Areas For Success In 2010

By Patrick F. Murphy

While the last year has been rough, there are sectors of our economy with pockets of growth. These include: alternative energy; advanced materials like high-strength metals, composites, ceramics and performance polymers; R&D needed to facilitate change in high-tech areas; health care goods and services as our population ages; and the infrastructure to keep our country healthy. This article highlights some areas of upcoming growth in the gases and welding industry.

The total global industrial gas market is estimated to be $67.6 billion. North America represents $25.1 billion, approximately 37% of that total market. A modest 2% growth in North America remains significant even when compared to double-digit growth in other parts of the world. North America remains a critical growth market for the industry, and we will continue to see strategic investments.

HELIUM
While demand for helium has softened, it has been more resilient than other products. In addition, supplies have improved in the last few years, alleviating the shortage conditions of 2006-7. If new, although more expensive, sources are commercialized as expected, and the adoption of substitution and helium-recycle technologies continues, supply is expected to be sufficient to meet anticipated demand over the next decade. Nonetheless, the industry is inherently susceptible to outages due to the nature of the supply chain.

As the Bureau of Land Management system depletes over time, reliance on other sources will continue to increase, and the industry will lose valuable “swing” capacity, complicating supply chains and increasing the costs associated with management of supply-demand balance.

ARGON
Nearly 80 percent of argon is sourced from oxygen plants for metals and petrochemical customers. Steel industry consolidation (less plants running) and the restructuring of the economy has reduced or eliminated oxygen demand, forcing producers to run plants solely for argon. Under these circumstances, costs are high. There is no option on the immediate horizon to add supply or address cost. “Clean coal” projects are potential new argon sources, but they are large scale and very expensive, and financing is not available.

INDUSTRIAL GAS
The processing of more sour and heavy crude at refineries means increased demand for hydrogen, nitrogen, oxygen, argon and specialty gases. Tonnage-scale hydrogen plants are the biggest winner from the fundamental shift in crude oil processing.

As oil and gas companies work to stimulate higher levels of production, there is an opportunity for carbon dioxide, nitrogen and argon. For example, in Mexico, PEMEX is using huge volumes (55,000 tpd nitrogen: five units with each at 11,000 tpd) to try and stem its crude oil production decline.

Trapped methane in natural gas shales requires carbon dioxide, nitrogen, specialty foams or water injected to fracture, or “frac,” the rock. This allows more methane to escape to producing wells. There is a large need for purging, especially for pipelines.

HYDROGEN
In September 2009, leading oil, industrial gas and energy companies agreed to build up a hydrogen infrastructure in Germany that will lead to hundreds of thousands of fuel cell vehicles being sold and obviously fueled. Seven OEMs—Ford, GM, Honda, Toyota, Daimler, Kia/Hyundia and Renault/Nissan—are supporting the supply of hydrogen cars and fuel supplies elsewhere in Europe, Asia and the United States. This means we'll be seeing many more hydrogen filling stations.

Hydrogen fuel cell forklifts are just the beginning of equipment initiatives. Across the United States, hydrogen fueling stations are being installed in warehouses for refilling forklift fuel cells on site.

NEW ENERGY
As society works to reduce energy consumption, more efficient products are in demand. Energy-efficient lighting requires higher concentrations of krypton, xenon and special isotopes.

Gases being used for producing new energy sources, fuels and cutting gases for infrastructure include: high purity gases and nitrogen for solar PV production; compressed and cryogenic gases as fuels; and dopants, etchants, precursors and chamber cleaning gases.

Oxygen will be used in coal gasification projects and enhancement of conventional coal burning using oxy-fuel. Spec gases will be needed to produce photovoltaic cells for solar farms and windmills. Not only will industrial gases be used to support other energy sources, but they, themselves, will be used as the fuels. The capabilities needed to make and sell products like compressed gases and LIN and LOX are the same ones needed to make and sell compressed and liquid hydrogen fuel and liquefied natural gas.

Corporations, federal labs, scientific and engineering schools are reorienting more resources from traditional areas to alternative energy. Local governments are starting up energy incubators for job creation and economic growth. Before any new process gets to commercial scale, it must be tested using small volumes of process and calibration gases.