Industrial gas use
Industrial gases are mostly used in three ways in the bulk chemicals industry: as reactants; for inerting and cooling systems; and in cleaning, leak testing, and drying systems. The chemicals industry itself generates large quantities of gases, usually as reaction by-products. However, industrial gas companies believe that there is a trend towards outsourcing supply to specialist suppliers and are optimistic about growth prospects.

The value of this business to the large suppliers varies between companies. Whereas Air Products recorded 25% of sales from their tonnage gases division, Praxair’s business is more diverse: in 2006, only 11% of sales were attributed to the chemicals industry and these included sales to biotechnology, life sciences and pharmaceutical firms. For Messer, sales to chemical companies made up 18% of sales in 2006.

It’s certainly a growing business, particularly in the Middle East and Asia. For example, Linde saw a 9.5% growth in its tonnage gas division sales in the third quarter of 2007. However, according to Jon Warnke (former Strategic Marketing Director at BOC), there are questions for the industry about how long the growth will continue. He commented: “We’ve seen a pretty sustained period of growth for the chemicals industry, 5...6...7% up to 10 percent, in terms of the finished product. Normally, you would expect the cycle to have gone down by now but in fact it’s been driven by Asia in terms of product demand.” Projected Asian demand has led to continued investment, when theoretically a downturn in the chemicals business cycle would be expected. “What has kept things going is that the costs of large plants have escalated for a number of reasons, such as steel cost increases and skills shortages, and so some of these projects have been delayed. So the cycle has not gone down as people thought it would.”

Hydrogen
Hydrogen is a significant growth area for industrial gas suppliers. In the refining sector, new environmental regulations require cuts in the amount of sulphur in fuels. This, combined with the exploitation of heavier crude oil grades, has stimulated the need for hydrogen for desulfurizing. Almost two-thirds of the hydrogen sold by Air Liquide is used in producing sulfur-free fuels.

Hydrogen is also used as a reactant in a wide range of chemical manufacturing processes, including the production of methanol, ammonia, aldehydes, the hydrogenation of hydrocarbons and catalyst manufacture.

Air Products claims to be the industry leader in H2 supply. The company recorded a 12% increase in sales in their tonnage gases division in the final fiscal quarter of 2007, which they ascribed to “refinery hydrogen investments and improved plant loadings”. Praxair meanwhile expects the demand for hydrogen to increase by 15-20% annually.

Air Liquide says its sales of hydrogen will yield over $1 billion in 2008. It has expanded hydrogen production by 50% over the past three years and claims to have the largest network of hydrogen pipelines in the world: the company’s 12 hydrogen networks comprise 1700km of pipelines.

An array of new hydrogen facilities has been announced in the past year, with the US Gulf Coast being one centre for these developments. Both Air Products and Praxair currently supply more than 50 refineries and chemical plants on the Gulf Coast. Praxair’s most striking investment is a hydrogen cavern storage facility in Texas. This unique project was integrated into Praxair’s 310-mile hydrogen pipeline in October 2007 and means that the company can now supply 18 million m3 per day on a steady-state basis.

In 2008, Linde will also be bringing a new hydrogen production facility online in Burghausen, Germany, partly to supply the Wacker chemical company.

Oxygen
Pure oxygen can be used to improve the yield in chemical oxidation processes such as the production of ethylene oxide, propylene oxide, ethylene dichloride, vinyl acetate monomer (VAM), titanium dioxide and ferric sulfate. It can also be used to enrich air in a process known as “debottlenecking”, to promote the productivity of a range of chemical reaction processes like the production of acrylonitrile.

Joachim Rohovec, Technology Manager for Messer’s Chemistry and Environment group, commented that the desulfurizing Claus process is still among oxygen’s most common uses: “As the quality of crude oil has declined, so the quantity of sulphur has gone up. This combined with stricter environmental regulations has stimulated demand for oxygen.”

Jon Warnke identified other key oxygen uses: “There’s been strong demand for new investment in ethylene oxide and monoethylene glycol... driven from the Middle East and Asia. There could well be an oversupply in the glycol market in 2008-2009 and that will tend to slow down the growth of air separation units (ASUs) and oxygen for those sorts of projects. I think we’ll still see strong demand from existing and incremental business but I think in terms of new investment there will be issues in terms of how many of these will projects will be built.”

One of the key Asian projects announced by Air Products last year was the building of a new ASU in the Nanjing Chemical Industrial Park in China. This facility will produce more than 1600 tonnes per day of oxygen and it is part of a deal struck with the Wison Chemical Company to renew an existing contract. Wison will produce syn gas (a mixture of carbon monoxide and hydrogen) using coal gasification (also known as the coal to liquid or CTL process). Syn gas can then be converted to petrochemicals such as methanol or acetic acid or to liquid fuels using the Fischer-Tropsch process.

Another major market for oxygen supply is gas to liquid (GTL) conversion. It involves the partial oxidation of natural gas (using oxygen from an ASU) to syn gas. GTL fuels have the bonus of being free of sulphur, aromatics and heavy metals. The use of GTL and CTL for the production of transportation fuels will be covered in an article later this year on gas use in refinery settings.

Nitrogen
Nitrogen’s key role as a reactant is in the production of ammonia. The unreactivity of N2 is made use of in applications such as storage, regeneration of purification beds, preparation of catalysts or in drying, leak testing or cooling of production systems.
Syn gas (CO and H2).

Methanol production uses syn gas. Methanol is used by the chemical industry to make formaldehyde, plastics, adhesives, dyes, and as a solvent for paints and dyes. According to the trade body, the Methanol Institute, there are 90 methanol plants around the world, producing over 11 billion gallons (42 million m3) each year.

The risks of over-supply in this area were highlighted by Jon Warnke: “We’ll see a lot of interest in the syn gas side – there’s been very strong growth for CO from acetic acid, and its derivatives and also urethanes and there’s a characteristic of over-supply. A number of global acetic acid plants are being built, particularly in China. And there are also new players coming on in the Middle East such as the Saudi International Petrochemical Company (Sipchem). New capacity could well lead to a push back in demand.”

Sipchem is already a major player in methanol production, producing a million mtpa through two affiliates. It is now developing several other major projects in Saudi Arabia, with the aim of becoming “one of the largest fully-integrated petrochemical complexes in the Middle East, owned and operated by the private sector.” A major acetyls complex will come online in the first quarter of 2009, producing acetic acid (460 thousand mtpa), VAM (330 thousand mtpa), and CO (345 thousand mtpa).

Carbon dioxide
CO2 is mainly a waste product of the chemicals industry. It is so inert that it is of no value as a reactant. Its key market is in the food industry but there is a market in engineering, in purification and cleaning processes. Joachim Rohovec from Messer, identified another market for carbon dioxide: the pulp and paper industry. He commented: “Previously this industry used hydrochloric acid or sulfuric acid for neutralizing waste, whereas over the past two years there has been a growing tendency to use CO2. We cannot keep up with demand at the moment.”

Linde’s plant at Marl Chemical Park in Germany is extracting the CO2 produced during the production of ethylene glycol at a Sasol plant, providing a highly pure gas.

Overall the long-term prospects for gases in the chemicals industry market seem to be bright. The major gas companies have invested heavily in recent years, particularly in hydrogen supply. There are dark clouds on the horizon though if predictions of over-supply turn out to be correct.