Tightening in supply or supply shortages of carbon dioxide (CO2) are continuing to hit businesses across the US, with strains set to continue throughout the coming months.
This comes as Everett, Massachusetts-based Night Shift Brewing last week (27th July) said it has had its supply cut for the foreseeable future.
Likewise, other companies are starting to feel a hit caused by disruption in the CO2 supply chain, with the Southeast and Southwest believed to be struggling the most.
Unfortunately, things don’t look like they’re going to get better in the short-term and there is certainly a long, hot summer ahead for the US CO2 market, with things not looking up until the fall.
Concerning those in the hospitality business, CO2 is used widely in the food and beverage industry as a refrigerant and is also used in Modified Atmosphere Packaging (MAP) to improve shelf life and in carbonating drinks.
Dry ice (solid CO2) has increasingly been used to keep food frozen during home delivery, a trend that boomed during the height of the coronavirus pandemic.
Why contamination is impacting the market now more than ever
Gas contamination is believed to be a leading factor that has led to the short supply. As highlighted by Sam Rushing, President of Advanced Cryogenics, last month (July 2022) CO2 firms operating in liquefaction and purification have been faced with a contaminated product and could not fully operate.
As gasworld understands, the Jackson Dome is where such contamination has been found. Located in the state of Mississippi, the Jackson Dome is owned by independent energy company Denbury, following an acquisition carried out in February 2001.
The Jackson Dome is Denbury’s primary Gulf Coast CO2 source and covers approximately 200 square miles. gasworld believes the contamination occurred when Denbury decided to use its existing CO2 supplies for enhanced oil recovery and drill additional wells to feed its CO2 pipeline that supplies merchant CO2 plants.
Rising oil and gas prices made utilizing the CO2 for EOR more attractive. Unfortunately, the additional wells came with contaminates. gasworld been told that hydrocarbons, including benzene, are impacting the purity of the CO2 as not all suppliers are able to filter out the impurities, so supplies are reduced.
It is thought that some plants in the region have now had to undergo a sufficient front end-clean-up to cope with the contaminants, but other, older plants are struggling and can therefore not reach or guarantee the International Society of Beverage Technologists’ (ISBT) CO2 purity standards.
As those in the food and beverage market will know, beverage-grade CO2 is high purity.
Elaborating on the matter, Rushing told gasworld, “Probably the worst of shortages regionally have been in the Jackson, Mississippi area. Such sources were perceived to be ‘always available’ and covering shortages originating from the ethanol problems during the pandemic, and more.”
“The so-called ‘long, hot summer’ is well underway, when usage is up; and often sources are strained, when considering history. There have been some plant turnarounds in the recent past, which have presented challenges from sources such as Hopewell, Virginia, and Augusta, Georgia, where these are key ammonia by-product sources for product.”
Ned Lane, President of CK Supply, an independent supplier of compressed gases, welding and cutting equipment, and dry ice that serves Missouri and Illinois, is also witnessing supply chain strains.
“I believe this is going to be a challenging summer/fall. CO2 demand continues to outpace the capacity being added and the current outages are only adding to that stress,” Lane told gasworld. “Natural wells are also dealing with purity issues that are reducing capacity.”
More plant closures set to impact supply in the coming weeks
Lane also believes that Praxair’s (Linde plc) Hopewell CO2 plant in Virginia is also scheduled to shut down next month (September 2022). It is believed the plant has a total capacity of 1,500 tonnes per day, equating to approximately 75 truckloads of CO2 being pulled out of the supply chain daily.
Ammonia plant closures due to scheduled maintenance occurs every year after the fertilizer season, so it is well known to the industry for planning purposes,” according to Maura Garvey, Principal, Intelligas Consulting. “The challenges surrounding the Denbury source have just made the logistics planning significantly more difficult. Since this issue is an annual occurrence, the industry and end users should be developing a longer-term plan to create a fly-wheel for the peak summer months.”
Ammonia production is a key sourcing route for CO2 production. In fact, ammonia plants have traditionally been one a large source of food-grade CO2 and while in the past decade other sources of CO2 have been invested in, including those raw gas streams from chemical operations and bioethanol plants, ammonia remains one of the largest sources.
Any shutdown in ammonia/fertiliser plants for an extended period naturally has an impact on the CO2 supply chain at some stage, as we have seen many times; CO2 shortages are almost an annual occurrence, as anyone in the industry knows.
Ammonia is a seasonal feedstock, with the peak production output for fertilisers generally from August to March, or during the winter months; hence why fertiliser companies often plan maintenance or shutdowns from April through to July.
Ammonia as a feedstock occupies a far greater share of the European sourcing pathways for CO2, with bioethanol a more dominant feedstock in the US, however such a fine tightrope of supply and demand means any disruptions to sourcing can have a significant impact.
Adding even further strain, it is believed further plant shutdowns are expected to take place over the coming weeks – meaning things could get worse before they get better. “There are at least four other smaller plants on shut down or scheduled for shut down over the next 60 days,” Lane confirmed.