The industrial gas industry represents a wealth of opportunities. It is a $51 billion industry dominated by a handful of large companies. Industrial gases are used across many markets and applications to provide energy efficiency, expand capacity, improve product quality and environmental performance. Companies in this industry generate stable returns through long-term contracts to supply gases including nitrogen, oxygen, hydrogen and others to refineries, chemicals plants, and other heavy industry. The use of industrial gases is driven by needs for efficiency and environmental compliance and is expected to continue growing.
air products & chemicals 3 December 2007 Citigroup Non ChemConf
1. The Industrial Gas Industry
A Wealth of Opportunities
Dave Taylor
Vice President, Equipment and Energy
Citigroup Chemicals for the
Non-Chemist Conference
New York City
December 3, 2007
2. Forward-Looking Statements
NOTE: This presentation contains “forward-looking statements” within the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on
management’s reasonable expectations and assumptions as of the date of this presentation regarding
important risk factors. Actual performance and financial results may differ materially from projections and
estimates expressed in the forward-looking statements because of many factors, including, without limitation,
overall economic and business conditions different than those currently anticipated; future financial and
operating performance of major customers and industries served by Air Products; the impact of competitive
products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover
unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or
regulatory activities; consequences of acts of war or terrorism impacting the United States’ and other markets;
the effects of a pandemic or epidemic or a natural disaster; charges related to portfolio management and cost
reduction actions; the success of implementing cost reduction programs and achieving anticipated acquisition
synergies; the timing, impact and other uncertainties of future acquisitions or divestitures or unanticipated
contract terminations; significant fluctuations in interest rates and foreign currencies from that currently
anticipated; the impact of new or changed tax and other legislation and regulations in jurisdictions in which Air
Products and its affiliates operate; the impact of new or changed financial accounting standards; and the
timing and rate at which tax credits can be utilized. The company disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements contained in this presentation to
reflect any change in the company’s assumptions, beliefs or expectations or any change in events, conditions
or circumstances upon which any such forward-looking statements are based.
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3. Industrial Gas Industry: Size and
Market Share
Total Industrial Gases Market: $51B in 2006
AL
Praxair
AP
Nippon Sanso
Linde
MG
Airgas
Other
Electronics &
Performance
Materials
(22%)
2006, 100% basis (BOC added to Linde not adjusted for 2007 disposals)
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4. Industrial Gas Industry: Markets
and Products
Metals
Hyco CPI
Tonnage Electronics
Foods
Liquid/Bulk
Medical
Spec Gas
Other
Cylinders
Electronics &
Performance
Materials
(22%)
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6. What drives the use of
industrial gases?
Provide energy efficiency
Expand capacity
Improve end-product quality
Improve environmental
performance
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7. Industrial Gas Supply Modes
Durable Business Model
10, 15 and 20-year contracts
Take-or-pay minimum volumes
Contractual energy pass-through Equipment &
Formula escalation Services 19%
Onsite/Pipeline
34%
3-5 year contracts Package Gases &
Liquid/Bulk
Regional business Specialty Materials
21%
Cost pass-through/surcharges 26%
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8. Merchant Gases
Liquid/bulk, cylinder and small onsite
gases to diverse industrial markets
Global business model
– Marketing Local
– Application development Business
– Supply chain Regional
Global Roles/Global
Differentiators
Local execution Collaboration
– Logistics
– Sales and pricing
Margin
– Customer service Improvement
& Growth
Opportunities for continued growth
– Eastern Europe & Asia growth
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10. Tonnage Gases
Supply to refinery, steel,
chemicals
H2 Plant Operating Years
Global supplier of hydrogen
APD . . .
Operating experience Widening Gap
Significant global franchise
positions
Strong economic drivers for
continued growth 1995 2000 2005
APD Comp. X Comp. Y Others
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11. How Hydrogen is Produced
Conventional H2
CO2
STEAM PRODUCT
H2 Rec.
HYDRO- HT / LT CO2
Natural Gas and REFORMER Methanation H2 PRODUCTS
DESULFURIZATION SHIFTS REMOVAL
Light Hydrocarbons
94-97%
N.G. FUEL
CH4 + H2O 3H2 + CO CO + H2O H2 + CO2
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12. Significant Refinery H2 Growth
Forecasted 2006-2016 Updated view
100 ~$13 B
MM BPD of on purpose
H2 investments*
Global Refining Capacity
Regulatory Growth Drivers
US, W. Eur. Clean Fuels
90 Transport Fuels Represents 10 Billion SCFD
USGC Hvy, sour crudes New Capacity
Economic Climate Drivers
Margins (Economics)
Global incr. conversion
80 Replacement SMR’s
Crude capacity growth
Global heavy sour crudes
Global clean fuels
~$5 B Geographically dispersed
of On purpose
H2 Investments*
70
1995 2005 2016
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*Note: Make plus Buy Market Opportunities
13. Strong Hydrogen Pipeline Positions
Sarnia
Canada 40
Baton Rouge 40
Edmonton, Suncor
Louisiana
IL
RA
Canada
Plaquemine
CN
Air Products
Canada
40
Geismar Shell
Refinery
Geismar
16
16
10
Lake ST.
16
Cosmar 16
Pontchartrain CLAIR
RIVER
Petro-Canada
Convent
Imperial Oil
Nola
New Orleans
Taft Sherwood Corunna
Park 21
21
14
14 630
630
Chalmette
Rotterdam
14
14
Europoort
Pernis
Dominguez
Southern
Channel
91
California
405 Zwijndrecht
Botlek
Tarragona
190th
Refinery
St.
710
Lake Charles
Beaumont To Moerdijk
Carson H2
Long
110
Mont Belvieu
VAN NESS Beach 69
10
AVE. Arpt. City of Houston
BP Battleground
Sepulveda
Texas
73
Blvd Carson
Port Arthur
10
405
APD HyCO facilities
Shell Baytown 2
Conoco Phillips Wilmington 610
H2 pipeline
Carson
1
CO pipeline
225
Anaheim Valero
Street 45
Wilmington LaPorte
Syngas pipeline
Pasadena Bayport
Conoco Phillips
Wilmington Wilmington H2
Clear Lake
110
Texas City
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14. Hydrogen Requirements
By Region
1800
1200-1800
1600
1400
H2 (scf/bbl)
1200
Oil Sands
1000 California
800-1000
800 US GC
600-800
Europe
600
300-600
400
200
0
18-20 22-25 26-30 30-35
Regional Avg. Crude (API Gravity) Quality
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15. Gasification:
An Exciting Growth Opportunity
APD is one of the largest
suppliers of oxygen to
gasification facilities around the
world (>10 large units)
Designed, built, own, and operate
units in Texas for syngas, H2 and
CO for pipeline systems:
– NG based POX units (LaPorte)
– Syngas cleanup / separation
facilities from heavy oil POX
unit (Baytown)
Recently announced Tonnage
relationship on O2 and H2:
– Eastman Gasifier - Texas
– Wison II in China
– BP Clean Power in California
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16. Equipment and Energy
Broad customer base
– Oil & gas, utilities, chemicals
and metals
Products
– LNG heat exchangers, large air
separation units, hydrocarbon
separators, helium containers,
hydrogen fueling systems…
Strategy
– Leverage existing relationships
– Develop energy projects
– Leverage engineering
technology and products to
grow gases businesses
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17. Coal-Fired ~9,000+ tpd CO2
Oxyfuel Boiler 95-99+% purity
at 110 bar
Turbines 500 MWe AP CO2 Purification &
Compression
Stack
Oxygen
Furnace 65-75% CO2
~9000 tpd
X
Coal
~4,000 tpd
Flue Gas
Recycle
X
Air
Flexible AP CO2 system - 90-98% CO2 capture
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18. Extending Gas Expertise into
Other Industries
Electronics and Performance Materials represent
~20% of our revenues
The segment is underpinned by technology,
innovation
Franchise positions / global leadership
Strategic positions with leading customers
Operationally excellent global supply chain
Leading edge applied technology, new products
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19. The Industrial Gas Industry
Provides…
Great track record of growth
Solid returns
Strong project backlog, good future insight
Leadership in energy opportunities
Strong applications growth
Most importantly, fiscal stability in uncertain
times
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