Linde industrial gases firm taps into 'shale gas revolution'

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Linde's air separation unit plant in Cartersville, Ga., which produces oxygen, nitrogen and argon. Linde, a supplier of industrial and specialty gases, helps process scores of everyday products. Patrick Murphy, president of its North America operations, said the company has a hand in "everything you touch, taste and feel."

(Linde North America)

It provides enough carbon dioxide for the beverage industry to put the fizz in 180 billion cans of soda, supplies enough oxygen to the steel industry for 1.5 million cars and distributes enough helium for the medical imaging industry to run 3,400 MRI machines.

Linde, the world’s largest industrial gases company whose North American headquarters is in Union County, has also become a major player in the current natural gas boom.

Linde rode the U.S. “shale gas revolution,” which has reinvigorated the industry and slashed energy prices, while stirring strong opposition from environmental groups about underground drilling methods that blast chemical-treated water into the ground.

Despite operating throughout the country, including New Jersey where it employs more than 1,000 people at three locations, “most people have no clue who Linde is,” said Earl Lawson, vice president of energy solutions.

The first lesson: It is pronounced “Lindy” in the U.S., and “Linda” in Europe.

Explaining its relative anonymity to the average consumer, Linde North America president Patrick Murphy called the company “a business to business business.” But because it is a supplier of industrial and specialty gases that help process scores of everyday products, it has a hand in “everything you touch, taste and feel,” he said. Those giant balloons in the Macy’s Thanksgiving Day Parade are inflated with helium from Linde, he added.

Linde North America's national operations center in Stewartsville. The location remotely manages and monitors Linde's inventory. It also serves as the emergency hub.

The company is more broadly known in the chemicals, energy, metals, electronics, and food and beverage industries. The company, which also builds and sells hydrogen and natural gas plants, has more than 95,000 customers in North America, including Pepsi and Coca-Cola, Samsung, DuPont, U.S. Steel and Shell.

Last year, North American sales totalled $3.4 billion — that includes the U.S., Canada and Mexico — with worldwide revenue at nearly $20 billion. On Tuesday, Linde reported a 14-percent rise in second quarter profits.

The company was founded in Germany in 1879 by Carl von Linde, a professor and entrepreneur, who got his start devising a new refrigeration method enabling a local brewery to produce a cold lager year-round. “That process of using engineering to help our customers is really core to our business,” Lawson said in an interview last week from headquarters in New Providence.

Linde’s main rivals, also multinational conglomerates, are Air Products, Air Liquide and Praxair, the largest industrial gas company in North America.

Basili Alukos, an equity analyst for Morningstar research, said Linde has especially benefitted from steel mills that are now using more natural gas than coal; Linde supplies the oxygen needed in steel production. Alukos said the company has a strong foothold in China, Eastern Europe and the Middle East, but lags behind its competition in the United States.

“Because we expect these emerging markets to experience more robust growth than developed economies, Linde should benefit” in the next decade, he wrote in a June note to analysts.

The picture for Linde and its competitors was bleak in the 1990s, when the supply of oil and natural gas in the United States was drawing low, with the petrochemical industry and manufacturers starting to shift operations overseas for the cheaper labor and energy costs.That all began to change when shale deposits filled with natural gas were extensively tapped after the combination of hydraulic fracturing and horizontal drilling was perfected.

Hydraulic fracturing — or fracking — has been around for decades and involves harvesting natural gas and oil by pumping chemical-filled water more than 3,500 feet straight down into the ground then setting off explosions. Horizontal drilling has enabled companies to extract far more natural gas.

Linde primarily supplies carbon dioxide and nitrogen to companies that use a method of drilling that doesn’t require water. The water-based drilling accounts for about 85 percent of fracking. While cheaper to pump the water, it is costly to treat and dispose afterward.

Linde claims the dry-fracking method has environmental benefits, but conservation advocates say hazardous chemicals are still used.

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In New Jersey, environmental groups are pressing for legislation to ban fracking and prohibit companies from being allowed to transport the waste water into the state. Earlier this year, Gov. Chris Christie allowed a one-year moratorium on fracking to expire after having previously vetoed a complete ban.

Lawson said “the challenge for the industry, and one we fully embrace as well, is that they have good standards and practices in place to mitigate. You can’t eliminate, but you can absolutely mitigate, the risk of the environmental impact.”

But Jim Walsh, New Jersey director of Food and Water Watch, said “there is no reason we should be doing fracking in New Jersey or anywhere else.” He called the carbon dioxide fracking extraction that Linde supplies “a red herring.” Radioactive elements and heavy metals are still released into the air with or without water, he said.

“With the challenges of water contamination, air pollution and climate change, we need to move toward a renewable energy future. We have to focus on conservation and sustainable energy sources like wind and solar, not one that causes us to choose between drinking water or heating our homes.”

New Jersey does not have rich natural gas deposits, unlike Pennsylvania and states west, most notably North Dakota and Texas, where fracking is widespread. The Marcellus Shale, a rock formation that extends from the Midwest to Pennsylvania, stops just short of New Jersey. Still, there are quantities in parts of the Newark basin.

There is no doubt that Linde, which builds the gas plants and supplies the oxygen, nitrogen, hydrogen and other gases and raw materials to companies has reaped the rewards of the “shale gas revolution.”

“We’ve absolutely seen a resurgence,” Lawson said. “Honestly, five years ago, we were like everyone else, incredibly concerned.” Lower energy prices helped consumers and businesses, he added, and spurred thousands of jobs and billions of dollars in investment while preventing companies from moving abroad.

Critics say the gas boom has come at the expense of natural resources. Environmentalists oppose fracking, saying it contaminates the water, and point to studies that have shown elevated levels of chemicals downstream from treatment plants and elevated levels of methane in drinking water.

Michel Boufadel, a professor at New Jersey Institute of Technology’s civil and environmental engineering department, said there must be “a compromise between short-term needs and long-term goals. Ideally, we should use renewable energy, but I don’t think we are there yet.”

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