Global natural gas boom fuels local Air Products business [The Morning Call (Allentown, Pa.)]
(Morning Call (Allentown, PA) Via Acquire Media NewsEdge) April 14--On the wooded outskirts of Wilkes-Barre, Air Products owns a cavernous, century-old brick factory building. Perhaps three or four times a year, the building's sliding doors part, giving birth to something utterly incongruous: A huge white NASA rocket two-thirds the length of a football field.
Well, it looks like a rocket. In fact, the resemblance is purely accidental. The massive cylindrical object is something else entirely -- a heat exchanger. And weighing in at more than 500 tons, it will never be airborne.
It will be shipped overseas and mounted upright in some far-off locale, perhaps a desert in the Middle East or an offshore drilling platform where natural gas is extracted from deep within the earth's crust. And there, for all the mind-boggling technology that goes into its manufacture and operation, it will be tasked with a relatively simple job.
A heat exchanger liquefies natural gas. That is, it chills the gas to its condensation point at minus 260 degrees Fahrenheit, converting it into a much denser liquid.
This is a critical link in the global natural gas distribution chain. In its gaseous state, natural gas takes up 600 times as much space as it does as a liquid. Only after natural gas is liquefied is it cost-effective to transport via tanker ships to population centers where the relatively clean-burning fossil fuel is in high demand.
The natural gas business is booming. In recent years, technological advances have led to the discovery of new natural gas reserves, new ways of tapping the gas and new uses for it.
Air Products, it turns out, has been and continues to be involved in all of these stages. The Trexlertown company, for instance, is both a leading supplier of the nitrogen used in natural gas exploration and extraction, and a leading producer of helium, which is derived from natural gas for use in MRI scanners, silicon wafers and party balloons.
Among these important Air Products contributions, however, the heat exchanger stands out, and not merely because of its massive size and dramatic profile. The majority of liquefied natural gas throughout the world is produced with an Air Products heat exchanger made at the Wilkes-Barre plant.
Rising demand Compared with petroleum products such as gasoline and heating oil, natural gas releases a fraction of the pollution. With the world's energy needs and the threat of global warming growing in tandem, natural gas has the distinction of being embraced by both energy companies and some environmentalists.
Today, natural gas is extracted throughout the United States in places such as the wind-swept grasslands of North Dakota, the long-abandoned oil fields of California and the Marcellus Shale formation running through Pennsylvania. An extensive pipeline system allows this gas to be transported directly to businesses and homes.
But that kind of infrastructure isn't in place in many other parts of the world, especially in the developing world where energy needs are rising fastest. Hence the demand for heat exchangers. Upon delivery by a tanker ship, liquefied natural gas can be reconverted into a gas to fuel everything from power plants to home heating systems to automobiles.
For Air Products, rising demand for natural gas translates into a faster production schedule. The Wilkes-Barre facility has been making heat exchangers since the early 1960s, initially at the rate of about one every year and a half. It took until the mid-1990s for the 50th heat exchanger to be built. The next 50, however, were finished in half as much time.
Air Products rolled out its 100th heat exchanger last summer. It was placed onto a custom rail car equipped with extra wheels to disperse its heavy weight, and carted ever so gingerly to a port near Philadelphia. The 125-mile trek took five painstaking days, inching along a route with raised bridges and widened corridors, modifications to accommodate ever-bigger heat exchangers from Wilkes-Barre.
No sooner had No. 100 reached the port than Air Products announced plans to build a second heat exchanger plant in Manatee County, Fla.
"The number of potential LNG projects in the pipeline is at an all-time high," Jim Solomon, Air Products' liquefied natural gas director, said at the time.
(Indeed, this week Air Products will formally announce yet another heat exchanger order -- placed by Malaysian liquefied natural gas producer PETRONAS.) "Projects on the horizon will require the largest heat exchangers we have ever built and the new location does not face the same shipping constraints of our current location," Solomon said. "The new facility will be built at a deep-water port location with the flexibility to produce our LNG offerings without any physical shipping restrictions," he said.
In its sixth decade, Air Products' heat exchanger business has arrived at a turning point. The story of how it got there helps to explain Air Products itself.
Making things cold Air Products is one of only two Lehigh Valley-based companies -- the other being PPL Corp. of Allentown -- on the Fortune 500 list. It has more than 20,000 employees in more than 50 countries, including 3,400 local workers, making it the region's No. 3 employer.
The company got off to a quick start in the 1940s thanks to a marketing innovation. Rather than producing oxygen at a central location and shipping it to customers, founder Leonard Pool came up with the idea of producing the gas on-site -- that is, wherever customers needed it. The approach guaranteed a reliable supply for customers while reducing transportation costs for Air Products.
Eventually, the company expanded its portfolio of offerings to include liquid hydrogen, a rocket propellant used by the Air Force and NASA, as well as many other chemicals in demand by private industry.
While many of these chemicals -- including Air Products' first, oxygen -- are abundant in the atmosphere, they must be separated from other each other before being put to use in commercial applications. This is done through cryogenics, the science of how materials behave at low temperatures. Oxygen, for example, morphs from a gas to a liquid when chilled to minus 297 degrees, allowing it to be isolated and sold.
Air Products thus became expert at making things cold. And to this day, that skill is a thread that binds much of the company's diverse product line.
A tunnel freezer for food processing companies; nitric oxide for neonatal ventilators; gases used in the manufacture of semiconductors, computer monitors and flat-screen TVs -- these are things Air Products sells, and all involve cryogenics.
Sandy McLauchlin, manager of the Wilkes-Barre plant, was only half-joking when, during a recent tour of the facility, he described heat exchangers as "giant refrigerators." He summed up the use of cryogenics this way: "There are some basic gas laws that we take advantage of and monetize." Currently, 10 heat exchangers are in various stages of production in Wilkes-Barre. Each takes about two years to build.
Among these works in progress is one designed for the world's first floating liquefied natural gas facility, which will sit atop a 1,600-foot ship -- the biggest ever built -- off the coast of Western Australia. To make the off-shore heat exchanger stronger and less susceptible to the elements than its land-based prototype, it is encased in stainless steal instead of aluminum.
Assembling heat exchangers is a painstaking process that includes precise placement of thousands of miles of interwoven coils, many of which are shaped, fitted and welded by hand. Getting this part of the job right is essential, because the coils are what cool and liquefy the natural gas.
"The people who are putting up the money [to buy the heat exchangers] put credence in having a reliable technology," McLauchlin said. "They expect it to work." Air Products does not disclose how much individual heat exchangers cost, or how much revenue the heat exchanger business, which is part of its tonnage division, contributes to the company's bottom line.
Air Products acquired its Wilkes-Barre property -- a factory that once made rail cars -- in 1954. As the young company's fourth manufacturing facility, the old factory became known, fittingly, as Plant 4. Initially, it was used to turn out storage tanks and a variety of other products.
The heat exchanger business was added to the mix in the early 1960s, and by the mid-1980s, demand for heat exchangers was such that Air Products had to expand the plant, doubling its size. A second major expansion followed in 2005.
Today, the plant encompasses 225,000 square feet, employing 250 workers, many of whom are highly skilled, and some of whom have been working there for up to four decades.
"It's not as though you train for this in school. You learn this hands-on," McLauchlin said. "The majority of people who come here stay." The workforce in Manatee County, Fla., will eventually be about the same size, though the new plant -- at 300,000 square feet -- will be considerably larger.
Air Products has no plans to shut down the Wilkes-Barre plant after construction in Manatee County is completed later this year, according to company officials. They say both facilities are necessary to meet the world's growing demand for natural gas -- and for heat exchangers.
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