Praxair, Inc. has signed a 15-year supply contract with chemistry solutions provider Celanese Corporation under which the Tier One player will build two new industrial gas production plants in the US Gulf Coast.

Representing an investment of more than $300m, Praxair will build, own and operate a new, state-of-the-art carbon monoxide (CO) and hydrogen (H2) plant as well as a new air separation unit (ASU) on its nitrogen (N2) and oxygen (O2) pipeline network.

The US industrial gas giant has also announced plans to expand its extensive H2 pipeline network to enable the supply of 80 million cubic feet per day of co-produced H2 in order to meet requirements of other new customers along the US Gulf Coast.

As a result, Praxair will provide tonnage quantities of the industrial gases required by Celanese in the long-term deal.

The new facilities and pipeline assets, which are due to begin operations in 2020, serve to strengthen Praxair’s production network.

As Toby Pimlott, Research Analyst at gasworld Business Intelligence, highlighted, “This new facility will strengthen Praxair’s position in the South West of the US. Praxair was the leader in the region in 2015 holding a market share of 22%, but we forecast that Air Liquide will become the dominant player in the market with a 25% stake following its acquisition of Airgas (2016).” Pimlott added that Praxair has achieved its strong position in the Gulf Coast via its extensive network of production facilities located around Houston, Texas.

“Praxair was the leader in the region in 2015 holding a market share of 22%, but we forecast that Air Liquide will become the dominant player in the market with a 25% stake following its acquisition of Airgas (2016)”

Toby Pimlott, Research Analyst, gasworld Business Intelligence

Praxair’s Chairman and CEO Steve Angel emphasised, “Praxair’s long history of successfully integrating and executing multiple projects was critical for this award. We are uniquely positioned to reliably supply industrial gases to our customers through our extensive pipeline network in the Gulf Coast region.”

“Our sourcing effort at Celanese was driven by the goal to secure a stable and reliable supply of critical raw materials for our operations to enable us to reach our future growth and financial goals,” added Mark Rohr, Chairman and CEO of Celanese.

Praxair’s pipeline systems are currently supported by multiple H2 and air separation plants and product storage capabilities, including the corporation’s 2.5 billion cubic foot, high-purity H2 storage cavern.

This latest development coupled with Praxair’s $100m upgrade investment in its Geismar CO facility in Louisiana as announced in April 2016, will more than double the company’s CO capacity along the US Gulf Coast when the sites start up in the second half of 2018.

The increased demand for industrial gases in the region stems from the abundant availability of low-cost shale gas in the US, which has been steadily declining for more than two years.