air products & chemicals 3 December 2007 Citigroup Non ChemConf


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air products & chemicals 3 December 2007 Citigroup Non ChemConf

  1. 1. The Industrial Gas Industry A Wealth of Opportunities Dave Taylor Vice President, Equipment and Energy Citigroup Chemicals for the Non-Chemist Conference New York City December 3, 2007
  2. 2. Forward-Looking Statements NOTE: This presentation contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this presentation regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by Air Products; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or epidemic or a natural disaster; charges related to portfolio management and cost reduction actions; the success of implementing cost reduction programs and achieving anticipated acquisition synergies; the timing, impact and other uncertainties of future acquisitions or divestitures or unanticipated contract terminations; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the impact of new or changed tax and other legislation and regulations in jurisdictions in which Air Products and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this presentation to reflect any change in the company’s assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based. 2
  3. 3. Industrial Gas Industry: Size and Market Share Total Industrial Gases Market: $51B in 2006 AL Praxair AP Nippon Sanso Linde MG Airgas Other Electronics & Performance Materials (22%) 2006, 100% basis (BOC added to Linde not adjusted for 2007 disposals) 3
  4. 4. Industrial Gas Industry: Markets and Products Metals Hyco CPI Tonnage Electronics Foods Liquid/Bulk Medical Spec Gas Other Cylinders Electronics & Performance Materials (22%) 4
  5. 5. Air Separation Made Easy 5
  6. 6. What drives the use of industrial gases? Provide energy efficiency Expand capacity Improve end-product quality Improve environmental performance 6
  7. 7. Industrial Gas Supply Modes Durable Business Model 10, 15 and 20-year contracts Take-or-pay minimum volumes Contractual energy pass-through Equipment & Formula escalation Services 19% Onsite/Pipeline 34% 3-5 year contracts Package Gases & Liquid/Bulk Regional business Specialty Materials 21% Cost pass-through/surcharges 26% 7
  8. 8. Merchant Gases Liquid/bulk, cylinder and small onsite gases to diverse industrial markets Global business model – Marketing Local – Application development Business – Supply chain Regional Global Roles/Global Differentiators Local execution Collaboration – Logistics – Sales and pricing Margin – Customer service Improvement & Growth Opportunities for continued growth – Eastern Europe & Asia growth 8
  9. 9. Merchant Gases Applications Argon Oxygen Nitrogen Heat Treating Respiratory Therapy Cryogenic Cooling Metal Refining Combustion Cryogenic Grinding Protective Cutting and Welding Food Freezing Atmosphere Pulp Bleaching Food Packaging Welding Wastewater Inerting Pressure Treatment Metals Processing Testing Rocket Propellant Materials Testing Blanketing Inerting 9
  10. 10. Tonnage Gases Supply to refinery, steel, chemicals H2 Plant Operating Years Global supplier of hydrogen APD . . . Operating experience Widening Gap Significant global franchise positions Strong economic drivers for continued growth 1995 2000 2005 APD Comp. X Comp. Y Others 10
  11. 11. How Hydrogen is Produced Conventional H2 CO2 STEAM PRODUCT H2 Rec. HYDRO- HT / LT CO2 Natural Gas and REFORMER Methanation H2 PRODUCTS DESULFURIZATION SHIFTS REMOVAL Light Hydrocarbons 94-97% N.G. FUEL CH4 + H2O 3H2 + CO CO + H2O H2 + CO2 11
  12. 12. Significant Refinery H2 Growth Forecasted 2006-2016 Updated view 100 ~$13 B MM BPD of on purpose H2 investments* Global Refining Capacity Regulatory Growth Drivers US, W. Eur. Clean Fuels 90 Transport Fuels Represents 10 Billion SCFD USGC Hvy, sour crudes New Capacity Economic Climate Drivers Margins (Economics) Global incr. conversion 80 Replacement SMR’s Crude capacity growth Global heavy sour crudes Global clean fuels ~$5 B Geographically dispersed of On purpose H2 Investments* 70 1995 2005 2016 12 *Note: Make plus Buy Market Opportunities
  13. 13. Strong Hydrogen Pipeline Positions Sarnia Canada 40 Baton Rouge 40 Edmonton, Suncor Louisiana IL RA Canada Plaquemine CN Air Products Canada 40 Geismar Shell Refinery Geismar 16 16 10 Lake ST. 16 Cosmar 16 Pontchartrain CLAIR RIVER Petro-Canada Convent Imperial Oil Nola New Orleans Taft Sherwood Corunna Park 21 21 14 14 630 630 Chalmette Rotterdam 14 14 Europoort Pernis Dominguez Southern Channel 91 California 405 Zwijndrecht Botlek Tarragona 190th Refinery St. 710 Lake Charles Beaumont To Moerdijk Carson H2 Long 110 Mont Belvieu VAN NESS Beach 69 10 AVE. Arpt. City of Houston BP Battleground Sepulveda Texas 73 Blvd Carson Port Arthur 10 405 APD HyCO facilities Shell Baytown 2 Conoco Phillips Wilmington 610 H2 pipeline Carson 1 CO pipeline 225 Anaheim Valero Street 45 Wilmington LaPorte Syngas pipeline Pasadena Bayport Conoco Phillips Wilmington Wilmington H2 Clear Lake 110 Texas City 13
  14. 14. Hydrogen Requirements By Region 1800 1200-1800 1600 1400 H2 (scf/bbl) 1200 Oil Sands 1000 California 800-1000 800 US GC 600-800 Europe 600 300-600 400 200 0 18-20 22-25 26-30 30-35 Regional Avg. Crude (API Gravity) Quality 14
  15. 15. Gasification: An Exciting Growth Opportunity APD is one of the largest suppliers of oxygen to gasification facilities around the world (>10 large units) Designed, built, own, and operate units in Texas for syngas, H2 and CO for pipeline systems: – NG based POX units (LaPorte) – Syngas cleanup / separation facilities from heavy oil POX unit (Baytown) Recently announced Tonnage relationship on O2 and H2: – Eastman Gasifier - Texas – Wison II in China – BP Clean Power in California 15
  16. 16. Equipment and Energy Broad customer base – Oil & gas, utilities, chemicals and metals Products – LNG heat exchangers, large air separation units, hydrocarbon separators, helium containers, hydrogen fueling systems… Strategy – Leverage existing relationships – Develop energy projects – Leverage engineering technology and products to grow gases businesses 16
  17. 17. Coal-Fired ~9,000+ tpd CO2 Oxyfuel Boiler 95-99+% purity at 110 bar Turbines 500 MWe AP CO2 Purification & Compression Stack Oxygen Furnace 65-75% CO2 ~9000 tpd X Coal ~4,000 tpd Flue Gas Recycle X Air Flexible AP CO2 system - 90-98% CO2 capture 17
  18. 18. Extending Gas Expertise into Other Industries Electronics and Performance Materials represent ~20% of our revenues The segment is underpinned by technology, innovation Franchise positions / global leadership Strategic positions with leading customers Operationally excellent global supply chain Leading edge applied technology, new products 18
  19. 19. The Industrial Gas Industry Provides… Great track record of growth Solid returns Strong project backlog, good future insight Leadership in energy opportunities Strong applications growth Most importantly, fiscal stability in uncertain times 19
  20. 20. Thank you tell me more 20