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Air Products and Chemicals Inc. (APD - Analyst Report) and its unit Air Products Canada Ltd. recently announced the signing of a long-term contract with North West Redwater Partnership. Under the terms of this contract, the company will supply around 25 million standard cubic feet per day (MMSCFD) hydrogen to North West’s Sturgeon Refinery near Edmonton, Alberta, Canada. The market reacted positively to the news and Air Products’ shares rose as much as 1% following the announcement.

The supply of hydrogen will come from Air products’ existing Canada's Heartland Hydrogen Pipeline as well as the new world-scale hydrogen production plant Air Products Canada will construct in Scotford, Canada. This new plant will be constructed, owned and operated by the company and located adjacent to Shell Canada’s Scotford facility, northeast of Edmonton, Alberta. More than 150 million standard cubic feet per day (MMSCFD) of hydrogen is expected to be produced by the plant.

The Scotford facility will be connected to Air Products Canada’s existing Heartland Hydrogen Pipeline system, which supplies refiners, upgraders, chemical processors and other industries in the Alberta Industrial Heartland region. Air Products’ 30-mile hydrogen pipeline is fed by two existing hydrogen production plants in Edmonton that produce over 180 MMSCFD of hydrogen. The company’s hydrogen pipeline system will provide a reliable source of hydrogen to the refineries, upgraders and other customers in the Heartland region where the demand for hydrogen is high.

The Scotford hydrogen plant will be built through an alliance between Air Products and Technip. The plant will have up-to-date technologies installed for reduction of energy consumption and emissions. It will also include optimal heat integration for lowering feedstock consumption during production.  

Air products’ contract with North West is expected to become operational by 2016, once the Scotford plant comes online. It remains committed to producing cleaner burning transportation fuel in the North West region.
Air Products currently holds a Zacks Rank #2 (Buy).

Other companies in the chemical industry worth considering are Praxair Inc. (PX - Analyst Report), du Pont (DD - Analyst Report) and FMC Corp. (FMC - Analyst Report). All of them hold a Zacks Rank #2 (Buy).

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