Air Products, Enterprise Products Expand Tie-Up - Analyst Blog
April 15 2014 - 5:55PM
Zacks
Air Products and Chemicals Inc. (APD) has inked
a deal with Enterprise Products Operating LLC, a fully-owned
subsidiary of Enterprise Products Partners L.P., to increase
hydrogen supply for refinery and petrochemical customers connected
to Air Products' vast Gulf Coast Connection Pipeline system.
Under the long-term agreement, Air Products will build, own and
operate a 40 million standard cubic feet per day hydrogen
production facility. The facility will process a hydrogen-rich
off-gas stream from a new propane dehydrogenation (PDH) facility
which Enterprise is currently building in Mont Belvieu, TX. The PDH
facility is expected come on line in the third quarter of 2015.
Air Products already processes off-gas at Enterprise's Mont
Belvieu complex servicing an existing facility and the deal expands
its long-term relationship with Enterprise.
With the agreement in place, Air Products can cater to the
increasing demand of its customers as well as increase the supply
reliability and flexibility of its system. It also enables the
company to purchase more off-gas during the life of the
contract.
Air Products benefits from a diverse customer base, sustained
pricing power and cost-reduction measures. New business deals and
strategic investments are expected to support results in fiscal
2014.
Air Products is also seeing incremental opportunities in the
liquefied natural gas (LNG) space. Moreover, it is making
significant progress in its hydrogen business and is constructing a
new world-scale hydrogen production plant in Canada.
However, Air Products’ tonnage gases business continues to face
challenges due to maintenance outages. Moreover, higher energy
costs pose a threat to margin expansion.
Air Products is a Zacks Rank #4 (Sell) stock.
Other companies in the chemical industry with favorable Zacks Rank
include Methanex Corporation (MEOH),
LyondellBasell Industries NV (LYB) and
Olin Corp. (OLN). All of them hold a Zacks Rank #2
(Buy).
AIR PRODS & CHE (APD): Free Stock Analysis Report
LYONDELLBASEL-A (LYB): Free Stock Analysis Report
METHANEX CORP (MEOH): Free Stock Analysis Report
OLIN CORP (OLN): Free Stock Analysis Report
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