December 19, 2022 • Paul Rodden • Season: 2022 • Episode: 173
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Welcome to The Hydrogen Podcast!
In episode 173, Seeking Alpha takes a deep dive into Air Products and how they’re playing in the hydrogen transition. I’ll cover the article and give my thoughts on today’s hydrogen podcast.
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Paul Rodden
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Transcript:
Seeking Alpha takes a deep dive into Air Products and how they’re playing in the hydrogen transition. I’ll cover the article and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
In an article in seeking alpha.com James Hanshaw writes, the hydrogen revolution is nice and could take Air Products investors to a 2023 high. The author starts by quoting Glenn T. Seaborg, a Nobel Prize winning chemist and chair of the US Atomic Energy Commission in 1966. said at the rate we are currently adding carbon dioxide to our atmosphere. Within the next few decades, the heat balance of that atmosphere could be altered enough to produce marked changes in the climate. Now since then, there have been 27 UN climate change conferences around the world, and they have achieved nothing except help add to the estimated 700 Giga tons of co2 we have thrown up in the atmosphere that’s close to the amount emitted since the start of the Industrial Revolution, in 1760. At the latest one of those un gatherings of the world’s leaders and experts and Egypt, no one knows how many delegates were there, but the number was estimated to be 45,000, plus media reporters and others.
All arrived from around the globe on hydrocarbon fueled polluting planes, going to conferences in vast halls and staying in air conditioned hotels, all using electricity generated from hydrocarbons. And like most before the only agreement reached was when and where the next such gathering should be held. Now, the term ESG came from the United Nations Environment Program initiative in 2005. It has become just another useless expression that turned into greenwashing by many companies, the E for environment, the S for social are anyway inextricably linked to the G for governance, good governance. That is, he says that he’s concerned about the environment and the endeavor to invest accordingly, cleaning it up and making money doing so is a good motivator. And for him that means searching for companies that are doing likewise practical things in place of PR buzzwords, and that means good governance.
Air Products is one of his choices, as that is a leader in both LNG which is the cleanest transition fuel and the ultimate clean fuel that hydrogen will be. He says that his confidence is strong that 2023 and beyond for APD or Air Products is founded on the vast and mostly un trumpeted about sums of money being invested in hydrogen worldwide. And while he goes into more detail on that later, first he talks about Air Products and Chemicals. Now Air Products and Chemicals or APD is an industrial gases company. The chemical part of the name has been dropped for several communication purposes by the company because it no longer makes chemicals. It supplies gases to those who do APD provides essential industrial gases related equipment and applications to customers in various industries including refining chemical metals, electronics, manufacturing, and food and beverage. The company’s segments include Americas, Asia, Europe, and Middle East and India. The company is also a supplier of liquefied natural gas process technology and equipment.
The company develops engineers builds, owns and operates industrial gas projects including gasification projects, carbon capture projects, and carbon free hydrogen projects supporting global transportation and energy transition. It supplies various gases such as argon, carbon dioxide, food gases helium, hydrogen, oxygen and nitrogen. Its applications include aeration, cooling, cryogenic, freezing, filling, fire suppression, heat treating hydrogen fueling, hydroprocessing, melting, inserting and blanketing oxygen enrichment and welding. But with all that being said, APD is accelerating the energy transition. And that’s by investing billions of dollars in low carbon hydrogen projects, Air Products aims to drive decarbonisation of heavy transportation and industrial sectors that are hard to electrify zero emission hydrogen fuel cell vehicles can decarbonize heavy modes of transport, like buses, trucks, ships and more while hydrogen can also provide lower carbon intensity power to heavy into sectors like steelmaking and chemical processing. And so their latest actions this reported on APDS website include increased sustainability commitment to $15 billion for capital investment in first mover, zero and low carbon hydrogen projects through 2027. A long term supply agreement for Imperial oils proposed Strathcona renewable diesel complex, with APD, supplying about half the low carbon hydrogen output from its net zero hydrogen energy complex in Edmonton, Alberta, Canada.
They also announced plans to invest approximately $500 million to build own and operate a 35 metric tonne per day facility to produce green liquid hydrogen at a greenfield site in Messina New York as well as liquid hydrogen distribution and dispensing operations. Air Products together with ACWA power and NEOM have signed an agreement for a $5 billion world scale carbon free hydrogen based ammonia production facility powered by renewable energy. The project is sited in NEOM a new model for sustainable living located in the Kingdom of Saudi Arabia. The project will supply 650 tons per day of carbon free hydrogen for transportation globally and save the world 3 million tons per year of co2. The Saudis plan is to become the world’s largest exporter of hydrogen to replace its position as the largest exporter of oil and diversify away from what will be a declining source of income. In Texas APD and AES Corporation unveiled plans recently to spend about $4 billion to build own and operate a green hydrogen production facility in Wilbarger. County, Texas. The company said that the mega scale project includes 1.4 gigawatts of wind and solar power generation along with electrolyzer capacity capable of producing more than 200 metric tons per day of green hydrogen, making it the largest hydrogen plant in the US.
They will jointly and equally own the renewable energy and electrolyzer assets, with Air Products serving as the exclusive off taker and marketer of the green hydrogen under a 30 year contract. Also in the US, APD is building the world’s longest hydrogen pipeline and Air Products says it was awarded $500 million in combined new contracts its largest ever investment in a US project to supply the proposed $1 billion Gulf Coast ammonia project in Texas. The contracts include construction of a 700 mile hydrogen pipeline from Texas City to Baytown, connecting the world’s largest hydrogen pipeline system running from the Houston Ship Channel to New Orleans APD says will also build and operate its largest ever steam methane reformer to produce hydrogen and air separation unit to supply nitrogen and a steam turbine generator for the power and utilities. There will be plenty of buyers waiting to use that hydrogen to power many things. But so with all those projects underway, let’s talk about prices. The authorized prices are one big reason that hydrogen skeptics abound. The first fuel cell appeared 182 years ago, but the difficulty and cost of producing hydrogen have been prohibitive. That is changing fast. The continued rapid investment in green hydrogen and electrolyzers. Over the next few years could mean the production costs fall under $2 A kilogram by 2030 from an average earlier this year of 380 to 580 per kilogram.
Even now at $5 A kilogram The price is competitive for running trains, and needs to be around $3 A kilogram for trucking companies due to the need for many more filling stations. Once it hits that price the needs of Europe, the US and China alone will total 4000 terawatt hours or 100 million tons reaching that will take time and a lot of additional infrastructure. APD will supply some of that before those trucks hit the road. Now some of those trucks already on the road. For instance, Hyundai in Switzerland has the first of 1600 Hydrogen trucks planned to be on the road by 2025 Those replacing current diesel trucks. But according to the author, there is one thing worth noting. But blindly ignoring by policymakers and skeptics is the full cost of filthy fuels such as coal and diesel. That full cost would include the cost of health care time out of work and consequent costs to the economy caused by breathing in the air they pollute. Now, there is one other thing that I want to add to this and it is the maintenance cost of internal combustion engines. By switching that out to fuel cells, you end up with a rather drastic decrease in the amount you have to set aside in your operating budget for engine maintenance on those vehicles.
Now from here on out, the author goes into some global investments going on with hydrogen in different areas around the world, as well as listing some of the competitors for APD, including Air Liquide, Lindy, and Chart. Now one of the reasons why I really liked this article is it’s highlighting a global company in Air Products that’s really going about the energy transition, what I believe to be the right way, as they still invest plenty of money into their current and near term, LNG projects, while still investing wisely, and long term and near term hydrogen opportunities. And they’re not picking any particular technology with which to really dive into. And that kind of portfolio balance, I think is going to be critical in the next 10 to 15 years.
All right. That’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. And as always, take care. Stay safe. I’ll talk to you later.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either. Subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening very much. Appreciate it. Have a great day.
