gasworld US Edition SAMPLE

MARKETS – INTELLIGENCE – TECHNOLOGY

®

US EDITION ISSN-1052-0139 www.gasworld.com Volume 54, No. 9

Incorporating CryoGas International

Helium

Sourcing hits new heights INSIDE THIS ISSUE THE HELIUM MARKET

Helium in surplus, demand flat, page 50 HELIUM AIRSHIPS ON THE RISE

Airlander 10 gives technology lift-off, page 40 THE BEGINNING OF A NEW ERA

An interview with Michael J. Graff, page 30

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CONTENTS

32

Helium market in 2016

24

Changing dynamics in US

NEWS

FEATURE ARTICLES

10

North America Texas plant investment expands neon supply

28

Hot topic High pressure cylinders – why your strategy matters

16

Personnel Chart names William C. Johnson President and COO

30

The beginning of a new era for the industry An interview with Michael J. Graff

18

Technology User feedback sees revamp to POCs

32

Helium in 2016 Brisk sourcing activity, despite ample supply

20

Hydrogen Air Products cuts ribbon on largest SMR in Canada

36

IACX taps the BLM pipeline and continues growing

By Brian Witt

22

Distributor Zone LDA members/vendors explore business opportunities

40

Helium airships are on the rise Airlander 10 takes technology to new heights

24

Intelligence

44

Countering fraud in food and beverages Harnessing science to identify counterfeit products

48

10 minutes with...

Mark Raimy

50

The 2016 worldwide helium market Helium in surplus, demand flat

56

ATMOsphere America 2016 A review by Andrew Williams

58

Company profile CryoVation

60

The art of selling Sold to the lowest bidder

62

Events/Ads index

MARKETS – INTELLIGENCE – TECHNOLOGY ®

US EDITION ISSN-1052-0139 www.gasworld.com September 2016 Issue 01

On the cover this issue

Incorporating CryoGas International

Helium’s ample supply A market reverses itself INSIDE THIS ISSUE THE HELIUM MARKET

A rare gas market enjoys ample supply HELIUM PRODUCERS

Brisk sourcing activity THE BEGINNING OF A NEW ERA

Air Liquide’s game changing acquisition

With this cover we introduce our new-look title for the North American market to all of our readers within the industrial gases community. We’ve been working on this rebrand for several months now, and are delighted to present, gasworld (US edition).

September 2016 • gasworld US Edition | 05

NEWS

Texas plant investment expands neon supply Linde Electronics and Specialty Gases has made another investment in its vertically integrated neon supply chain, with the installation of a production facility at the group’s large air separation unit (ASU) in La Porte, Texas.

The new production unit is part of a $250m investment in Linde’s La Porte site, and will add 40 million litres of neon annually to these capabilities.

Linde is also upgrading purification and distribution capabilities at several locations around the world, as the company seeks to assure a long-term and secure supply of neon for its customers globally.

Customers in the semiconductor lithography and laser vision correction markets in particular will be supported by the expanded supply chain.

“This is an important part of our strategy to increase our overall neon supply and meet the growing needs of our

“We believe this new investment will allow Linde to further enhance this leadership position well into the future...”

475

customers,” said Matt Adams, Vice-President, Electronics and Premium Products. “It is yet another example of Linde’s commitment to provide a robust supply chain of consistent quality products to our global customers.”

Shortage The timing of Linde’s investment in neon supply is particularly pertinent, given that the gas has been in unusually severe shortage in 2015/16.

A by-product of very large oxygen plants, neon has historically been in oversupply since its days as a strategic product for both the US and former Soviet Union (USSR) in the production of

Haun Welding Supply makes double acquisition Haun Welding Supply Inc. has expanded its presence in the state of New York after acquiring two firms in the region, Danes Welding Supplies and Johnson Welding Supply.

Haun secured both firms in

475 million liters.

A handful of mothballed plants could address this imbalance if started up again, gasworld understands, while it is thought that discussions have taken place at all major suppliers to add capacity from 2016-2018.

Linde is the only neon Demand for neon totaled 475 million liters provider with end-to-end in 2015 – with supply supply chain and quality only reaching 400 control capabilities inmillion liters house – from plant design their respective and production to multiplehigh-powered laser site purification and blending. weaponry.

Reflecting on this and the This production, coupled significance of the new capacity, with the fall of the USSR, Adams added, “Linde already effectively created a significant has a deep understanding of the stockpile of neon – largely in latest technologies, OEM activity Eastern Europe – that continued and customer requirements.” right the way through to 2013.

“We have decades of As gasworld explored in its experience in refining our September 2015 Hot Topic, this global production, analytics, over-supply began to tighten in distribution and local stocking/ 2014 as many existing oxygen service network. We believe plants in Eastern Europe were this new investment will allow either shutdown or replaced by Linde to further enhance this new units that are not equipped leadership position well into with neon recovery capability. the future.”

Such decline in production RELATED ARTICLES created a sizeable imbalance in Hot topic: Neon the market; in 2015 production totaled around 400 million liters The new rare gas shortage of 2015 per year, with demand at around gasworld.com/2008118.article Lighting and laser applications are among the biggest drivers for neon demand.

separate transactions. Financial details were not disclosed.

The two new additions both provide compressed and liquid gases, as well as various welding products and equipment, and will augment Haun’s presence in

10 | gasworld US Edition • September 2016

Western New York.

Joshua Haun, Director of Operations and Marketing at Haun, commented on the transactions, “Mark Johnson has done a great job building customer relationships in the Batavia area and Danes has been a leading distributor in the Rochester market for over 60 years.

“We have had a solid business

relationship with Danes through the years – the mutual respect we have had for each other’s businesses made this an easy decision.”

A fourth generation family-led business, Haun Welding Supply distributes welding equipment, tools, and supplies throughout the state of New York, northern Pennsylvania and Vermont, and operates 19 stores in the region.

www.gasworld.com/region/north-america

NEWS

American Welding & Gas expands in South East with acquisition of Norton Welding Supply, Inc. distributed among the major companies, the largest of which was Airgas mainly due to a strong packaged gases business in the area.

American Welding & Gas, Inc. (AWG), an independent manufacturer and distributor of industrial gases and welding supplies in the US, has acquired Norton Welding Supply, Inc. Based in the state of Georgia, Norton serves the Georgia and South Carolina regions with industrial gases and welding supplies. It is understood that this acquisition will solidify AWG’s position in this area of the US, after the company also recently opened its 72nd independent production site in Columbia, South Carolina.

A press release explained, “The acquisition and opening of our new Columbia gas production and distribution center is part of our core growth strategy in key

markets and strengthens our commitment to efficiently supply our customers.”

Bill and Sandra Norton will stay with the company, it confirmed, and will work together with AWG’s associates for a smooth transition.

AWG is firming up its position in what is the largest regional industrial gas market in the US, according to gasworld Business Intelligence.

In 2015, the commercial industrial gas market in the South East reached peak revenues of $4.7bn. This was up from $3.4bn in 2005, indicating a healthy average annual growth rate of 3.4% for the decade.

Independent industrial producers and distributors

Bedfont Scientific passes FDA inspection

AHRI accredited refrigerant lab opens

Loftware, Inc. marks 30 years in business

Linde-BASF complete CO2 capture pilot project

Bedfont® Scientific Limited, a medical device manufacturer, has passed its latest US Food and Drug Administration (FDA) inspection.

Following an inspection of its premises in Kent, UK, the breath analysis specialist was found to be fully compliant with Good Manufacturing Practice (GMP) – meaning its products are manufactured to the highest possible quality.

Louise Bateman, QA & RA Manager, stated, “With this, it shows we are working as a compliant company to FDA standards and are able to continue to provide highquality products to the US.”

The Refrigerant unit of Airgas has opened a new AirConditioning, Heating and Refrigeration Institute (AHRI) accredited refrigerants testing laboratory in Atlanta.

The facility, which is housed in Airgas Refrigerants’ filling and reclamation site in Atlanta, Georgia, took around 12 months to design and construct and is used to test samples from manufacturers’ bulk tankers, in house reclamation, service technicians and reclaimed gas cylinders for purity and noncondensable gases.

The lab can process up to 25 analytical results per day, with a turnaround time of 1-2 days.

Loftware, Inc. a global market leader in Enterprise Labelling Solutions, has celebrated its 30th year of business.

Three decades ago, in 1986, Loftware’s founder, Andy Anderson, had a vision to create PC-based graphical barcode label design software.

Anderson’s initial innovation breakthroughs saw expansion in the 1990s, when the first Windows-based label design and printing software was introduced. Today the company has expanded to serve thousands of companies across the globe with its labelling solutions, such as Parker and GE.

The Linde Group and BASF have successfully completed a joint pilot project to improve the capture of carbon dioxide (CO2) from flue gas at a coal-fired power plant at the National Carbon Capture Center (NCCC) in Wilsonville, Alabama.

The companies captured over 30 tons of CO2 per day at a capture rate of more than 90% in the project. In addition, the purity of captured CO2 was more than 99.9%.

The technology combined Linde’s CO2 capture process and engineering with BASF’s advanced aqueous amine-based solvent and process technology.

generated around 14% of commerical industrial gas revenues in the region in 2015, while the bulk of revenues in the South East are fairly well

“The acquisition and opening of our new Columbia gas production and distribution center is part of our core growth strategy in key markets...”

$4.7bn In 2015, the commercial industrial gas market in the South East reached peak revenues of $4.7bn

September 2016 • gasworld US Edition | 11

NEWS

Air Products hits captured CO2 milestone, company transports its three millionth ton Air Products has hit a major milestone after successfully transporting its three millionth metric tonne of captured carbon dioxide (CO2) from its hydrogen production facility in Port Arthur, Texas.

The Capture Demonstration Project, which is sponsored by the US Department of Energy (DOE) and managed by the © Air Products | Air Products’ carbon capture facility in Port Arthur, Texas.

National Energy The EOR unit could now Technology produce 60-90 million Laboratory (NETL), It is now estimated that the adsorption (VSA) extra barrels of oil via captures more than West Hastings Unit could machinery.

CO2 injection 90% of by-product produce between 60-90 The three million CO2 emitted from two million additional barrels of oil tons of captured CO2 commercial-scale steam have been and continue via CO2 injection, according methane reformers (SMRs) at to the DOE’s Fossil Energy to be used for enhanced oil the facility. organization. recovery (EOR) at the West The site utilizes the The Air Products project, Hastings Unit oilfield in company’s vacuum swing which was originally instigated southeast Texas.

60

“The three million tons of captured CO2 have been and continue to be used for enhanced oil recovery at the West Hastings Unit oilfield in southeast Texas” in October 2013, is supported through the DOE’s Industrial Carbon Capture and Storage (ICCS) program, which is actively advancing the deployment of carbon capture and storage (CCS) technologies for industrial sources at both commercial and utility scales.

RELATED ARTICLES Linde-BASF complete CO2 capture pilot project Page 11

Illinois Instruments celebrating its 30th year

Syngas added to expanded GSTC agenda

Cryogenic freezing lauded in white paper

Praxair price hike for various bulk gases

Illinois Instruments, Inc. is celebrating its 30th year in business as one of the leading specialists and manufacturers in gas and moisture measurement.

The company was founded in 1986 to provide a manufacturing, sales, customer service, and technical support function for the North, South, Central American, and Canadian markets.

It produced its first oxygen analyzers in McHenry, Illinois in 1986 before expanding into the permeation gas analyzer market in 2002 due to high demand. The same year saw the company move to its current headquarters in Johnsburg.

The Gasification and Syngas Technologies Council (GSTC) has announced an expanded and broadened annual conference agenda, on the back of forming two strategic allegiances with syngas and methanol focused institutes this year.

Previously known as the Premier Gasification Association, the organization expanded to become the GSTC in January 2016, encompassing the syngas production, processing and conversion industries as well. The GSTC annual conference takes place from October 16-19 at the Westin Hotel in Vancouver, BC.

Linde LLC has released an informative white paper exploring the benefits of using advanced cryogenic freezing systems at food processing plants. Entitled High-Efficiency Cryogenic Freezing for Food Processing, the paper highlights an overview of the corporation’s cryogenic technology and details its variety of solutions for efficient freezing.

The paper covers tunnel freezers, individually quick freezing (IQF) freezers, immersion freezers, spiral freezers, immersion spiral freezers, impingement freezers, pellet freezers and cryomechanical freezing systems.

Praxair, Inc. has notified bulk industrial gas and medical gas customers in the US and its territories of price increases of up to 15% for nitrogen, oxygen, argon, hydrogen, helium, and carbon dioxide, effective July 15, 2016, or as contracts permit.

These adjustments support continued investments in capacity, reliability, and efficiency of Praxair’s operations and enhancements to the company’s production and distribution capabilities.

Price adjustments will vary as permitted by individual supply contracts. Praxair price increases were effective January 1, 2016.

12 | gasworld US Edition • September 2016

www.gasworld.com/region/north-america

Look Before You L e ap W hen the time comes to sell your company, be sure to choose a knowledgeable, experienced acquisition partner who will let you know exactly what to expect – before, during and most importantly, after the sale. Tech Air has a proven track record of acquiring small- to mid-sized companies from coast to coast, developing individual exit strategies that meet every seller’s short and long-term goals. So far, so good – nobody has jumped off a cliff yet!

For a better look, contact Myles Dempsey for a confidential, no-obligation evaluation at (203) 731-8981 or myles@techair.com.

JOIN THE GROWING FAMILY OF TECH AIR COMPANIES:

Esquire Gas Products Company Enfield, CT

Dressel Carlisle, PA Hazleton, PA Lancaster, PA Cogan Station, PA York, PA Hagerstown, MD

Prest-O-Sales & Service, Inc. Long Island City, NY

East Coast Hydro Testing & Gases Augusta, GA

Prest-O-Peconic, Inc. Riverhead, NY

Compressed Gases of Augusta, Inc. Augusta, GA Gainesville, GA

Corp Brothers Inc. Hyannis, MA Providence, RI

Endweld Supply Corporation Johnson City, NY Ravena Welding Supply Ravena, NY

L & M Welding Supply, Inc. Mobile, AL

TechAirFirstStep.com

Gas & Alloy Supply Co. Dallas, TX U.S. Oxygen Arlington, TX McKinney, TX McGinnis Welding Supply Co. Vernon, TX Wichita Falls, TX Specialty Air Technologies, Inc. Long Beach, CA Geneva Gas & Supply North Hollywood, CA

Myles P. Dempsey, Jr. Chief Executive Officer Tech Air

DISTRIBUTOR ZONE

→ Distributor zone Members/vendors explore opportunities at LDA Meeting [LDA] The Linde Distributor Association (LDA) recently completed its 21st consecutive Annual Membership Meeting at the Loews Portofino Bay Hotel in Orlando, Florida.

The meeting provides the opportunity for LDA members to share ideas for business improvement and to network with preferred vendors.

“I’m always impressed with the enthusiasm at the annual meetings, which bring members and vendors together to enhance business opportunities,” said Mark Falconer, Co-Chairman of LDA and President of Minneapolis Oxygen Company, headquartered in Minneapolis, Minnesota. “However, while we continue to have strong attendance, I believe the meetings would be exponentially better if we had our full membership of 62 independent distributors in attendance and participating. We’re determined to have full membership participation next year.”

“It’s critical that all our members stay abreast of all the new products and services the vendors have to offer” Established in 1993, LDA enables its independent gases and equipment distributor members to leverage their purchasing power to achieve volume discounts and earn rebates from equipment suppliers.

During the general session, Bob VanKirk, Head of Distributors, US Packaged Gas Products, and Caribbean for Linde LLC, updated members and vendors on the Linde supply chain, including an announcement of a new air separation 22 | gasworld US Edition • September 2016

unit (ASU) Linde plans to build in the Southeast.

Terry Hall, Co-chairman of LDA, was very impressed with the quality of the presentations made by the vendors during the communications sessions, stating, “The presentations went off very well and were very well received. It’s critical that all our members stay abreast of all the new products and services the vendors have to offer, as well as the various deals that are coming down the pipe.”

John Tillman Company, of Compton, California, was chosen LDA Vendor of the Year, which is based on service, delivery, and sales communication. The company manufactures personal protection solutions for welders and other industrial workers.

This is the second time John Tillman has received the Vendor of the Year Award.

“The entire Tillman team is honored to be recognized by the LDA,” said Blake Brown, President, John Tillman Company.

“We are extremely thankful for the relationship over the years and we will continue to work very hard to deliver value and quality in the future.”

This year’s LDA meeting was sponsored by preferred vendors CK Worldwide, Chart Industries, CryoVation, Direct Wire & Cable, Dynaflux, ESAB/Victor Technologies, Flame Technologies, Gas Innovations, Hougen, Hypertherm, Linde LLC, Metabo, Miller/Smith Equipment Company, Norton Abrasives, Ratermann Manufacturing, John Tillman Company, United Abrasives/Sait, Weldcote Metals and Welders Supply Company.

SPECIALTY GAS TRAINING [GLOBAL CALIBRATION GASES] If you wish to increase specialty gas sales, continued training is essential.

Global Calibration Gases announced that its next sales and applications class for specialty gases will be held September 27-29. These classes are led by Ray Borzio, President of Global Calibration Gases and advisor to gasworld (US Edition)’s quarterly supplement Specialty Gas Report.

Classes are limited to six people and include extensive information on production technology, sales applications, and a subscription to Specialty Gas Report. For complete details, please contact Ray Borzio at: rayb@globalcalibrationgases.com

WELDER SERVICE JOINS IWDC [IWDC] The latest member to join the Independent Welding Distributors Cooperative (IWDC) is Ohio-based Welder Service Company, Inc. Welder Service has been a familyowned and operated business for nearly 70 years, providing the Toledo area with quality welding gases, welding supplies, welding equipment, including welding safety equipment, and welding accessories. As of June 6, 2016, the company is an IWDC member too, and the organization is encouraging fellow members to join it in welcoming Welder Service Company to the fold.

The IWDC is a cooperative formed in 1994 to leverage the strengths of independent welding distributor members across North America.

Members serve a range of industries. www.gasworld.com/americas

DISTRIBUTOR ZONE

Q2 Baird Survey results: hardgoods remain sluggish The results of the second quarter 2016 Baird Survey of Industrial Gas Distributors are in. Respondents believe we continue to muddle along, with growth – or lack thereof – varying by market. Hardgoods remains sluggish in keeping with the markets that sector is attached to. Gases are steady, if not stellar.

Pricing continues to be a topic of concern with majors keeping the pressure on. Helium price/margin erosion is expected (see why in our Helium Market report on page 50).

There is some optimism going forward as shown in the Revenue Outlook chart, but it is slight with Gases remaining steady and Hardgoods enjoying a much needed, albeit slight, uptick. Gases revenues continued to outperform the Overall Distribution Market, but Hardgoods continues to lag.

When asked about purchasing new high

pressure cylinders, 56% of respondents reporting buying cylinders at less than 2,500 PSI; 41 percent purchase cylinders in the 2,500-3,4OO PSI range; and only three percent purchase cylinders at above 3,400 PSI. See our analysis of High Pressure

cylinders on page 30 of this issue.

Survey respondents receive complete results of this quarterly report. To become part of Baird’s Quarterly Survey of Industrial Gas Distributors, contact Aggie Baker at: agnes.baker@gasworld.com

Next-Quarter/Full-Year Revenue Outlook Source: Baird Survey, Q2’16

8%

‘16E

6%

y/Y change

[BAIRD]

4%

Gases 3.3%

2% 0% Hardgoods -0.6%

1-2% -4%

4Q14 1Q15

2Q15

3Q15 4Q15

Overall

Gases

1Q16

2Q16 3Q16E 4Q16E

Hardgoods

GAWDA

Mike Huckabee keynote speaker at GAWDA annual Mike Huckabee, former Arkansas governor, two-time presidential candidate, and speaker at July’s Republican National Convention, will be a keynote speaker for the 72nd annual convention of the Gases and Welding Distributors Association (GAWDA) annual meeting, the association has announced.

Huckabee will address an estimated 500-600 GAWDA member representatives during the group’s general business session on Wednesday, September 28.

The annual convention is being held in in Maui, Hawaii, from September 25-28, and its theme is “Disruption: Threats and Opportunities.”

Tuscaloosa, Alabama businessman William A. Visintainer, the group’s 20152016 President, will preside over the annual business meeting. Visintainer

noted that the choice of Huckabee is an apt one, given the conference’s focus on disruption and the threats and opportunities it can mean.

“In keeping with the conference theme, I couldn’t think of anything more disruptive than what’s happening this year in American politics,” Visintainer said. “And I couldn’t think of anyone better to address that issue than two-time presidential candidate Mike Huckabee. In having him speak to GAWDA, we’re hopeful that Governor Huckabee will be able to provide insight into what the economy may look like in the future depending on which presidential candidate is elected to office.”

Huckabee‘s topic is, “The Pursuit of the Presidency and the Perfectly Insane American Process.” As the 44th governor of Arkansas, serving from 1996-2007,

Huckabee disrupted the state government status quo, creating a legacy of tax cuts, job creation, state road system reconstruction, and K-16 education reform. He led a nationally-heralded and duplicated health initiative based on prevention versus a costlier intervention approach, and his administration fought long-standing political corruption. He ran twice for the Republican presidential nomination, in 2008 and again earlier this year. He ended his 2016 race in February and returned to Fox News in April, resuming his career as a top-rated weekend show host.

Also speaking at the convention are Seifi Ghasemi, Chairman, President, and CEO of Air Products; and Dave Nelsen, CEO of Corporate Visions, a social media strategy consulting firm.

September 2016 • gasworld US Edition | 23

BUSINESS INTELLIGENCE

intelligence THE HELIUM HEATMAP

With the entry of an estimated 25% in new global capacity in the market in late 2013 and early 2014, the helium business of 2016 continues to find itself in a state of over-supply. For how long, is another question entirely, but there is little doubt about the changing face of the industry throughout recent decades.

The start-up the Qatar II plant, the world’s largest helium purification and liquefaction unit at Ras Laffan, and expansion of the Skikda plant in Algeria have perhaps been the most notable additions in capacity in recent years, while Air Products’ Doe Canyon plant in Colorado heralded a significant new dawn in helium sourcing, derived from a naturally occurring carbon dioxide (CO2) stream.

These are just the latest developments in what has been a huge expansion of the business over the last 30 years, especially considering the economics involved and the rarity of the gas by its very nature. From just seven helium plants in 1983, the market has grown to more than 20 plants around the world – and still counting. Add to this a number of helium transfill sites brought into service in the last decade, and a significant supply network exists globally.

Here, gasworld Business Intelligence looks at some of the more notable production plants around the world, and some of those that may just be warming up…

Mankota, Saskatchewan, Canada

Plans were understood to be on track for a new helium processing facility to come on-stream in Saskatchewan, Canada, after Weil Group Resources, LLC acquired and re-entered the wells in the Canadian province in 2013 and commissioned the new plant after validating its helium reserves.

The new plant was designed and supplied by The Linde Group, and will purify inert gas from existing wells into 99.999% helium product, with a capacity of around 40 million standard cubic feet per year. This helium will be supplied to customers throughout Canada and the US.

Big Piney, Wyoming

Though originally on-stream in 2014, the joint venture APMTG Helium LLC’s (Air Products-MATHESON) Big Piney, Wyoming, project remains on hold due to problems with Denbury Resources’ natural gas processing plant that will be providing the feedgas for the helium plant.

The Big Piney Plant would be capable of producing 200 million standard cubic feet per year of liquid helium that will be shared between Air Products and MATHESON. However, due to low oil prices and reduced demand for CO2, the timing for restart of this plant is currently understood to be in doubt.

Moab, Utah

Originally marketed by Linde-BOC and idle for several years now due to lack of feedgas, Praxair has announced a tolling agreement with Castleton Commodities International (CCI) which includes plans to restart CCI’s 160 million standard cubic feet per year Moab, Utah helium refining facility.

Feedgas for the plant will come from nearby fields extracting helium from helium-bearing natural gas fields that were not economically viable until helium prices increased during the 2011-2013 shortage.

26 | gasworld US Edition • September 2016

Shute Creek, Wyoming

ExxonMobil operates the world’s largest helium plant in Shute Creek, Wyoming, producing 1,450 million standard cubic feet per year of helium.

The plant, which was brought on-stream in 1986, will be taking a significant maintenance outage during the July-September 2016 period.

Doe Canyon, Colorado

On-stream in 2015, Air Products’ Doe Canyon facility in Colorado is seen as a potential game-changer in the global helium business, as the first-ever example of helium extraction from a stream of naturally occurring CO2.

The plant is already producing its expected 230 million standard cubic feet per year rate of bulk liquid helium extracted, from a stream of CO2 otherwise utilized for enhanced oil recovery (EOR).

www.gasworld.com/americas

BUSINESS INTELLIGENCE

Helios, Arzew, Algeria

On-stream 1994, 600 million standard cubic feet per year capacity 51% Sonatrach, 49% Air Liquid-Air Products joint venture.

Odolanow, Poland

On-stream 1980, 100 million standard cubic feet per year capacity.

Operated by Polish Oil and Gas company

Orenburg, Russia

On-stream 1977, new liquefier added in 2014 230 million standard cubic feet per year capacity Output decreased since 2011 Operated by Gazprom Dobycha Orenburg

RasGas Helium 1, Ras Laffan, Qatar

On-stream in 2005, the Helium 1 plant in Qatar reached full utilization in 2008 and derives its helium feedstock from eight LNG processing trains, with a capacity of 700 million standard cubic feet per year.

RasGas Helium 2, Ras Laffan, Qatar

Helison, Skikda, Algeria

On-stream 2007, 600 million standard cubic feet per year capacity. Below full utilization in 2016, produced 270m million standard cubic feet per year in 2007.

Virginia, Free State province, South Africa

RasGas and Air Liquide started up the world’s largest helium purification and liquefaction unit in July 2013, a turnkey project at Ras Laffan, Qatar.

Brought on-stream 2013, production capacity at the unit is approximately 1,400 million cubic feet of helium per year at full capacity. Between them, RasGas’ Helium 1& 2 plants meet around 25% of global helium demand.

A further fillip to the market in the future will be the Qatar III project (Helium 3), which gasworld understands is expected to produce 425 million standad cubic feet per year, commencing in 2018.

The 187,000-hectare helium and natural gas field in Virginia, in the Free State province of South Africa is the first and only onshore natural gas production site in the country and has proven reserves of 25 billion cubic feet of both gases. It boasts a high concentration level of helium – usually up to 3-4% by volume.

Several major industry companies have recently signed a historic agreement for the commercialization of the field, with The Linde Group, and its African subsidiary Afrox, involved along with alternative energy company Renergen Limited. Set to commence operations in 2018, the project will see Renergen supply Linde with helium reserves via an offtake contract, with Afrox to operate the plant and market the helium. gasworld estimates a capacity of 100-150 million standard cubic feet per year.

Darwin, Australia

The only liquid helium processing plant in the Southern Hemisphere, LindeBOC’s Darwin plant in Australia has the capacity to produce 150 million standard cubic feet of helium per year.

On-stream since 2010, the plant recently completed its 1,000th shipment for both Australian and international industry and consumers.

September 2016 • gasworld US Edition | 27

SPECIAL FEATURE – HELIUM SOURCING

Helium in 2016

Brisk sourcing activity, despite ample supply

By Phil Kornbluth

D

espite sluggish growth in demand and continued ample supply in global helium markets, the level of activity aimed at developing new sources of helium continues at an unprecedented rate. This article examines the drivers behind the current high level of interest in developing new helium sources, where the activity is taking place, which companies are participating, and some of the possible outcomes.

Key drivers of the “helium rush” Coming out of Helium Shortage 2.0, which lasted for three years from 2011 – 2013, helium demand has been significantly less than it was pre-shortage due to “demand destruction” caused by the price elasticity of demand. Quite simply, when prices for 32 | gasworld US Edition • September 2016

a commodity go up, demand goes down.

With prices for helium roughly doubling during the shortage, and forced rationing imposed on helium users, those users collectively figured out how to consume less helium in their operations.

While prices have come down somewhat since the shortage ended early in 2014 (when supply from the Helium 2 source in Qatar ramped up to full capacity), they remain at elevated levels compared to historical prices. With no large new applications and continued incentives to reduce usage due to elevated pricing, helium demand growth has remained tepid since the shortage ended.

On the supply side, a significant amount of capacity has been taken off-line by the helium refiners linked to the Bureau

of Land Management’s (BLM) Crude Helium Pipeline and Storage System (BLM Pipeline) and some major suppliers having taken the radical and unprecedented step of reinjecting liquid helium into the BLM Bulk Liquid Helium Wholesale Prices

Source: Kornbluth Helium Consulting, LLC. 250.0 200.0 150.0 100.0 50.0 0.0

1

5

10

Bulk Lhe Wholesale Prices Oct 1, 2005 – Oct 1, 2015 OCT 1, 2005 = 100

www.gasworld.com/americas

SPECIAL FEATURE

Pipeline to avoid missing take or pay commitments. These actions have helped to create a new equilibrium between supply and demand. In fact, three of the six liquid helium plants tied to the BLM Pipeline have been completely shutdown (except for reinjection activity at one plant) mostly due to lack of demand.

With weak demand and ample supply, the obvious question is…why are we seeing a rush to develop new sources (the “Helium Rush”) now, at a time when market fundamentals might lead you to expect far lower levels of activity? The author believes that there are at least three reasons for the current high level of activity: continued elevated prices for helium; the depletion of the US government’s helium stockpile and the continuing decline of the BLM Pipeline; and, weak markets for oil and gas.

Elevated prices The first noteworthy factor contributing to the high level of helium sourcing activity is the elevated prices for helium that are a remnant of Helium Shortage 2.0, even though helium supplies have been ample for more than two years.

With higher prices, there are greater economic incentives to develop new sources of helium. Where previously, helium was only produced as a by-product of natural gas processing and LNG production, heretofore uneconomic sources of helium-bearing gas, including gas with very low concentrations of hydrocarbons, can now provide attractive financial returns solely from the sale of helium.

This has opened up new areas for development of helium sources, including the Four Corners area in the Southwestern US, an area encompassing SW Saskatchewan, SE Alberta and northern Montana, and previously unexploited deposits of helium in Tanzania that were previously ignored, under-explored, and generally considered to be not worth the trouble. Improvements in noncryogenic purification technologies like pressure swing adsorption and membrane separation have also contributed to improved economics for helium recovery, especially for smaller, non-hydrocarbon sources. Over time, these technologies have

Tapping the BLM pipeline. Photo courtesy of IACX.

become lower cost, more efficient in terms of helium recovery rates and more reliable.

Decline of BLM Pipeline & Storage The second factor in the high level of helium sourcing activity is the ongoing decline of the BLM Pipeline & Storage System caused by the depletion of the US Federal Helium Reserve.

“Improvements in noncryogenic purification technologies like pressure swing adsorption and membrane separation have contributed to improved economics for helium recovery...”

The BLM has been gradually selling off the Federal Helium Stockpile since 2003 and will continue to sell crude helium to both helium refiners and other qualified buyers until the terminal inventory of 3.0 BCF (billion cubic feet) is reached sometime after the FY 2018 or FY 2019 sale. Subsequently, crude helium from the Federal Stockpile will only be made available for sale to government helium users. With the quantity of crude helium in the stockpile down to 5.57 BCF as of July 1, 2016, the BLM Pipeline has lost a significant portion of its ability to deliver crude helium to the helium refiners (due to declining pressure from the field). This means that collectively, the helium refiners

have lost a considerable amount of what, at one time, was roughly 4.0 BCF of annual liquid helium production capacity. The major refiners — Air Products, Linde, and Praxair — are all quite motivated to replace their BLM capacity (as well as other declining sources), ideally in locations that are subject to minimal levels of political risk, with good proximity to major helium markets.

The need to replace BLM capacity is not the only driver of demand for new sources.

Some of the major helium marketers would like to diversify their supply away from major producers, who have increasingly imposed hard-nosed commercial tactics, while others seek to add flexibility to their supply portfolio or are driven by their own unique circumstances.

Low priced oil and gas The third major factor contributing to the “Helium Rush” is the extremely low prices for oil and natural gas that have made exploration for hydrocarbons uneconomic in many places, bankrupted a number of E&P companies, and left many of these companies looking for opportunities to put their skills to work in an area where they can make a reasonable profit.

Some of these companies have zeroed in on helium source development and a handful of new companies have been established with their primary focus on helium. With helium refiners needing to replace their BLM capacity, E&P companies looking for opportunities to apply their skills while oil and gas prices remain depressed, and elevated helium prices September 2016 • gasworld US Edition | 33

SPECIAL FEATURE – TAPPING BLM PIPELINE

IACX taps the BLM helium pipeline and continues growing its markets

By Brian Witt

I

n May of 2016, IACX Energy tapped the BLM helium pipeline to begin taking receipt of crude helium from the BLM helium reserve. With this action, IACX becomes the first company to tap the government line and join the refiner community since the passage of the Helium Stewardship Act of 2013. The company is refining this crude into ultra-high purity product which is being marketed directly into the gaseous helium arena. This tapping event, along with the commissioning of its first high-purity facility, signifies continued

“IACX was the first company to tap the government line and join the refiner community since the passage of the Helium Stewardship Act of 2013...”

36 | gasworld US Edition • September 2016

progress in IACX’s helium product offering.

The receipt point of this BLM gas is located in central Kansas at IACX’s Otis facility, which is the same site of IACX’s first helium plant, commissioned in 2009.

Prior to 2009, the company had been operating a nitrogen rejection facility at the Otis site where regional, low-Btu natural gas deposits were treated by removing nitrogen and selling the residual methane via pipeline. This part of central Kansas is coincidentally a region where deposits of helium were historically exploited; however, the company’s entrée into the area started with nitrogen rejection, not helium.

After the financial crisis of 2008, coupled with the proliferation of horizontal drilling and hydraulic fracturing, abundant supplies of natural gas drove prices down to levels that were economically challenging for many nitrogen rejection

projects. In response, the company added helium purification assets at Otis as a way to combat the challenging commodity price environment by increasing revenues for both IACX and its natural gas producers. IACX’s engineers had significant, prior experience in the helium refinement space, and because its proprietary technology is relatively adaptable between nitrogen and helium service, the shift to helium refinement made good sense at the time.

Within a few years of helium service at Otis, the world’s helium market began to tighten dramatically. The reasons for this shortage have been well documented by CryoGas International and gasworld, so we will not recite that history here; however, the recognition of a more opportunistic focus on helium development began to arise as a result of the shortage. Two years after its start-up at Otis, IACX entered the www.gasworld.com/americas

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MARKET ANALYSIS – HELIUM IN 2016

relationship is expected to be in surplus, transitioning to in balance, over the next few years as the BLM depletes the private inventory by 2021 and new planned sources, such as Qatar 3 and Gazprom, come onstream beginning in 2018.

Intelligas Consulting, on behalf of gasworld (US Edition), spoke with the helium experts and managers at major industrial gas companies and distributorships throughout the past year to get the insider’s view of this critical market and the changes underway within it. Those views and opinions are reflected here.

The 2016 worldwide helium market

Helium in surplus, demand flat

By Maura D. Garvey

T

he worldwide helium market demand in 2016 is about 5.9 billion cubic feet (Bcf) (see Figure 1). This is flat compared to 2015, and a decline of about 100 million cubic feet (mmcf) from five years ago due to demand destruction and global economic weakness.

Worldwide helium supply is about 6.0 Bcf in 2016. This is a continuation of surplus in supply, which was first triggered in 2014 when new large sources came on-stream in Qatar and Skikda, Algeria in late 2013.

Since 2010, tight global helium supply, caused by planned and unplanned shutdowns at refining plants and reduced operating levels at the BLM Cliffside field as it entered the depletion phase. Lower than planned operating rates and persistent economic weakness across the globe have hindered demand growth in most regions.

Demand destruction during this period of

50 | gasworld US Edition • September 2016

tight supply has become permanent in some applications as helium recovery, recycle, substitution, and the significant run-up in prices have permanently eroded demand.

In addition, there has not been any new significant helium applications to increase demand. Demand for helium is driven by advancements in technology that need helium, per capita consumption (such as in the balloon business), and by price. Supply volumes in 2010 were at about 6.0 Bcf when the BLM and Hugoton refiners in the US were operating close to effective capacity as well as overseas plants.

This access to plentiful supply has put downward pressure on retail helium prices, while the spigot price of helium continues to rise at a rate of at least the US consumer price index (CPI). Most, if not all global sourcing contracts, base escalation off US CPI. The world’s helium demand-supply

Current worldwide helium demand Within the Americas (US, Canada, Mexico, and Latin America), the US has the largest market for helium worldwide, consuming about 32% of the total volume, or about 1.9 Bcf/yr (see Figure 2). Tight helium supply and higher prices have caused erosion in helium volume demand as end-users sought cost-effective solutions to the situation by employing conservation, substitution, recovery, and recycle. Going forward, the US demand growth will be fairly flat with no new applications to drive growth.

Other Americas is estimated at 13% of worldwide helium demand. Current economic conditions in South America make growth projections difficult. Supply to Other Americas is from the US. Asia represents the second largest market for helium with 31% of worldwide demand; about 1.85 Bcf/yr. China is the largest market in Asia, followed by Japan, South Korea, and Taiwan. Asian demand growth going forward is estimated to be low to mid-single digits with the exception of Japan. Japan is a more mature market where demand growth is flat and has slowed in the past five years due to global economic weakness. Demand in Asia is being driven by the Korean and Taiwanese electronics markets, which also have slowed in the past year. Helium is used in electronics applications such as flat panel displays and computer chips, as well as optical fiber.

Much of the MRI (Magnetic Resonance Imaging), electronics, and fiber optics business has moved to China, Taiwan, and Korea. Tempering this growth estimate is www.gasworld.com/americas

MARKET ANALYSIS

global market. These regions traditionally the economic slowdown in China and its have contributed to strong demand growth. potential market ripple effects.

As shown in Figure 1, the current primary However, the ROW is expected to grow supplier of helium for Asia is still the US due about 2-3% per year going forward, driven by industrialization in their emerging to favorable distribution economics economies. Supply to ROW is from western US sourcing and primarily from Qatar and fast container shipping from Algeria due to the proximity Long Beach, California.

Global helium demand of those sources.

However, with the new Qatar is around 5.9 Bcf in 2016 – supply is supply fully ramped up, we are around 6.0 Bcf Current WW helium supply seeing increasing supply to Asia As noted earlier, worldwide helium from Qatar and declining supply supply for 2016 is estimated at 6.0 from the US. Bcf, higher than demand causing a surplus in supply being stored in ISOs. Worldwide Europe comprises about 20%, or 1.16 Bcf, helium supply ramped up significantly of worldwide helium demand. Helium in early 2014 when several large helium applications are becoming as saturated projects came on line. The large Qatar 2 in Europe as they are in the US. Demand growth is expected to be flat or down for the plant in Ras Laffan went into full production and the megatrain operations in Skikda, next few years due to economic conditions Algeria began to provide more reliable in the region. Currently Algeria and Qatar supply to the helium plant there. In addition, are the primary suppliers, with backup Gazprom replaced the liquefier at its helium supply from the US. plant in Orenburg, Russia, and Air Products brought on its Doe Canyon facility in the US. Rest of the World (ROW) – Africa/Middle This rapid ramp up in supply outstripped East/India together represent 4% of the

5.9

Figure 1. Worldwide Helium Demand Supplied by Region (Bcf/yr)

Europe 1.16

Source: Intelligas Consulting

QEP

ExxonMobil

Poland

Secondary & Backup

Denbury Doe Canyon Primary

HUGOTON

Temporary

demand causing an oversupply or “overhang” situation that overburdened the supply chain and required 50–100 ISO containers to be used for temporary helium storage to meet take-or-pay contract commitments.

The current helium supply situation has had varying impacts on helium suppliers depending on a number of factors: whether they are a refiner or non-refiner; the geographic location of their helium supply; and the reliability of crude feed.

Air Liquide, one of the largest global suppliers of helium with 50% of its helium sourced from both RasGas Qatar plants and part of Arzew, commissioned a large helium storage facility in Gronau-Epe in the North Rhine-Estphalia region of Germany.

This facility will allow Air Liquide to better manage their helium supply, allowing them to operate independently of the reliability of production sources.

Helium supply and demand is in the process of rebalancing. Experts project that 2018 is the earliest supply and demand may be back in balance. This does not take into consideration unplanned outages, planned

RUSSIA

Russian Far East

Qatar

Arzew ALGERIA

US Primary

Skikda

Americas 2.66 US 1.9

Current Supply Planned Supply Note: Regional market demand volumes in ovals

Asia 1.87

Darwin Afr/MidE/India 0.23

AUSTRALIA

Total Worldwide Market – 5.9 Bcf September 2016 • gasworld US Edition | 51

COMPANY PROFILE Pictured is CryoVation’s latest project in Brazil, a fully palletized and automated fill system.

CryoVation Designing the latest in cylinder filling technology

I

n the 16 years since Ric Boyd founded CryoVation and opened its first manufacturing plant in Maple Shade, New Jersey, the company has expanded its footprint from coast to coast and internationally. Today, CryoVation designs the latest cylinder filling technology and cylinder fill plant concepts, specializing in customized industrial, specialty gas, beverage, and medical gas fill plants. Its latest project in Brazil, a fully palletized and automated fill system, is a perfect example of the type of highly skilled and customized turnkey installations CryoVation is known for.

Ric Boyd, managing partner of CryoVation and an experienceed design engineer, has taken the company from its first small order for cryogenic pump parts that were shipped to Singapore, to a company that designs, manufactures, and installs some of the most complete fill plant systems and advanced cylinder

58 | gasworld US Edition • September 2016

filling equipment for compressed gas and cryogenic companies around the world.

Today, CryoVation is active domestically and internationally, which keeps the company’s staff of 27, including Boyd’s two sons, Ryan and Nate, and daughter Rachel, very busy. Boyd estimates that currently 30% of CryoVation’s business is for export to overseas markets. CryoVation is particularly busy in the Latin American and Far Eastern regions, where the need for improved safety and system efficiency is pushing demand for new equipment.

Product profile CryoVation offers turnkey installations, technical support, and field services, with a product line that includes cryogenic pumps, ambient and waterbath vaporizers, automated and manual control systems, automatic cryogenic liquid filling, gas purifiers, palletized fill systems, and specialty gas systems.

“CryoVation is particularly busy in the Latin American and Far Eastern regions, where the need for improved safety and system efficiency is pushing demand for new equipment...”

Last year alone, CryoVation released an impressive array of 18 new products or design enhancements. Boyd elaborates, “Products, like our automation and gas purification technologies, are constantly being developed as the demand for better and more efficient cylinder filling systems increases.”

Integrating automated controls into proven industrial filling equipment has resulted in the several trademarked systems for CryoVation, like its SureGas™ automated onsite gas delivery system and SequeFill™, an automated carbon dioxide (CO2) fill system. Other brands that are drawing attention for the company include CryoVation’s Fusion™ Specialty Gas Mix System and its Helio Surge™ helium booster pump, which has a patent pending.

What’s ahead CryoVation has a solid record of achieving growth through both new product development and strategic partnerships with other industry leaders. Looking ahead, Boyd sees the need to continue to focus on the individual customer’s needs to drive new product ideas and improvements. He believes, “No two customers have the same business template and each one deserves a customized approach.” gw

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September 2016 • gasworld US Edition | 59