Rob Cockerill investigates how North America has consolidated its 32.5% industry share and what the future holds for this superpower.

When you’re way out in front as the leading player, where else is there to go? Emerging markets such as East Europe and Africa continue to strive forward, while China itself and the broader North Pacific Rim maintain rapid progression. In the midst of this, the global market leader North America, has shown no sign of weakening and last year consolidated its 32.5% industry share.

Figures from Spiritus Consulting estimated the North American industrial gas market to be worth around $17.6bn in 2006 but the group’s latest statistics suggest revenues had risen to more than $18.8bn in 2007, revealing a growth rate of 7% last year.

Such a percentage aligns itself with the 7.5% average annual growth rate seen over the past five years, a period which has presided over relatively buoyant industrial gas activity despite the gradually gathering global credit crisis. Spiritus figures had anticipated a compounded annual growth rate (CAGR) of a moderate 5.7% for the period 2005-2011, yet the actual increase in revenues appears to initially defy this.

Gases in the US is still a booming business, while both Canada and Mexico also seem to have flourished in the past twelve months, as these countries exhibited growth rates of 8% and 10% respectively in 2007. Much of this business is built on the solid foundations of enhanced oil recovery (EOR) operations and oil tar sands in Canada, as explored in recent Energy and Refinery themed issues of gasworld magazine.

The nascent hydrogen economy is also thought to be contributing to positive performances in Canada, with reports in August this year suggesting that federal funding of around $1m could also be made available to support both the development and commercialisation of hydrogen and fuel cell technologies.

So how does the market breakdown, and what of industrial gases in the United States?

United States
There may well be a change of power ahead as the US Presidential election race gathers momentum, but there’s no change in power in the North America gases market as the US still dominates proceedings.

So strong is the power of the US market, that this is still by far the largest industrial gases business in the region and indeed, across the globe.

As Senator John McCain’s running mate Sarah Palin, Governor of Alaska, said when unveiled as the Presidential hopeful’s partner, “A ship may be safe in harbour, but that is not why it is built.”

The US industrial gas ship could easily sit idle in harbour, yet sails the seas and is currently riding the crest of a gases wave. Despite the constricting global financial conditions, the US gas market appears to have sailed through the potentially rocky waters and floats comfortably clear as it demonstrated a 6% growth rate in 2007.

During last year, US industrial gas revenues are believed to have matured from $14.5bn in 2006 to almost $15.5bn by close of 2007, according to estimates from Spiritus Consulting. This 6% growth may not be as healthy as that of 8% and 10% experienced in Canada and Mexico respectively, but demonstrates how the global leader keeps at the forefront of the industry and doesn’t stand still.

The world has for some time now been gripped in a global helium deficit and the US is central to this issue, with nearly two thirds of the world’s helium supply found within a 250 mile radius of Amarillo, Texas – dubbed the ‘Helium Capital of the World’.

As a by-product of billions of years of radioactive decay, helium is distilled from natural gas that has accumulated in the presence of uranium and thorium deposits. It’s in this initial stage of resource that the answers to the increasingly fragile global demand and supply dilemma could be found, according to Matheson Tri-Gas John C. Bigham, Director of Helium Product Management and Global Logistics.

The issue of a lack of supply could well be sourced back to the initial resource at the natural gas field, where if it’s not extracted during the natural gas refining process, the helium is simply lost.

Speaking about the current industry climate, Bigham had this year commented, “Though helium in principal is abundant, it is produced as a by-product of natural gas processing. Its value is considerably less and is therefore secondary – it isn’t valuable enough, to those making billions from the natural gas extraction, to justify developing a natural gas field and building a gas processing plant purely to extract helium, the helium distillation plant is an add on.”

Bigham explained, “The US Bureau of Land Management (BLM) pipeline and the associated private crude helium plants were designed to produce 4 billion cubic feet per year of crude helium to supply the 6 private helium refineries located along this pipeline system. Due to depletion of the Hugoton Natural Gas field, we believe that these refineries can no longer operate, simultaneously, at full capacity.”

“This is a recent phenomenon and we believe this decline reduced available BLM network supply by approximately 300 million cubic feet in 2007. We expect that this gap will continue growing each year.”

Such a gap and the overall global situation of helium supply encourages the shared drive for further helium facilities around the world. Indeed, as recently as September 2008 gasworld reported how permission had been granted for a special lease for the development of a new methane and helium recovery facility in the US.

The State of Wyoming granted Cimarex Energy Inc. (Cimarex) a Wyoming Special Use Lease for development of a new methane and helium recovery facility to be located on State lands near Riley Ridge, east of Big Piney. The project would test new technology in processing a sour gas (a mixture of hydrogen sulphide, carbon dioxide, natural gas, and helium).

Capturing coal capabilities
If there are concerns over the supply and demand of helium in both the United States and around the world, there’s even more concern for the energy solution of the future.

One of these options could be fuel from coal reserves and associated technologies. Just as hydrogen and next generation nuclear power are emerging areas of development stateside, the evolution of coal-based technologies may well concern the US most too. A report released by the Energy Information Administration of the US highlights that while estimates vary from source to source, at projected rates of usage we probably have reserves of around 50 years of oil, 80 years of natural gas and
200 years of coal.

More than a quarter of the world’s coal reserves lie within the US, and the energy content of that country’s coal resources exceeds that of all the world’s known recoverable oil. The world’s largest coal deposits are found in the US, Russia, China, India, Australia and South Africa in descending order of size and together these countries hold 84% of all known accessible deposits of coal.

So it appears coal is the longer-term answer to questions of energy supply, but could also be seen as the ‘dirtiest’ alternative of all the options on offer. Investment in clean coal technologies is therefore seen as essential to utilise such an abundant source of energy.

To tap the full potential of the nation’s enormous coal supplies, the US Department of Energy’s (DOE) Office of Fossil Energy is working with the private sector to develop innovative technologies for an emission-free coal plant of the future.

Praxair, in conjunction with the Jamestown Oxy-Coal Alliance, intends to submit a proposal to demonstrate technology designed to capture carbon dioxide emissions from both new and existing coal-fired electricity-generating plants.

Helping companies such as Praxair to develop the technology is funding of $340m available from the DOE which will be distributed among chosen recipients. The DOE will consider cooperative agreements between government and industry to demonstrate, at a commercial scale, new technologies that capture carbon dioxide emissions from coal-fired power plants and either sequester the carbon dioxide or put it to beneficial use.

Praxair proposals aren’t the only development in the US where coal is concerned, with plans ahead for the country’s first ever modern coal-to-liquids (CTL) plant in the state of West Virginia.

Governors, senators and West Virginia’s Congressional delegation joined officials from CONSOL Energy, Synthesis Energy Systems (SES) and the Regional Economic Development Partnership (RED), to announce the project this summer.

The construction of the nation’s first modern coal-to-liquids plant in the state’s Northern Panhandle signals the move forward to a potentially cleaner, more environmentally-friendly, and sustainable future. At a time when energy security is often in question and the drive for greener, energy alternatives is urged, CTL and gas-to-liquids (GTL) projects are becoming increasingly prominent on the global stage.

The US, with its vast coal reserves, is in a leading position to capitalise on this wealth of resource and take the next step forward.

Taking the next step forward is often associated with the development and adoption of a future hydrogen economy and to that end, the recent Hydrogen Road Tour ‘08 has been canvassing attention and raising public awareness in the US. Hydrogen is also the subject of much attention in neighbouring Canada too at present.

Funding of around $1m is believed to be available by Canada’s federal government to support the development and commercialisation of hydrogen and fuel cell technologies, products and services.

Earlier in the year, Air Products and its subsidiary Air Products Canada Ltd announced the commercialisation of its new hydrogen plant producing in excess of 100 million standard-cubic-feet-per-day (MMSCFD) to serve the Petro-Canada refinery near Edmonton, Alberta.

The newly commercialised facility is the second to be constructed by Air Products to supply hydrogen to Petro-Canada’s refinery, as well as several additional customers in the Edmonton area. An earlier facility was successfully placed on-stream in June 2006.

Aside from the development of its hydrogen initiatives, Canada recorded one of the higher growth rates for industrial gas revenues in the US region in 2007 and is a market approaching the $2bn valuation milestone. The country had revenues of $1.6bn in 2006 and consolidated this with an 8% growth rate in 2007 to reach revenues of $1.78bn, and a 9.5% share of the North American industrial gas market.

Not far behind Canada with a comparatively healthy 7.2% share of this market is Mexico, progressing positively and boasting the strongest revenue increases for the region.
A 10% rise in 2007 saw the Mexican market leap from a valuation of $1.2bn in 2006 to just over $1.3bn last year.

Such advances in the market require investment in new facilities to cater for demand and keep pace with developments. An example of just such investment was seen in July when gasworld reported how Air Products’ Mexican partner the Infra Group is building two new air separation units in the region.

With a combined capacity of 250 tpd, the new units will meet demand from increased activity in the Central American region. The free trade agreement with the US as well as a number of other variables, have led the Central American economies to a period of growth, therefore increasing the activity of the industrial gases market in the region.

The Infra Group, since 2004 has partnered with Fabrigas Group in Guatemala to form a joint venture in the region’s largest economy, and also a partnership with El Salvador’s Oxgasa. Productos del Aire, the Guatemalan joint venture, will commission an ASU in the first half of 2009 at its El Jocote site.

The El Jocote site hosts two smaller air separation units, a hydrogen plant and cryogenic maintenance facilities, while in El Salvador at the heart of an industrial park set to focus on the electronics sector, the second ASU is scheduled to be on stream by 2010.

The plant will not only supply high purity nitrogen and argon to electronics customers, but will also cope with the merchant and packaged gases demand for the Salvadorian joint venture, Infra de El Salvador.