Industrial gases company Air Products, which has global headquarters in Lehigh Valley, Pa., is exiting three projects in the United States, primarily to write down assets and terminate contractual commitments.
“The decision to exit these three projects will streamline our backlog and focus company resources on projects that drive value for Air Products’ shareholders,” Air Products CEO Eduardo Menezes said Monday.
Air Products said it will continue to evaluate all projects in its backlog and currently doesn’t expect any additional material cancellations going forward.
The decision was made as part of a review initiated by Menezes and the company’s newly elected board of directors. Air Products expects to record a pre-tax charge not to exceed $3.1 billion in its fiscal 2025 second quarter and said the estimated charge will not impact adjusted earnings per share for fiscal 2025, according to a Feb. 24 statement.
Air Products has terminated its agreement with World Energy for the sustainable aviation fuel expansion project in Paramount, Calif., and is managing its overall exit from the site.
The company said its decision to exit reflects challenging commercial aspects surrounding the expansion project and current operations.
Additionally, Air Products has cancelled its plans to construct a 35 metric ton per day facility to produce green liquid hydrogen in Massena, N.Y., and related liquid hydrogen distribution and dispensing operations.
The decision to cancel this project, the company said, is based on recent regulatory developments rendering existing hydroelectric power supply ineligible for the Clean Hydrogen Production Tax Credit (45V), as well as slower than expected development of a hydrogen mobility market in the region.
Air Products also said it has terminated a project in Texas for the production of carbon monoxide due to unfavorable project economics.
Estimated contract cancellation and other project cancellation costs are subject to further refinement and may ultimately differ from actual costs recorded in the company’s fiscal second quarter and beyond, according to Air Products’ statement, which notes that additional information, including revisions to the company’s capital expenditures forecast for fiscal 2025, will be provided in its fiscal second-quarter earnings release.
The company will provide an update on major projects during its next earnings call that will only be specific to Air Products’ two largest projects under execution: the NEOM green hydrogen project in Saudi Arabia, which is approaching 80 percent completion, and the Louisiana Clean Energy Complex, which is expected to start up in 2028.
Regarding the Louisiana project, Air Products said it’s in active discussions with potential equity partners to participate in the ammonia loop and carbon dioxide sequestration to reduce capital outlay for the project.