Air Liquide (AI) Investor Update summary

Project overview and strategic significance

• Announced a major partnership to supply low-carbon oxygen and nitrogen for ExxonMobil's Baytown, Texas hydrogen project, marking the largest industrial CapEx in company history at $850 million.

• The project will support the world's largest low-carbon hydrogen platform, producing 1 billion cubic feet of hydrogen daily and capturing up to 7 million tons of CO₂ per year for permanent storage.

• Four large modular air separation units will be built, owned, and operated under a long-term contract, increasing oxygen production capacity in Texas by 50%.

• The platform will enable low-carbon hydrogen and ammonia production, CO₂ capture, and sequestration, and will supply 9,000 metric tons/day of oxygen and up to 6,500 metric tons/day of nitrogen.

• The initiative aligns with the company's ADVANCE strategy and is expected to accelerate growth after 2025, serving as a catalyst for further decarbonization projects in North America and Europe.

Technology, efficiency, and sustainability

• Modular air separation units are standardized, pre-manufactured, and assembled on-site, reducing construction needs and improving CapEx control.

• These units consume 25% less electricity than comparable capacity, and sourcing low-carbon electricity will cut CO₂ footprint per ton of oxygen by two-thirds.

• The project will increase oxygen production capacity on the U.S. Gulf Coast by 50% while reducing emissions, and will be the largest source of low-carbon argon in North America.

• Features extensive hydrogen pipelines exceeding 500 km and oversized infrastructure for future growth.

• The company will leverage its distribution network to market significant volumes of argon, krypton, xenon, and rare gases, and access large volumes of low-carbon hydrogen for its pipeline customers.

Commercial model and financials

• The supply contract includes monthly fees, take-or-pay clauses, and meets return on investment criteria.

• The $850 million CapEx is not subsidized and covers all necessary equipment and support for the air separation units.

• Expected turnover from the investment is estimated at $200–$250 million, consistent with the company's capital intensity.

• The project meets internal ROCE targets, with profitability enhanced by synergies in the merchant business, especially from argon and rare gases.

• The investment decision depends on ExxonMobil's project progress, government policy, regulatory permits, and market conditions.