Future looks favorable for industrial gases It's a $650 million a year industry now, and all the portents for future growth remain favorable. Yet top executives of the three largest air separation companies—Air Products & Chemicals, Air Reduction, and Union Carbide—are restrained in discussing business prospects for industrial gases. In addition, there are any number of exciting new uses for industrial gases. Sewage treatment and coal gasification processes together promise enormous potential markets for oxygen in the coming decade. Yet industrial gas producers learned from the experience of the 1960's that production growth alone doesn't create a healthy business, and they say it's a lesson not forgotten. The top managers of the industrial gas business for Air Products, Airco, and Union Carbide's Linde division, though fierce competitors, have a lot in common. Each one of the three is under 45 years old, each has held the job in his company's industrial gas operations about two years, and each has his own game plan for returning vitality and profits to the business. Turnaround. Air Products' Pat Dyer, Linde's Al Flamm, and Airco's Chuck Simpson manage the industrial gas operations of their respective firms. These companies account for about 80% of industrial gas sales. The business is capital intensive. In the past few years, returns have been low and capital can be invested more profitably in other business areas. The industry is in a turnaround period and seems headed toward slower growth with more emphasis on profits. Pat Dyer, vice president of Air Products' industrial gas division, explains that the whole nature of the business has changed. He characterizes the first eight years of the 1960's as a period of price wars in the industry. "We're statesmen now," he adds. At Carbide, Al Flamm, vice president and general manager of industrial gases for Linde, echoes similar sentiments. "We are placing more emphasis on business sophistication. In a nutshell this means holding our share of the market and increasing profitability. Basically we plan to do this by expanding in areas where we have cost advantage or expect to have one in a few years." Like his counterparts at Linde and Air Products, Airco's Chuck Simpson is an architect of change. "Our sales force is now operating on the philosophy that sales volume at any price doesn't have a home at Airco." Hindsight With 20/20 hindsight, it's easy to see how industrial gas produc-
ers marched headlong into the overcapacity situation in bulk oxygen and nitrogen which faced them three years ago. The steel industry made the transition in the 1960's to the basic oxygen furnace and oxygen injection of open hearths. Gas producers operated on a "get the business today and profits will take care of themselves in a few years" basis so it wasn't difficult to justify some zany economics. By 1969, however, the boom was over, the steel industry's demand for oxygen began to taper off (although steel still remains a growing market), and industrial gas producers found they had overexpanded. Since 1969, the industry has built onsite plants to supply large-volume customers. The construction of merchant plants ceased and it is only within the past year that returns rose to a point that Air Products felt justified in committing investment to a 250 ton-per-day merchant oxygen plant at Creighton, Pa. The costs of shipping merchant product to customer sites are increasing rapidly. Steeply rising shipping costs are causing a reversal in the historical pattern of building larger and larger plants, according to Air Products' Pat Dyer. Smaller units nearer markets can be more advantageous than giant air separation plants, he explains. Chuck Simpson says a plant that is shut down means that product must be shipped from another location to supplement production. Since the cost of shipping often exceeds the cost of making the product, Airco
places stronger emphasis on preventative maintenance to ensure plant reliability. The industrial gas business is changing in some other important ways. Firms continue to eliminate unprofitable operations, cut costs, and computerize inventory and distribution systems. Finally, the industry is looking at programs to sponsor and processes to develop that result in the consumption of large volumes of oxygen and nitrogen. Market. Linde, Airco, and Air Products account for about 80% of merchant gas sales. Linde has about 35% of the total market, followed by Airco with about 25% and Air Products with 20%. Other producers include Big Three Industries, National Cylinder Gas division of Chemetron, Air Liquid, Houston Natural Gas, Burdette Oxygen (Cleveland), Burdette of Norristown, Pa., Dye Oxygen, Alabama Oxygen, and Gulf Oxygen. Pollution abatement proffers numerous new markets for oxygen. Foremost and most widely publicized of these markets is that for secondary sewage treatment. Sewage treatment processes replacing air with oxygen seek to improve the quality and spread of bacterial action. Linde is the most optimistic for the future of this business, having licensed its Unox process to 24 municipalities already. It says Unox could mean a market for oxygen equal to the tonnage consumed by the steel industry. Air Products will install its OASES (oxygen-activated sludge environmental systems) process in Fairfax County, Virginia, in a full-scale secondary treatment plant.
Nitrogen sales will spearhead industrial gases growth Production (Billions of standard cubic feet) 1970
Annual compound growth rate (Per cent) 1965-70 1971-75*
Oxygen On-site
315
6%
5%
49
4
3
On-site
93
15
11
Merchant
54
15
9
3
17
10
Hydrogen
28
-1
6b
Acetylene
14
-3
0
333
-6
-4
787
3
4
Merchant Nitrogen
Argon
Carbon dioxide (Thousands of short tons) Solid Liquid and gas a Forecast, Sources:
b 8.5% a year, including the space shuttle and other government programs.
U.S. Department of Commerce, C&EN estimates OCT. 18, 1971 C&EN 23
ι
Dyer:
the business has changed
Airco is also offering an oxygen sec ondary sewage treatment process and has an ozone tertiary treatment proc ess in a pilot plant. Airco describes its oxygen secondary treatment proc ess as one in which waste water to be treated is combined with oxygen and a recycle stream of active microor ganisms. The biological action of the organisms occurs in a pipeline reactor and purified water is separated in a clarifier. On-site oxygen production (gas) should reach 315 billion standard cu. ft. this year. Production should grow 5% a year compounded to 1975. Mer chant oxygen production (liquid) may total 49 billion cu. ft. for 1971 and is predicted to grow 3% a year over the next five years. There has been a movement in the industry toward re placing low-purity oxygen with highpurity. The advent of oxygen sewage processes may reverse this trend since 99.95% purities aren't required in these processes. An expected energy short age in the U.S. could spur the devel opment of coal gasification processes. Stearns-Roger Corp. estimates that be tween 1974 and 1985 26 large-scale plants to make substitute gas from coal and nine plants to make liquid fuels from coal will come on stream in this country (C&EN, Sept. 27, page 15). A plant making 250 million cu. ft. per day of gas will consume between 2100 and 4300 acre feet of waste a year to produce hydrogen. Hydrogen could be produced by using oxygen in the
partial oxidation process or by steam reforming. Incineration. Another significant market for oxygen could be spawned in the incineration of solid municipal wastes. Although details of the proc ess are sketchy, Union Carbide is known to have developed a solid waste incineration process using oxy gen that can operate on a completely closed cycle with no pollutants escap ing to the atmosphere. Metal and glass by-products streams can be re covered. The firm says that this proc ess could rival Unox in its oxygen con sumption. The process is more eco nomical and cleaner, and produces a valuable fuel gas by-product in com parison to existing municipal incinera tors. The impact of sewage treatment, coal gasification, and municipal solid waste disposal on oxygen's growth is not reflected in growth estimates since it's still anybody's guess when this market will begin to grow and how large it will ultimately become. Merchant nitrogen sales now exceed those for oxygen. The most promising area for growth with liquid nitrogen will continue to be refrigeration, par ticularly convenience foods. Liquid nitrogen is used both for fast freezing of foods and for cooling during trans port. Argon consumption should still grow at 10% a year but most of this in crease will be accounted for in the use of argon for making stainless steel via Linde's AOD (argon oxygen decarburization) process. Argon's use as a shielding gas in welding is not grow ing appreciably, Linde points out. For carbon dioxide, solid markets will continue to lose out to gas and liquid. Airco is quite bullish over prospects for pelletized solid carbon dioxide, however, in its system for re frigerating food on jet liners. The firm says that at full passenger load, a Boeing 747 requires about 1000 pounds of carbon dioxide p e r flight to handle food service. Hydrogen production should grow 6% a year over the next five years, not including government and NASA re quirements. The space shuttle and other government programs could add an average increment of 4.6 billion standard cu. ft. per year of hydrogen to 1975. When provision for govern ment consumption is made, total hy drogen use could grow 8.5% a year to 1975. Acetylene is predicted to show no growth as chemical producers shift from acetylene to other more economi cal starting materials.
COBRATEC, THE COPPER STOPPER Cobratec® an aromatic triazole, stops copper tarnish, stops copper corrosion, too. It builds a monomolecular surface layer on copper and copper alloys that keeps them bright and tarnish free. High temperature resistance and stability, even in acid formations, make Cobratec a versatile preventative maintenance tool. Add it to water recirculating systems, lubricating oils, cooling fluids, rolling oils and greases, or antifreezes—wherever metal is subject to corrosion. For your free sample of Cobratec and technical literature write — SHERWIN WILLIAMS CHEMICALS, P.O. Box5638, Cleveland, Ohio 44101. Or call (216) 566-2960.
m m sherwin _ ^ Williams M m chemicals TM
OCT. 18, 1971 C&EN 25
