STUDY REPORTS U.S. HYDROGEN SALES INCREASED OVER THE PAST FIVE YEARS AT A RATE OF 25 PERCENT ANNUALLY
SRI Consulting Study Reveals That Several Large Hydrogen Plants Have Been Built to Keep Up With Increased Demand
MENLO PARK, Calif. March 30,1998 --- According to a recent SRI Consulting study, hydrogen sales in the United States have increased at an average annual rate in excess of 25 percent during 1993 -1997.
This high rate of growth primarily reflects the addition of seven
large on-site plants capable of generating 485 million standard cubic feet per day of hydrogen to serve refineries. Hydrogen demand at refineries is an international trend; Western Europe is experiencing growth due to environmental regulations, Latin America is seeing increases in heavy crude upgrading capacity and overall demand for refinery products have pushed sales in Asia.
In the past, refineries met their hydrogen requirements with recovered hydrogen or built, owned and operated their own hydrogen plants. Recognizing an opportunity to expand their business, industrial gas companies convinced many refineries to treat hydrogen as a utility
purchased from an industrial gas company. Refineries, often strappe for cash to implement other capital improvements, were receptive to purchasing hydrogen through single- and multi-user pipelines owned and operated by an industrial gas company. Efforts to penetrate the refining business have led to several partnerships between industrial
gas companies and engineering companies. Air Products and Chemicals, Inc. was one of the first to do this when the company formed an alliance with KTI Group. Since then, BOC Gases
has formed a partnership with Foster Wheeler, Air Liquide has established alliances with Haldor Topsoe A/S and Howe-Baker Engineers, and Messer has linked up with Lurgi.
Although more than 90 percent of the hydrogen purchased in the United States is produced and delivered in gaseous form to large volume consumers, liquid hydrogen sales are an importantcontributor to industrial gas company revenues. Since Praxair brought two new liquid
hydrogen plants on stream in 1995 and 1997, Praxair and Air Products nearly split 90 percent of North America's installed liquid hydrogen capacity. About 20 percent of this capacity is installed in Canada, built in the 1980s to take advantage of relatively low power rates, but most of the production is destined for U.S. markets. Gaseous hydrogen is not traded in significant quantities because of the high cost of transportation. The point at which on-site or captive hydrogen becomes more economic than liquid or trucked gaseous hydrogen may change dramatically over the next five years as small scale
hydrogen generation technologies are improved as a by-product of efforts to commercialize hydrogen-fueled fuel cells. Electrolysers, which use electricity to break water down into hydrogen and oxygen, are also becoming more competitive. Industrial gas companies are
watching these developments closely as the developers of these new technologies decide how to enter the market; independently or through companies already in the business.
Over the 1996-2001 period, the rate of growth in merchant hydrogen demand is expected to slow to about 10 percent per year, reflecting the higher installed demand base. In addition to refining, the metals industry is one of the fastest growing markets as companies switch to 100 percent hydrogen atmospheres for steel annealing.
SRI CONSULTING Subsidiary of SRI International, 333 Ravenswood Avenue, Menlo Park, California 94025 (650) 859-2000
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