PX to Provide Hydrogen to Valero - Analyst Blog
June 07 2011 - 8:30AM
Zacks
Recently Praxair
Inc. (PX) has been awarded a contract to supply 270
million standard cubic feet per day (scfd) of hydrogen to Valero
Energy Corporation. Subsequent to the deal, Praxair decided to
enhance its hydrogen capacity in Texas and Louisiana in order to
meet the requirement. Besides, the company will also be expanding
its Mississippi River corridor hydrogen pipeline system.
Praxair will install a new hydrogen
plant in Louisiana with a production capacity of 135 million scfd.
The plant will be located at Valero’s St. Charles refinery and is
expected to come online in the fourth quarter of 2012.
Additionally, Praxair will be
expanding its Louisiana pipeline by 50 miles and connect its new
plant at St. Charles with its existing plant in Geismar. The
extension is expected to consummate in the second quarter of 2012.
These expansions will enable Praxair to satisfy Valero’s as well as
other customers’ hydrogen needs.
In Texas, a new 135 million scfd
hydrogen plant at Valero’s Port Arthur refinery will be installed.
The plant is expected to begin production in the first quarter of
2013.
It is evident from the present
scenario that the growth prospects of industrial gas producers are
very bright going forward, with demand for gases expected to
increase manifold due to their wide application areas. Hydrogen for
refining; oxygen for healthcare; and nitrogen and carbon dioxide
for oil and gas production are being increasingly used.
The demand environment for hydrogen
is very strong, particularly in emerging economies of Brazil,
China, Russia and India. Praxair is expected to launch a large
hydrogen plant in India by 2011 or, latest by 2012. Project backlog
for the company remains strong at 40 large projects with capital
value of $2.5 billion.
Praxair is one of the leading
companies engaged in the production and distribution of industrial
gases, primarily catering to demands in North America, South
America, Europe, and Asia. Prime competitors of the company include
Air Products & Chemicals Inc. (APD) and L'Air
Liquide SA.
We currently maintain a Neutral
recommendation on the stock.
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