Various delivery methods have been developed by the industrial gas industry to meet the needs of a wide variety of nitrogen, oxygen and other industrial gas users.  A number of parameters determine which combination of production and distribution methods will be optimum for a particular user at a given time. 

The most important factors influencing the choice of supply and delivery options for users of nitrogen, oxygen or other industrial gas products are the average consumption rate, short and longer term usage rate variation patterns and the purity of product required to meet the needs of customer applications.

Very small volume users will typically purchase gas in cylinders from distributors of packaged gases.  Users with somewhat higher demand will purchase liquid products that are stored and vaporized as needed. Still higher volume users will be most economically served by on-site gas production or pipeline supply.

As customer usage changes over time, the optimal supply mode may shift from one production and distribution combination to another. By choosing a new production and delivery option when the optimal mode changes, customers will benefit by declines in the average unit cost for industrial gas products as their usage rate increases. 

While it would be ideal for customers to be able to shift modes as soon a different supply arrangement would be more cost effective, this is not usually possible.  Customers experiencing significant growth or decline in usage should consider the likelihood that making a change in supply mode and/ or supplier may be in their best interest in the near future.  If that may be the case, UIG and UCG have tips for companies which want to prepare for potential changes in their supply system and / supplier. Although  there are many factors to consider, one piece of advice is paramount to ensure there is an opportunity to consider options: Start well in advance of the end date for your current supply agreement - preferably about three years in advance.   

On-site gas production of gas and pipeline delivery can cut the unit cost of nitrogen or oxygen gas by as much as one half versus use of truck-delivered bulk liquid only.  Appropriately-designed onsite gas supply systems can cost effectively and reliably service a wide range of user demand rates and usage patterns.

Users that require more than about 8 million SCF per month of liquefied gas (about 15 truckloads per month) should investigate the substantial savings typically available by switching to an onsite gas production system to supply some or all of the required product.

Onsite gas supplies are cost effective for most users because most purchasers of bulk liquid products do not use the product in liquid form. Instead, they vaporize the liquid, then distribute the resulting gaseous oxygen, nitrogen and/or argon to usage points. They purchase liquid only because they use gas at a rate that is (or once was) in the  range where bulk liquid delivery is a cost effective and convenient option (compared to alternatives such as cylinders or onsite production). Liquid customers who use nitrogen or oxygen in gaseous form only are paying for refrigeration costs, trucking costs and transfer losses that can be avoided by producing the gas they need at their own site.

A few liquid customers do use the intense refrigeration that can be obtained from cryogenic liquid products.  These companies typically use liquid nitrogen or liquid CO2 in applications such as food freezing or cryogenic grinding that require both an inert atmosphere and very cold temperature.  Some of these users could be candidates for an onsite liquid plant which would save them money and eliminate periodic production disruptions caused by liquid transportation problems. 

Supply Modes for Gas Users:

Cylinders are primarily distributed by independent distributors (of varying sizes) that buy merchant gases in bulk liquid form from producers and package the gases into cylinders in their facilities.

Small to medium size customers are often use vaporized liquid as their source of nitrogen, oxygen and argon. In these systems, trucked-in bulk liquid product is transferred from delivery vehicles to a storage tank on the user's premises, then vaporized into a local distribution system.

Depending upon customer demand level and location, the tank and vaporizer system may be installed by, and the account may be serviced by a local independent distributor company, or by the company which produces the liquid products used at the site.

Bulk liquid vaporization systems can accommodate a relatively wide range of average usage rates and are particularly suited to handling highly variable usage patterns.  The cryogenic storage tank and vaporizer system that is installed on the customer site, near the usage point, is commonly called a customer station.  The customer's gas distribution system is generally held at relatively constant pressure by automatic controls.  This technique adjusts the rate of liquid vaporization to track changing demand.

Customer station storage tanks typically hold as little as about 300 gallons or as much as 15,000 gallons ( 1300 to 57,000 liters) - with larger tanks (or multiple tanks) used for higher volume customers.  Tank sizing is determined by analysis of the user's product consumption pattern.  The volume must be adequate to handle average and peak demands, and sufficient to allow for a cost-effective tank refilling schedule under normal operating conditions.

Customer station tanks and vaporizers are typically rented from the liquid supplier but they may be owned by the customer purchasing the liquid. UIG encourages companies to consider ownership of the customer station system as it enables users to change suppliers relatively easily if they are dissatisfied with their liquid supply service or pricing.  When the storage and vaporizer system is rented from a major industrial gas supplier, users often discover that it is difficult to change suppliers.  Not only must the liquid user/ tank renter provide advance notice of their intention to cancel existing liquid supply contracts, they will almost certainly find that their customer station will need to be replaced by one owned by their new supplier. (UIG is unique in offering their onsite gas and/or liquid customers the ability to change liquid suppliers if a better liquid price is available while continuing to use UIG-owned customer stations.)

Relatively large but temporary requirements are sometimes met with “Tube trailers” (bundles of high pressure cylinders permanently mounted on a wheeled platform).  Common situations when tube trailers are used are testing of new equipment, process development and plant "turnaround" maintenance demands.  Another use is providing an extra level of standby backup to delivery systems that serve very critical operations. For long-term, relatively steady usage, this option is usually more expensive than liquid deliveries or on-site gas production.

"Onsite" plants are usually the most economical means of supplying oxygen and nitrogen customers that use more than about 10 tons per day of product (more than one truckload of liquid each two days).  Onsite supply systems use a  gas production plant that is erected on or close to the customer's site to supply most or all of the operating requirements through in-plant or local multi-plant distribution pipelines.

To ensure a continuous supply of product when on-site production is disrupted due to power failures or maintenance requirements, onsite gas plants (oxygen or nitrogen generators) are integrated with customer stations that store backup liquid which can be vaporized into the distribution system when needed. Because these backup systems have very rapid response times, they also supplement onsite gas production when there is a sudden increase in demand. Ideally, onsite production plants will operate at a slowly changing rate that tracks average demand while liquid is vaporized to meet usage spikes. Users switching from bulk liquid product to onsite production will find that, after an onsite plant is installed and operating, liquid purchases will drop to a small fraction of previous consumption.

On-site gas (and liquid) supply systems may be owned and operated by UCG or they may be user-owned and operated. Onsite gas plants owned and operated by an industrial gas company is the most popular of these two options in North America and is growing in popularity world-wide.  User owned and operated plants remain popular in many smaller and more isolated markets.

There is increasing interest in user-owned, small, non-cryogenic nitrogen and oxygen generators, in many markets. Small to medium size users of oxygen or nitrogen that do not need high purity may find that their most economical supply alternative is product from a non-cryogenic gas generator. Non-cryogenic oxygen can be produced by two types of generators - PSA and VPSA (VSA) plants.  Oxygen VPSA technology is more cost effective for larger volumes and higher power cost areas.

Similarly, non-cryogenic nitrogen may be produced using membrane technology, or by a pressure-swing-adsorption (PSA) unit. A PSA with a supplemental purification step is an alternative to liquid deliveries when "liquid-like" gas purity is required.     

Nitrogen users with greater consumption rates or those who need high purity nitrogen may find that the most economical technology is a cryogenic “LIN assist” plant installed on their site.  LIN-assist plants use a modified cryogenic production cycle that cost effectively produces most of the gaseous nitrogen that is required.  A relatively small amount of liquid nitrogen (typically 5 to 10% of the total volume of delivered nitrogen) is used on a continuous basis to provide process refrigeration for the distillation process that makes the on-site-produced nitrogen.  This vaporized liquid nitrogen mixes with the onsite-produced gas and is routed to users. 

Nitrogen customers that need very high purity nitrogen, or very large volumes of nitrogen may find that the characteristics of a traditional cryogenic nitrogen generator provides the best fit with their operating patterns.

Oxygen users that need high purity product or relatively high volumes of product will need a traditional cryogenic air separation unit.  Cryogenic oxygen plants are available in low purity (about 95%) and high purity (99.6% +) models. There are oxygen-only plants, and multi-product configurations (oxygen plus nitrogen and argon). 

Customers that are located close to several large volume users may have the option of receiving product from a multi-customer pipeline.  Regional pipelines offer economies of scale for production and low operating costs for the delivery system. The air separation plants that supply the regional pipeline are backed up by high pressure gas and liquid storage at production sites and/or at most consumption sites. 

Supply Options for Bulk Liquid Users:

While liquid storage and vaporization capability will still be required to meet peaks in demand and to back up the on-site generator; future liquid consumption should be a very small fraction of the pre-onsite level. 

If a liquid storage tank is refilled more frequently than every two days, there is a good chance that a switch to onsite-produced gas will save money. 

• Cryogenic trailer trucks.  The most common supply mode. 

• Onsite liquid plant. 

UCG onsite liquid plants offer two significant advantages:

• Lower cost product due to the total avoidance of transportation costs and transportation losses.

• Excellent protection against supply disruptions caused by transportation problems; because of the large liquid inventory that will be maintained on site. 

Very large users of liquid (those using more than three truckloads of liquid a day, which is about 60 tons per day or 50 million SCF/ month) are definitely candidates for an onsite liquid plant.

Companies that consume as little as one or two truckloads a day of liquid are also candidates. These lower volume liquid users may be economically supplied from an onsite liquid plant when their demand, combined with that of other local users, is sufficient to support an economically viable liquid products plant.   

In many cases investigation will reveal that local demand is great enough to justify installing and operating a liquid plant that serves multiple customers.  Industrial gas distribution companies supplying nearby liquid users can be expected to take advantage of a new, low-cost local supply source rather than continue to supply their customers with costly liquid from distant plants. UIG welcomes inquiries from potential clients who are interested in investigating onsite liquid production; and will work with them, nearby industrial gas users and local distributors of liquid products to determine the feasibility for building a multi-customer liquid plant and the optimal plant sizing.

When UIG and UCG are able to justify building a multi-customer (or "piggyback") plant, a portion of the revenue from third-party sales is used to lower the cost of product to the host plant. 

Changing
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