Air Products believes it could still proceed with its paused $4.5bn blue hydrogen plant in Louisiana, US, according to its CEO.
Speaking during the industrial gas firm’s Q4 results, Eduardo Menezes said although the development would not go ahead without an offtake agreement, there may be a way to make the project bankable.
The Louisiana development was announced in 2021 with plans to produce up to 1,700 tonnes of blue hydrogen per day and convert it into ammonia.
Investors viewed the project as risky because of speculative offtake agreements and Air Products’ plan to retain responsibility for CCS and ammonia synthesis.
After Menezes became CEO earlier this year, Air Products paused spending on the development in May as it explored options to de-risk it by firming up offtake and looking to offload the CCS and ammonia operations.
Air Products is expected to make a decision to go ahead with the project before the end of 2025.
The CEO told investors the firm was looking to transform the project into a “regular” hydrogen and air separation project by handing off the CCS and ammonia elements.
“We’re evaluating proposals to divest the carbon sequestration and ammonia production assets,” he said. “We will only go forward with this project if we can sign firm offtake agreements for hydrogen and nitrogen from the facilities that will be owned and operated by Air Products.”
He indicated the firm was “very advanced” in those negotiations.
Menezes told investors if Air Products is able to adequately de-risk the project, it could add up economically.
“When you look at the natural gas price, the infrastructure that we have in place, and the 45Q [carbon capture incentive], it is the right place to install blue ammonia projects,” he said.
“Even our competitors that are doing similar projects in Texas and Louisiana and saying exactly the same thing: that you can be competitive even against grey ammonia in Europe.”
“If I really didn’t think we have a chance to have something, it would be much easier for me to say that today. But we still believe we can find an interesting solution for this project.”
However, if a solution can’t be found, Air Products would look to minimise its losses.
“If we decided not to go forward, of course, we still have this asset that is the floor space that we can try to monetise in the market,” Menezes said.
The jeopardy comes as Air Products looks to cut its capital expenditure by over $1bn to $4bn in 2026 before getting to around $2.5bn by 2028.
The decision will play a key role in how the company balances growth in low-carbon hydrogen with tighter capital spending targets.