is currently under development in Andalusia that will supply Air Liquide with renewable electricity, saving the company 250,000 tonnes of CO2 emissions over the term of the contract. The wind farm is due to be operational in 2021.
At a time when such energy has been expended on other causes, it’s a step in the right (long-term) direction that we’ve learned about over the last seven days.