Air Products Sees $15B Hydrogen, Energy Transition Project Backlog

Industrial gases company Air Products continues to strengthen its hydrogen position with a hydrogen and energy transition backlog of about $15 billion.

The Pennsylvania-headquartered company has eight hydrogen projects underway, targeting an IRR of more than 10%. The projects include three blue hydrogen projects—two in Louisiana and one in the Netherlands—as well as a green hydrogen project in New York.

“Air Products is pursuing a first mover growth strategy with our core industrial gases business as the first pillar and our blue and green hydrogen projects as the second pillar,” Air Products CEO Seifi Ghasemi said during the company’s Feb. 5 earnings webcast. “Executing our strategy in these two pillars, with sustainability underpinning both of them, enables us to fulfill our higher purpose as a company, which is to help solve significant energy and environmental challenges in our world.”

Used mostly today for oil refining and production of ammonia, a key ingredient for fertilizers, hydrogen is seen as a promising route to decarbonize hard-to-abate sectors and reduce reliance on fossil fuels. While global focus on reducing emissions has put the spotlight on hydrogen in recent years, luring new players to the field, Air Products has been in the hydrogen business for more than 60 years.

“By producing and delivering low- and zero-carbon hydrogen at the scale for heavy duty transportation and industry, we can meaningfully contribute to the goal of decarbonizing the world,” Ghasemi said. “We believe that the first mover advantage will be substantial and deliver enduring long-term shareholder value, both in terms of return to Air Products and in generating a cleaner future for everybody.”

Most of the company’s planned $5 billion to $5.5 billion in planned capex for the year will go toward the NEOM green hydrogen project in Saudi Arabia.

Working with joint venture partners ACWA Power and NEOM Green Hydrogen Co., the $8.4 billion project will be one of the world’s largest green hydrogen projects. When complete, the plant will produce up to 600 tonnes per day of hydrogen in the form of green ammonia by year-end 2026. Developers say they will use up to 4 gigawatts of solar and wind energy as part of the process.

Substantial amounts will also be used for Air Products’ sustainable aviation fuel facility in Los Angeles and its blue hydrogen facility in Canada, Ghasemi said. Located in Edmonton, Alberta, the $1.6 billion hydrogen facility will use advanced auto-thermal reforming technology. The project is currently in the construction phase, Air Products COO Samir Serhan said.

“We look to bring it on stream in [second-half] fiscal year ’25 in line with our customer plans,” Serhan said.

He said the company had no updates regarding the project’s deployed capital or government incentives.

In North Texas, Air Projects is working with The AES Corp. to develop an approximately $4 billion green hydrogen production facility in Wilbarger County, Texas. Air Products is in the process of getting a permit and doing preliminary engineering, Ghasemi said.

Also on deck for Air Products: a $4.5 billion Louisiana Clean Energy Complex, where more than 750 MMscf/d of blue hydrogen will be produced and CO₂ captured and permanently sequestered underground. Startup is expected in fiscal year 2027, if all required permits and approvals are secured.

Ghasemi said the EPA’s authorization to give the state of Louisiana approval over CO₂ sequestration in the state could cut about a year off the timeline of getting a Class VI permit.

Although Air Products reported 3% higher volumes driven by strong hydrogen demand and 2% higher pricing for first-quarter 2024, sales in the Americas of $1.3 billion were down by 10% compared to a year earlier, due to a 15% lower energy cost pass-through.