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Praxair Starts Valero Hydrogen Plant

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Industrial gas producer and supplier, Praxair Inc. (PX - Free Report) recently announced the commencement of operations at a new hydrogen plant located at Valero’s St. Charles refinery in Norco, La.

The new state-of-the-art plant has a production capacity of 135 million standard cubic feet per day (scfd) of hydrogen. Praxair’s plant start-up is a result of a long-term contract, signed in Jun 2011, to supply 270 million standard cubic feet per day (scfd) of hydrogen to Valero Energy Corporation.

Additionally, Praxair is working towards expanding its Louisiana pipeline by an additional 50 miles and connect its new plant at St. Charles with its existing plant in Geismar. The extension is expected to consummate in the fourth quarter of 2013. These expansions will enable Praxair satisfy Valero’s as well as other customers’ hydrogen needs.

It is evident from the present scenario that the growth prospects of industrial gas producers are very bright going forward, with demand for gases expected to increase manifold due to their wide application areas. Hydrogen for refining; oxygen for healthcare; and nitrogen and carbon dioxide for oil and gas production are being increasingly used.

The current Zacks Consensus Estimate for Praxair for years 2013 and 2014 are pegged at $5.95 and $6.70, reflecting annual growth of 6.8% and 12.7%, respectively. Estimated 3-5 years earnings growth rate for the company is 11.6% as compared with just 9.6% for the peer group.   

Praxair has a market capitalization of roughly $35.5 billion and bears a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Eastman Chemical Co. (EMN - Free Report) , Braskem S.A. (BAK - Free Report) and LSB Industries Inc. , each with a Zacks Rank #2 (Buy).

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