High profile industrial gas consultant John Raquet, of the Spiritus Group, has questioned whether the gases business has taken its eye of the ball in North America.
Raquet was presenting as a keynote speaker at the gasworld North America Industrial Gas Conference 2012 today in Miami, Florida.
His presentation followed that of The Economist’s Robert Powell, who had earlier discussed the impending Fiscal Cliff and the depressed state of both the global and US economies.
Delivering a clear perspective on the North American gases business, Raquet explained how the industry has mirrored this global economic situation – before questioning the forward-thinking going on in the region.
“In 2012, looking at the first three quarters or nine months of the year, the industry has mirrored the global slowdown and we’re now running at an average for the year of 4-5%. We’re getting mixed signals on Q4, some improvement on Q3, but also some other mixed results.”
“The market in 2012 is going to be around $78bn, and we forecast that the average for the next five years will be around 7-7.5% CAGR growth.”
“All of the majors appear to have been focused on re-structuring in Europe – have they taken their eyes off the US market?” he questioned. “We believe that the major players will have to re-focus on the US and where this market is going.”
Describing some of the challenges – and opportunities – ahead for the industry in the region, Raquet continued, “There is LNG story - do we play, and how do we play, as an industry? There are some similarities. When trucking a tanker of LNG at such temperatures, it is a cryogenic liquid, and the technology is the same. So, do we play?”
“The industrial gases business over 120 years has developed applications to use oxygen, nitrogen and argon. With LNG, it’s a fuel vector, and it’s going to be interesting to see how that plays out. There’s no doubt it’s a huge opportunity for our industry because of the synergies.”
“In terms of ASU plant infrastructure, it’s aged, small and inefficient. It’s a case of Capex reinvestment levels versus upgrades. There are also merchant versus piggyback decisions to be made. There is an issue related to bulk too, are they commodities or can you get more value-added out of it?”
With the big questions thrown out there on the gasworld stage and the gauntlet firmly laid down, Raquet looked ahead to the market in 2013.
Providing a view to the market in 2020 too, delegates were left with plenty of room for optimism.
He concluded, “Short-term, the Fiscal Cliff is on the lips of everybody at the moment. If it happens there is going to be a slowdown in investments and if that happens, there is going to be a short-term impact on our industry, both on volumes and directly on new business projects.”
“2012 will show slow growth, volumes have slowed but prices have remained solid. In 2013 we expect a slow start, but North American growth will continue, there’s no doubt about that and the signals are there.”
“Major onsite projects will continue,” he added, “the aim is to try and piggyback more efficient liquefiers to get those economies of scale. There must be an efficiency drive in the merchant business, that’s for sure.”
“The oil and natural gas sectors and the drive for self sufficiency in the US will also be fantastic for our industry, and we have the equipment and services to seize those opportunities.”