Hydrogen has been a solid growth platform for the industrial gas industry. In large volumes, industrial gas companies continue to supply hydrogen through their on-site pipeline (OSP) businesses to oil and gas refineries, basic and specialty chemical manufacturers, and food processors.
In smaller volumes, merchant liquid hydrogen is supplied via tube trailer and cylinder and is used in a wide range of applications including metallurgy, electronics, aerospace, fuel cells, glass, electrical power generation, and food hydrogenation. The largest demand for hydrogen continues to be in the petroleum sector, where strict environmental regulations for clean air require lower sulfur fuels. Continuing to drive the hydrogen business for industrial gas companies in the future will be: the shift toward sale of gas (SOG) and hydrogen for chemicals in emerging markets; the acquisition/replacement of aging steam methane reformers (SMRs); and continuing the heavy/sour crude processing capability. However, with the advent of shale oil production in the US, demand for oil has been down and is likely to remain so in the near term.
In this report, we focus on applications and growth trends in the merchant hydrogen business in the US. The increased emphasis on alternative energy schemes, such as fuel cells, appears to be the major driver behind demand in the US merchant hydrogen market, causing the liquid hydrogen capacity utilization rate to steadily increase since 2010. This has driven capacity expansion in the US for the first time in 15 years.
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