Industrial conglomerate Honeywell International Inc. sees a future fueled by natural gas, CEO Vimal Kapur said. To that end, the company is expanding its global LNG prowess with the takeover of Air Products’ liquefied natural gas process technology and equipment business.
Charlotte, NC-based Honeywell agreed to pay $1.81 billion for the Air Products unit. Allentown, PA-based Air Products provides industrial gasses, related equipment and applications expertise for customers worldwide. It has expertise in the LNG, refining, chemical, metals, electronics, manufacturing, and the food and beverage industries.
Air Products’ LNG business develops, engineers, builds, owns and operates some of the world's largest industrial gas projects.
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"While the world continues to build the renewables-based energy infrastructure of the future, natural gas is a critical lower-emission and affordable transition fuel that will help meet ever-increasing and dynamic global energy demands," Kapur said.
The acquisition would “offer customers a comprehensive, top-tier solution for managing their energy transformation journey.”
Honeywell already serves LNG customers worldwide with a natural gas pretreatment solution. The Air Products line would complement that offering with in-house design and manufacturing of coil-wound heat exchangers (CWHE) and related equipment.
The CWHE equipment “will immediately expand our installed base, creating new opportunities to compound growth in aftermarket services and digitalization,” Kapur said.
In its recently published Energy Outlook 2024, BP plc energy economists projected that U.S. LNG exports would more than double by 2030 from 2022 levels. Domestic natural gas consumption is forecast to decline “only slightly” over the next 25 years.
NGI recently reported that the flood of LNG poised to hit the global natural gas market later this decade is expected to push prices lower, potentially broadening the fuel’s appeal in a way that could stoke more demand and help absorb the projected supply glut.
Goldman Sachs’ Samantha Dart, head of natural gas research, told NGI that prices would need to decline to create the demand needed to match the next supply cycle.
“Ultimately, we do expect Asia LNG demand growth in particular to absorb those volumes, so that this bearish cycle for global gas we see in the second half of this decade doesn’t last forever,” Dart said.
Air Products manufactures the CWHEs from a 390,000 square-foot manufacturing facility in Port Manatee, FL. The LNG unit employs about 475 people.
Divesting the LNG heat exchanger technology and equipment business reflected a decision to focus on the “core industrial gas business and related technology and equipment,” Air Products CEO Seifi Ghasemi said. The company also is working to become a “first-mover, delivering clean hydrogen at scale to decarbonize industrial and heavy-duty transportation sectors.”
The LNG business, Ghasemi said, “is a great business, and is at its strongest point in its decades-long history.” However, the business unit “will be in good hands to advance as part of Honeywell's related portfolio of technologies.”
