Air Products said Wednesday it will spend hundreds of millions of dollars in projects toward a proposed ammonia production plant along the Gulf Coast.
The Trexlertown global industrial gas giant said it has locked in to deals for 20 years to supply hydrogen and nitrogen. Specifically, Air Products will build, own and operate a hydrogen-production facility, a nitrogen air-separation unit and a steam turbine generator to supply power.
The work will go toward a planned $600 million ammonia production plant for Gulf Coast Ammonia in Texas City, Texas, that is expected to produce 1.3 million tons of the gas used to make fertilizer.
In all, Air Products said it plans to invest $500 million in contracts, its largest U.S. investment in the Lehigh Valley company’s history, company CEO Seifi Ghasemi said in an afternoon conference call with analysts. He also said officials believe it is the single-largest investment made by any gas company in the country.
“There has been this talk that Air Products is investing in China and the Middle East, because [the company] can’t compete in the Gulf Coast,” said Ghasemi, who is also chairman and president. “This demonstrates that we can compete in the U.S.”
The project also includes extending a hydrogen pipeline between Texas City and Baytown, Texas. Air Products said the Gulf Coast pipeline, built in 2012, stretches about 700 miles from the Houston Ship Channel to New Orleans, and is the largest in the world.
Air Products said the pipeline segment of the project is targeted for completion in the second half of 2021, with the ammonia plant expected to begin commercial operation in the first half of 2023.
The pipeline supplies customers with about 1.7 billion feet of hydrogen per day from 24 hydrogen production facilities. The company also has hydrogen pipelines in California, Canada and the Netherlands.
Jake Dollarhide, co-founder and CEO of Longbow Asset Management in Tulsa, Okla., which follows Air Products, said the news will extend Air Products’ domestic footprint as well as prove rewarding to shareholders.
“Air Products just reaffirmed its dominance and leadership within its own industry,” Dollarhide said.
Since arriving five years ago at Air Products, Ghasemi has focused on building the company’s industrial gas business by, among other things, spinning off its electronic materials business and selling its performance materials business. The company has had more resources to pursue major industrial gas projects and, potentially, acquisitions of smaller industrial gas companies.
Air Products, one of two locally based Fortune 500 companies along with Allentown’s PPL Corp., operates in 50 countries with about 17,000 employees, including about 2,250 in the Valley, most at the Trexlertown campus.
Air Products is building a $400 million headquarters not far from its current corporate office in Trexlertown, with plans to sell its current headquarters and 41 acres to German specialty chemical company Evonik to offset some of that cost.
While the company did not specify what the Gulf Coast work will mean in terms of local employment, the company’s engineering and other “support functions” will benefit, spokesman Art George said.
Morning Call reporter Anthony Salamone can be reached at 610-820-6694 or asalamone@mcall.com
