Gas chiller boosts liquidity

Air Products makes giant heat exchangers used to ship liquid natural gas.
PHILADELPHIA (AP) -- One of the state's biggest exports -- in sheer bulk -- rolls down the rails of Eastern Pennsylvania this week to a Delaware River port, where it will be shipped overseas for a role in easing the nation's natural gas shortage.
The huge cargo, which looks like a rocket more than half the length of a football field, is the latest liquid natural gas heat exchanger to leave Air Products Co.'s cryogenic equipment plant in Wilkes-Barre.
The 180-foot-long, 15-foot diameter cylinder is packed with miles of aluminum tubing and valves engineered into super efficient refrigeration circuits.
What it does
Once installed at a liquid natural gas plant, the 300-ton heat exchanger stands on end like a 10-story high tower. As natural gas is piped in, its temperature plunges. At minus 260 degrees, the gas turns to liquid. The liquid takes up one six-hundredth the volume of the gas, making it possible to ship vast amounts in refrigerated tanker ships or trucks.
Air Products, the Trexlertown-based supplier of industrial gases and other materials, has sent about 70 of the mammoth heat exchangers down the rails in the 30 years its cryogenics equipment plant has been operating.
They go to plants in gas-rich countries such as Abu Dhabi, Australia, Brunei, Malaysia, Qatar, Oman and Nigeria, which export the liquid natural gas, dubbed LNG, to Europe, Korea, India, Japan, and increasingly, the United States.
"Over 85 percent of the world's LNG is produced by our equipment," said Jim Solomon, Air Products business area manager for LNG equipment.
Simple economics
The economics of the business are simple. "LNG is produced in remote locations where there is no big demand for natural gas, and shipped to Japan or Europe where there is a big demand," Solomon said.
As natural gas prices rose, so did the worldwide market for LNG, said Frederic Murphy, a professor of management-science operations at Temple University's Fox School of Business and Management. "The terminals weren't economic at lower natural gas prices."
Shortfalls, high prices
Other countries have long experienced the shortfalls and rising prices now beginning to plague the United States, said Murphy, who researches the natural gas industry.
"You have all these energy hungry economies in Southeast Asia and Japan," Murphy said. "When you turn on your stove in Tokyo you are getting reconstituted LNG."
So far, LNG imports fill only about 2 percent of U.S. natural gas needs, but Federal Reserve Chairman Alan Greenspan and other officials have advocated increasing imports to ease energy prices.
The United States has only four terminals that can receive LNG tankers, at Cove Point, Md.; Elba Island, Ga.; Lake Charles, La.; and Everett, Mass. About 30 new terminals have been proposed.
Air Products makes the equipment for the more remote locations where the gas is liquefied and shipped out. Eying the growing market, the company has invested several million dollars in the Wilkes-Barre facility since 2000, and further expansion is in the works, Solomon said.
Very costly
The LNG heat exchangers cost tens of millions of dollars. Solomon wouldn't reveal specific revenue figures, but said LNG equipment is an important part of Air Products' equipment business.
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