Air Products has exited three major US projects as its new management focuses on streamlining its backlog and prioritising initiatives that the company believes will drive shareholder value.
The write-downs that attach to the three projects are large, with Air Products expecting a pre-tax charge of up to $3.1bn in its fiscal 2025 second quarter. The costs are spread across asset write-downs and penalties and costs that attach to the termination of contractual commitments.
The three projects are the World Energy sustainable aviation fuel (SAF) expansion, the Massena green hydrogen project in New York, and a Texas-based carbon monoxide facility.
All three projects were announced during Seifi Ghasemi’s tenure as President, CEO, and Chair. The new CEO, Eduardo Menezes, who took the reins earlier this month, has moved quickly.
The World Energy project was a $2bn investment and the Massena green hydrogen project was worth about $500m. Air Products did not attach a cost to the carbon monoxide project when it was first announced.
Under Ghasemi, Air Products invested heavily in low-carbon and green hydrogen. However, with the new directors in place a change of direction was expected.
In the company’s next earnings call it has said it will update on the future of two key large green hydrogen projects that are well-advanced: the NEOM green hydrogen project in Saudi Arabia that is approaching 80% completion, and the Louisiana Clean Energy Complex, which is also progressing, with startup expected in 2028.
Air Products noted today that it is in active discussions with potential equity partners to participate in the ammonia loop and carbon dioxide sequestration to reduce capital outlay for the Louisiana project.
In reference to the Massena project, Air Products said that its cancellation decision is based on recent regulatory developments rendering existing hydroelectric power supply ineligible for the 45V credit. It also cited the “slower-than-expected” development of a hydrogen mobility market in the region.
With the SAF project, Air Products said the exit reflected challenging commercial realities and for the carbon monoxide project it cited unfavourable project economics.
In making the announcement about these three projects, it said it would continue to evaluate all projects in its backlog but does not currently expect any additional cancellations going forward.
The projects explained
Air Products announced the SAF project in collaboration with World Energy and Honeywell in 2022. At the time, the partners said they would develop what they believed to be the world’s first commercial-scale and North America’s only SAF production facility, featuring a hydrogen plant, in California.
Read more: Air Products, World Energy, Honeywell to develop ‘world’s most advanced’ SAF hub
The project was meant to be online this year.
In New York, the company was to build, own, and operate a 35 million tonnes per day facility to produce green liquid hydrogen at a greenfield site in Massena, New York, as well as liquid hydrogen distribution and dispensing operations.
Read more: Air Products to invest $500m in New York green hydrogen facility
Commercial operation of the facility was scheduled for 2026–2027.
Lastly, the Texas-based carbon monoxide plant project would have seen two new production facilities constructed, with a capacity of 70 million standard cubic feet per day.
Read more: Air Products to expand ‘world’s largest’ carbon monoxide pipeline with two new plants
The unit had been set for start-up in 2026.
