Chemical giant Air Products (APD - Analyst Report) has announced the successful operation of a United States Department of Energy (DOE) Demonstration Project. The project has been specifically designed to capture roughly one million tons of carbon dioxide (CO2) in an enhanced oil recovery operation. Air Products’ innovative technology is behind this remarkable accomplishment which has not been achieved anywhere else in the U.S.
Air Products’ project in Texas recovers and purifies CO2, all of which is then transported in its gaseous state through a Denbury Green Pipeline-Texas, LLC-owned pipeline for injection into the Denbury Onshore operated West Hastings Unit.
This noteworthy achievement marks a milestone in DOE’s Industrial Carbon Capture and Storage (ICCS) program. DOE estimates an additional 1.6-3.1 million barrels of oil to be produced annually from the CO2 injection at the enhanced oil recovery operation.
Air Products’ CO2 removal technology was retrofitted to its steam methane reformers (SMR) situated within the Valero Port Arthur Refinery, which produces hydrogen to help in the making of cleaner burning transportation fuels by refinery customers on Air Products' Gulf Coast hydrogen pipeline network. Hydrogen is mostly used in petroleum refining processes to remove impurities found in crude oil such as sulfur, olefins and aromatics in order to meet the product fuels specifications.
Air Products' Gulf Coast 600-mile hydrogen pipeline supply network stretches from the Houston Ship Channel in Texas to New Orleans, La. The pipeline is fed by over 20 hydrogen production units and provides over 1.2 billion cubic feet of hydrogen per day to refinery and petrochemical customers. Air Products' Gulf Coast hydrogen plant and pipeline supply network is the world's largest hydrogen system.
DOE contributed 66% of the funds for the over $400 million project. Air Products initially received $253 million of funds from DOE through American Recovery and Reinvestment Act (ARRA) in June 2010 and later received another $30 million for final engineering, design, construction, and project operation through Sep 2015.
The DOE project’s main purpose is to monitor , verify, and keep an account of injected CO2, so that it remains underground, safely and permanently trapped in the same geologic formation that confined the oil brought to the surface in the demonstration.
Air Products currently holds a short-term Zacks Rank #4 (Sell).
Other companies in the chemical industry having favorable Zacks Rank are Shin-Etsu Chemical Co., Ltd.
, Celanese Corporation
(CE - Analyst Report
)and LyondellBasell Industries NV
(LYB - Analyst Report
). While Shin-Etsu Chemical and Celanese hold a Zacks Rank #1 (Strong Buy), LyondellBasell retains a Zacks Rank #2 (Buy).