Air Products' damaged Louisiana gas plant may be back by year-end

Air Products' damaged Louisiana gas plant may be back by year-end

Sep 20, 2005 - The Morning Call, Allentown, Pa.
Author(s): Kurt Blumenau

Sep. 20--Air Products and Chemicals' wind- and flood-damaged New Orleans industrial gas plant should be substantially back online by the end of the year, the company said Monday.

Most of the water has been pumped out of the plant, which makes liquid and gaseous hydrogen. Early repairs are under way, though the complex still lacks electricity and natural gas, the company said.

The complex suffered extensive damage from Hurricane Katrina, according to Air Products. Monday's news marks the company's first full update on its condition.

"We made a lot of progress last week that allowed us to estimate the resumption of operations at New Orleans," Joe Pietrantonio, vice president of operations in the Americas, said in a statement.

The Trexlertown gases and chemicals giant also resumed some production last weekend at a liquid hydrogen plant in Sarnia, Ontario, Canada. That plant had been temporarily shut down due to a scheduled interruption in its gas supply.

The announcements remove some uncertainty from Air Products' liquid hydrogen operations. The company is one of the two leading makers of liquid hydrogen, which is used in steelmaking, aerospace and other industries. Praxair Inc. of Danbury, Conn., is the other.

Hurricane Katrina and the Ontario outage sidelined about 90 percent of Air Products' production capacity. That sent shock waves through the steel industry. One small steelmaker laid off 70 people when it cut back on production, trying to conserve its limited stock of liquid hydrogen.

Air Products said it has met some customer needs with liquid hydrogen from other sources and geographic areas. Praxair also cranked up production, selling excess capacity to needy users.

Air Products has declared force majeure, a legal concept that clears it from liability because an unforeseen event kept it from fulfilling its contracts. That remains in effect because Air Products' liquid hydrogen supply will remain "materially constrained and disrupted" for the next several months, the company said.

The reopening of New Orleans is "a tremendous undertaking with a lot of unknowns at this point," Pietrantonio said.

Analyst David Begleiter, who follows Air Products for Deutsche Bank, said Monday's news should reassure investors who wondered about the status of the New Orleans plant.

"That's probably the main thing, that it removes uncertainty from the situation," Begleiter said. "The fact that it's not a complete loss is a positive."

Last week, Begleiter slashed two cents from his earnings-per- share estimates for the fourth quarter and fiscal year, which end Sept. 30. Air Products has not given any guidance on hurricane- related costs.

The company said it has accounted for all its New Orleans employees. It also thanked customers and government agencies, including the Army Corps of Engineers, for their help.

Air Products stock lost 35 cents per share on the New York Stock Exchange, closing at $56 per share. Trading volume was average.

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