Why downsizing won’t solve Air Products’ $9bn Louisiana blue hydrogen problem

Air Products has spent the past year trying to de-risk its planned 1,700-tonne-per-day blue hydrogen project in Louisiana, US. But scaling it down may not be a viable solution.

The development has been under the microscope from investors for stretching the industrial gas major’s capital allocation and exposing it to atypically high execution risk, as it planned to handle downstream carbon dioxide (CO2) sequestration and ammonia synthesis.

With a with fertiliser major Yara International to take on the ammonia segment, Air Products could shift part of the project’s already ballooned capital burden and operational risk off its balance sheet.

During the firm’s Q2 earnings call, CEO Eduardo Menezes faced questions from investors about the potential of halving the capacity of the project to limit costs.