Air Products and Chemicals, Inc. (APD) Earnings Call Transcript & Summary

Well, good morning, everyone. I wanted to welcome you to this Seaport Research Partners Conference on sustainability and transformation -- Very pleased to have the team with me from Air Products today, Simon Moore and Moshe. Simon, in addition to your role as Investor Relations, you're also what we're seeing the sustainability charge here. So I definitely appreciate you -- And I'll leave it to you to give us some opening remarks before we get into some Q&A.

Okay. Well, great. Well, thanks, Mike. I really appreciate the opportunity to be here. Thanks to you. Thanks to the rest of your team, and thanks to everybody who's joining us today. Tremendous opportunity to be here today to talk about sustainability, to talk about hydrogen, to talk about the energy transformation the world is looking at. And maybe I could just frame Air Products for folks a little bit, and then I look forward to our dialogue, Mike. So hydrogen is a big part of Air Products' business today. It's almost 25% of our revenue is hydrogen today. And Air Products really pioneered the concept of outsourcing hydrogen for the refining industry. And today, almost all the hydrogen we produce, it goes to the refining industry, and it helps them clean up their transportation fuels. So it's kind of interesting that we're talking about this very new exciting thing, which is hydrogen in the transportation space and almost 25% of Air Products today is kind of related to that. Now it's a different kind of hydrogen. And because of that, Air Products has decades of experience in hydrogen. We have experience in different ways of producing hydrogen. We have experience in different ways of transporting hydrogen via a pipeline as liquid in a truck, as gas in a truck. And we have decades -- years and years of experience in actually dispensing the hydrogen into vehicles. So one of the things we're going to talk about today, Mike, is the very real projects that Air Products is doing based on the experience we have. So we have a lot of experience in hydrogen. I know we'll talk about the market opportunities. We'll talk about the transportation opportunities. We'll talk about some of the industrial opportunities. And I don't need to tell anybody on the phone that every day you wake up and open up your computer, you see another sign that the world is very, very focused on and moving towards lower carbon energy, and we'll talk specifically about some different styles of making hydrogen. But at the end of the day, it's about lower carbon energy for the world, and hydrogen's got a critical role to do with that. And again, I know we'll get into some of our projects, but one of the most exciting things for Air Products is we're doing real projects. We've committed almost $10 billion to 3 major projects that will help drive the energy transition. And Mike, I'll be honest with you, these are not MOUs to begin to study thinking about maybe forming a partnership to do something one day. These are fully approved by our Board. We're spending money. We're moving dirt, and we're doing engineering. And so that's a little bit of an overview. And with that, would like the opportunity to get in some questions with you, Mike.

It is exciting, and I think the next 4 to 5 years are going to be very interesting to see how things play out and excited to get into discussing this. Maybe to start off, talk a little bit about how you see the current market size for hydrogen. I know you mentioned that the vast majority of what you sell today goes into refineries. But how do you start to think about estimating the hydrogen opportunity into the future as you think about transportation and other mobility applications as well as many other markets?

Yes, it's a great question, Mike. And to be honest with you, we're going to leave it to all the expert consultants in the world to do all their forecasting and charts and graphs and all that kind of good stuff. And I make a little bit of a joke out of that. But the market potential is so huge that whether we thought it was a $50 billion market, a $100 billion market, I mean it almost doesn't matter. It is so potentially large that I'll be honest with you, we're very focused on understanding the specific market opportunities. But in terms of the overall, we know it's very, very large. And let me give you, Mike, for the team, kind of a statistic. The NEOM project, which, as you know, is a total investment of $7 billion to produce green hydrogen in Saudi Arabia, $7 billion. It's a 4-gigawatt project. It's orders of magnitude bigger than anything anybody has ever done. And that provides enough hydrogen for 20,000 city buses. And it may not all go to the city bus market, but just to give you an order of magnitude for the size, 20,000 city buses. Well, there's 3 million city buses in the world. So that project, as huge as it is, as game-changing as it is, can only provide enough hydrogen for a tiny sliver of one of the submarkets within transportation, right? Never mind trucks and trains and planes and then the industrial applications. So to be honest with you, Mike, we haven't looked at putting a number on this. The world's energy market is a $50 trillion, $80 trillion market. And so our view is there's a tremendously large market opportunity. And so we're taking serious commitments to move ahead with these projects to be ready.

In terms of -- as you look around the world and think about these opportunities that are beginning to emerge today, you mentioned NEOM in Saudi Arabia, but what regions or countries around the world are showing the greatest interest in hydrogen for mobility? Where are they starting to move forward with projects? Where is the government support greatest as you see the market right now?

Yes, it's a great question, right? Because every government everywhere is saying something about this direction, right? And to be honest with you, trying to sort out what's real and what's maybe not so real. So we're going to talk first about -- so again, as you asked about the mobility of the transportation market, maybe we'll come back later and talk about the industrial market. But for the mobility in the transportation market, I think no surprise to anybody, we see a lot of activity in Europe. And there is activity at the EU level. There's activity at the country level. I think not only have the countries realized that hydrogen has a key role to play in transportation for them, they've also realized that it doesn't make sense to produce all of that hydrogen in country. So for example, Germany is moving aggressively towards seeing hydrogen as part of their energy transition solution, but they also recognize that from a -- let's face it, from a solar standpoint, Germany is not the best place to produce renewable electricity to make green hydrogen. So they have programs in place, let's say, to support and encourage the import of green hydrogen. So I think you need to kind of see 2 things, right? One is somebody who's creating the incentives for people to make those transitions. And then also depending on the country, a place that's willing to acknowledge and utilize imports of that green hydrogen. And again, what we see, just we talked about transportation, maybe to round that out for a little bit, I mean, we're really talking about heavy transportation, Mike. When we think about the transportation market, for the lighter vehicles, for the passenger vehicles, we actually think that battery electric vehicles are probably the winning solution there. Because quite frankly, the weight of the batteries is not that important in your passenger vehicle relatively speaking. But when we turn to heavy transportation and again, buses, trucks, trains, airplanes, where weight really matters, the size, the scale and the weight of the batteries starts to have a big impact on the utilization of the payload of those vehicles. So that's where we see a hydrogen fuel cell electric vehicle being the right solution for that heavier transportation. Now at the end of the day, we're all -- those are all electric-powered vehicles. It's just a question of, for the smaller passenger vehicles, the electricity is produced elsewhere stored in the vehicle in a battery. And for the fuel cell, the larger vehicles, in using hydrogen, we actually produce the electricity in the vehicle itself. So again, that's how kind of we see the market. So a lot of activity in Europe. Certainly, California's low carbon fuel standard creates some pretty interesting opportunities there. As you know, part of our project in Canada includes some liquid hydrogen. We see a lot of activity by Canada and the province of Alberta to promote the transformation of the trucking industry towards hydrogen. Again, in harsh conditions, very, very cold, the performance of the battery suffers, whereas the fuel cell really continues to shine. So we see a lot around the world, but those are some of the key markets that we see a lot of great activity in.

You mentioned earlier that you guys are doing actual projects. You're moving dirt already. There are some other players out there who are talking big about hydrogen, but not necessarily doing anything. Who do you see as the most meaningful competitors in this space right now? And how do you think about Air Products' competitive advantages as this market grows?

Yes, it's a great question. So let me just -- if I was an investor and I was looking at this space, I want to be comfortable with a company: a, had the experience, quite frankly, we talked a little bit about the experience that Air Products has and has the technologies. So one of the things that we've been able to put together at Air Products is a portfolio of technologies that are relevant to this situation, and we can sort of bring those together in the right configuration for each situation. And so that technology includes, first of all, gasification technology because for the blue hydrogen projects, it is a gasifier. You're gasifying natural gas. You got to have [ carbon ] capture technology. Well, we've demonstrated that we've been doing a carbon capture project for the last 8 years in Port Arthur. You got to be able to make liquid hydrogen, because there's times when that's the right solution. And again, you got to know how to move the hydrogen via pipeline, which we do. And then if you look at the green hydrogen projects, in this case, we decided we didn't need to go out and develop our own electrolyzer, but we've got a strong relationship with thyssenkrupp to take advantage of their expertise in the electrolyzer market. And then, okay, maybe we're going to want to move the hydrogen via ammonia. So we've got a relationship with Haldor Topsoe for the ammonia technology. So I think if you look back over the last few years, you've seen Air Products make a few steps. In some cases, we've acquired the technology like gasification. In other cases, we needed the technology, but it didn't necessarily mean we had to go buy the ammonia technology, let's say, we entered into a relationship. So not only do we have the experience, we've got the portfolio of technologies at our fingertips to put together in the right configuration. And then, of course, you got to be real from a sense of these projects are expensive. I just said we've spent -- committed $9 billion or $10 billion for these projects. You've got to have a robust balance sheet that can handle these investments. And Mike, we all know that for the first 3 or 4 years of these projects, you're just writing checks, right? I mean it takes 3 or 4 years to build these. The companies that are doing are going to have to have the financial wherewithal to be able to invest $4.5 billion with no return for a few years until the project comes on stream. And then obviously, none of this happens without people. We could have all the balance sheet, all the technology, all the experience, but without people to execute these projects, and we're tremendously excited about the team that we have, the build-out of the team under Dr. Samir Serhan's leadership to really be in a strong position to execute. So when we think about competition in this marketplace, we think about it a little bit differently. Look, we're competitive. We'd love to win everything. But we go -- I go back to your first question, Mike, the scope of this market is so huge that no single company can do all of this. So while we do view other people as competitors, we recognize there's going to have to be other people doing hydrogen projects to allow the world to have the amount of hydrogen it needs. So in some cases, we do need competitors who are also going to do projects. And certainly, you hear some things from the industrial gas companies. You hear some things from some of the other companies out there. We're very, very focused on our exciting projects. And as Seifi has said the last few times he's announced a project, he says, "hey, we've been working on this for 3 or 4 years." You can imagine there are some other things that we're working on, too. So hopefully, there will be other opportunities for us at some point in the future.

So you mentioned the industrial gas players. I think of other very obvious competitors might include some of these oil -- integrated oil companies. They're very accustomed to moving fuel around, dispensing fuel and distributing fuel. Are those integrated, the super major oil companies, someone that you consider a competitor at this point or someone who's going to look to serve this market as it emerges?

Well, it's a great point, Mike. And I think it remains to be seen. I mean we all see every day that, that group of companies, if you will, that industry is thinking about what their future looks like, right? I mean they're at a fundamental -- what is the role, if you're at one of those companies, what is your role in a much lower carbon future? So I think that remains to be seen. I think one of the exciting things for Air Products is we're proud of the fact that we can move quickly. We can move boldly, and we can make these commitments. And again, what's interesting is those companies, generally speaking, are the same companies that own the refineries that used to own their hydrogen plants and over the years, got comfortable outsourcing their hydrogen plants to Air Products and our peers. Now I'm not saying that's going to be exactly the same model, but it is the same industry who in maybe a different situation, said, "hey, this makes sense to outsource." So we'll see. I think, Mike, we're confident that Air Products could bring the full solution all the way from producing hydrogen to delivering it into the vehicles. And as I said, there's going to need to be other people who do projects.

You mentioned other industrial gas companies being involved in this. It seems like your approach to the hydrogen opportunity has been one of mega projects that you mentioned around $10 billion already committed to a handful of projects. It seems like some of your competitors in the industrial gas space are taking in more measured approach, not necessarily saying downplaying the size of the market or the opportunity but just being a little bit more measured. Smaller projects for now waiting into the future for the bigger projects to come, maybe talk a little bit about the differences in your approach on more towards the mega projects versus what other players are doing.

Yes, it's an interesting point. I mean, again, I would say we didn't go into this and saying, "hey, we want to do mega projects. Let's go find a place to do a mega project." What we said, Mike, is we want to be a major player. We see this energy transition of the world happening. We see hydrogen as a key part of that energy transition. We have a leadership position today. We want to maintain that leadership position. So what do we need to do to help, quite frankly, drive the energy transition, because we all recognize this. If there is no low-carbon hydrogen, then a hydrogen vehicle doesn't accomplish very much, right? So you kind of got to prove to the world that you're going to have the hydrogen. So we said, okay, what makes sense here? And then once you're going to do a project, let's take a look at the project in Saudi. Well, we could have made that smaller. But to be blunt, why would you do that? I mean, in our humble opinion, it's a $5 billion project. We talked about the fact that only needs about 20,000 city buses. So our view is one of the ways that we create strong economics around that project is the scale. I mean, the size of that project helps drive down the cost, of course. And so it's a very, very attractive project. And to be honest with you, our view, we are this confident about the market opportunity. So we have no problem committing to these and other projects. So I can't speak to why our competitors are taking a much slower, more conservative approach. But I think I'll say it this way, it feels every day, like the demand for this low carbon hydrogen is going to be significant and people are announcing some projects. But when we have this green hydrogen and blue hydrogen in 2026 or so, I think it's going to be a very exciting opportunity for Air Products. I think the market demands will be very significant at that point in time.

All right. So at this point, I do have some more questions to go through, but I just want to remind people that if you type a question into the question box down there at the bottom of your screen, I will be able to see that. I will be able to ask your question anonymously. Worst case, if you have my e-mail address, [email protected], shoot me an e-mail, and I'll ask your question that way. You mentioned the blue hydrogen, green hydrogen. I think you've got not all the -- I've heard teal thrown out there as well, not every color of the rainbow but some. Maybe talk about how you guys are seeing customers think about, oh, we'll settle for gray hydrogen or blue hydrogen now and we want green in the future. It seems like at the end of the day, as you mentioned, the carbon intensity is what matters for making this a type of fuel that increases sustainability and is favorable for the environment. But talk about, I guess, the different colors. Maybe talk a little bit about how you guys see pricing playing out in differentiating between gray and blue and green hydrogen.

Yes, great. I didn't know about teal. Why, good, I got a new one today. So I know I've learned something today from you, Mike. So well, look, let's just -- I'm sure everybody knows, but just maybe to ground people. I mean, so-called gray hydrogen is hydrogen made from hydrocarbons with no carbon capture. So the CO2 is emitted. Blue hydrogen is made from hydrocarbons with carbon capture on it, and then green is made from renewable energy, so not made from hydrocarbons. And Mike, at the end of the day, we think this is an and, not an or. We don't think there's one of those, which is the solution going forward. We think there's going to be market opportunities for all 3 of those. And again, we're going to continue to be the leader in all 3 of those areas. But you also hit on something which I think is really critical. It's almost too simplistic just to describe a project as blue or green. And let me give you an example. Let's talk about our Canada project. So obviously, that starts with natural gas. So it is sort of, by definition, a blue hydrogen project but we're using the innovative gasification technology that allows us to capture more than 95% of the CO2. So although it starts with natural gas, i.e., methane, CH4, a carbon-containing compound, we're going to directly capture more than 95% of that CO2 that's produced, and that will get sequestered. And then we're also going to produce low-carbon electricity, and so that will offset the remaining CO2. So there, we have a project that is natural gas based, so it's a blue hydrogen project, but it has a net zero footprint. And I could have a different type of blue hydrogen project if I retrofitted an existing steam methane reformer, kind of the technology of choice today or in the past, that maybe only captures 50% of the CO2. So I think you can see that just calling something blue hydrogen is probably not descriptive enough, because I could have blue hydrogen that emits 50% of the CO2, and then I can have a project like Canada that has a net zero footprint. So we see, as you said, carbon intensity being what's important to people. They're interested in a lower carbon intensity. Now some people will want, let's say, all the way, I want nothing to do with any hydrocarbons in my project, that one so-called green made for renewable electricity. Great, we're going to have that option for you. But we're also going to have blue hydrogen but with a very, very low carbon footprint, as I said, Canada with a net zero carbon intensity. And Louisiana is going to capture greater than 95% of the CO2 as well. And then I also do think we believe there will still be a market for the gray hydrogen. Quite frankly, although we're excited about this transition, we see hydrocarbon-based, oil-based refining being a key part of the energy solution for many, many decades to come. So we see all 3 of those. Again, being able to access the technology that supports all of those types of projects, being able to put the right solution together, so we're not just running around the world. We're not trying to do a green hydrogen project in Alberta because, quite frankly, that's pretty difficult. Alberta has abundant natural gas. They have a good setup for sequestering CO2, quite frankly, so does Louisiana. So that's why it kind of made sense to do those projects in that place. So again, we want to -- we are a leader today in gray hydrogen. We're going to, with these projects and others, be a leader in the blue and green hydrogen. So we'll be able to offer customers kind of a portfolio of opportunities that best fits what they want to do.

Almost a horses for courses type of approach where you're going to be able to walk into a situation, work with that customer and understand what kind of technology is going to work best based on what they have in terms of infrastructure, et cetera.

Exactly. Yes.

Wanted to move on to -- you've touched on a few of these projects already. I wanted to make sure to ask a couple of specific questions about the NEOM project in particular. You announced yesterday that thyssenkrupp was awarded the electrolyzer contract there. Maybe talk a little bit about what that means for that project. And then my other question on NEOM is it seems like this is the most revolutionary project in that you are using ammonia as a carrying medium for the hydrogen. Maybe talk about that approach.

Yes. Great. So again, NEOM is the project in the northwest corner of Saudi Arabia. So what we're going to do is we've got a joint venture with ourselves, ACWA Power, who is an entity that -- great power developer in the Middle East, and we've done other projects with them and then the city of NEOM is actually the other partner there. So basically, this project, as I say, Mike, it starts with seawater, sun and wind because we're going to -- the joint venture is going to build the solar field, the wind farm, the desalination plant, so produce our own renewable electricity. And I often get asked, why are you doing that there? And I know this is almost insultingly simplistic, but it's because the wind blows and the sun shines. In that northwest corner of Saudi, you have very, very powerful sun and consistent sun and wind. And so you leverage the capital cost of producing that renewable electricity and create a cost advantage. So now we have a significant amount of renewable electricity. As you said, we're going to use the thyssenkrupp electrolyzers. We're going to buy them from thyssenkrupp and use them to make hydrogen. And I think yesterday, when we first announced this project, we also announced a relationship with thyssenkrupp. We said that they were going to be the supplier of the electrolyzers. But yesterday's announcement, I think people are looking for key milestones on this project. Yesterday's announcement, we actually signed a contract to buy all of those electrolyzers from them. And when I say we, it's actually Air Products on behalf of the joint venture. So it was always the plan to do that. But this is a no kidding real contract, real commitment to go buy this now. And so I hope people do see that as the type of milestone they've been asking for. So then out of those electrolyzers, you've got green hydrogen, but you got it in Saudi Arabia. And that's -- while there could be some market opportunities there, that's not the primary market opportunity. So how do we take that hydrogen and move it to where we need it to be, where the market wants it? As I said early on, Mike, we've got a lot of experience moving hydrogen, and we know how to do liquid hydrogen, gaseous hydrogen and trucks and pipelines. But in this case, to move hydrogen around the world, if you move hydrogen as a gas, it's very light, and therefore, it's quite expensive. You've got a lot of steel tubes to move it around. If you turn it into a liquid to move it around the world, that takes a lot of energy. It's also very cold. And so as it moves around the world, it kind of boils off a little bit. So one of the innovative things we're doing in this project, as you noted, is to turn that hydrogen into ammonia. So we're going to do that at the site in Saudi and then use ammonia as the distribution mechanism for the hydrogen because, quite frankly, ammonia is much easier to distribute around the world. There exists today a supply chain to move ammonia around the world, so you can leverage and take advantage of that. And then you move that ammonia to at or near where you need it, and then you crack it or dissociate it back to hydrogen, again, ammonia being NH3, so just sort of separate, crack off that nitrogen molecule. And then you have hydrogen, you compress that and you dispense it into the station. So really, I mean, to summarize this project, we want to produce it at that spot in Saudi because it's got very attractive sun and wind characteristics, which create low-cost production. And then we use ammonia to move that around the world, which gives us the flexibility to get it where we need to be. So that project is expected to be on stream in 2026. Let me also just clarify that when I say we're going to take the ammonia, it's a 3-party joint venture to produce the ammonia in Saudi and Air Products takes 100% of the output of the facility that's fully responsible for the downstream marketing. So we're very actively engaged with people around the world who are very interested in this ammonia in 2026 -- in hydrogen in 2026, so.

You mentioned to liquefy hydrogen is very energy intensive. And I also would think that there's some energy intensity associated with converting it into ammonia. Can you talk a little bit about what's different about the ammonia plant itself that's going to keep it green or low carbon?

Yes. Well, so again, we're going to produce power. So the site in Saudi is going to be self-contained, right? We're going to produce enough power, obviously, for the electrolyzer, for the ASU and also the rest of the power that's needed there. So it will all come from kind of sun and wind electricity to do that. And again, Mike, as you pointed out, it's all trade-offs, right? We could put a bunch of gas in tubes and put it in a truck and move it around, put the truck on a ship, and we get a very small amount of hydrogen at the other end. And so really, we look through the different opportunities, the different ways of distributing that hydrogen. And in this case, we came up with ammonia being the right solution. But I'm going to quote back to you, horses for courses. Then when we look at the Canada project, where the distribution of the hydrogen for the mobility market is in a smaller radius, I mean, Alberta is a big place, but a relatively smaller radius, quite frankly, turning into ammonia and dissociating back doesn't make sense. In that case, we actually are going to turn it into liquid hydrogen because the distribution radius is a lot shorter. The other part of the product out of Canada is going to get distributed via the pipeline network as a gas. So again, back to no one of these is better or worse. It depends, quite frankly, on how far you're trying to distribute the product. What's kind of the radius of distribution, and it's great to be able to kind of deploy the right solution in the right situation.

We do have a question that's come in from the audience regarding transportation costs. Maybe talk a little bit about the economics of moving that green ammonia around and dissociating it.

Sure. Well, I mean, I'll be honest with you, as you know, Mike, we haven't shared a lot about the specific economics, either the production side, the distribution side or the expected selling price other than to commit to these projects. But we fully expect them to earn the minimum return. So I'm really not in much of a position to kind of comment specifically about that. But again, I mean, ammonia has moved around the world on ships today. We see that as a very valid supply chain that you think you kind of land the ammonia in a port. And then maybe you build the cracker at the port and you distribute gaseous hydrogen if the city is right there or maybe you move the ammonia via a truck to a sort of a central cracking location, if it's a little bit further away. And then again, what you're building actually at the site is a cracker, a little, small chemical plant, and then you're going to compress the hydrogen stored as a gas and dispense it into the station. So apologize, I can't really comment too much on the specific economics of that. But again, I think you can recognize just with the amount of ammonia that's moved around the world today while leveraging that supply chain makes a lot of sense.

Well, I think if I can kind of break down the way I think about it, the capital costs associated with this project upfront are higher than you would expect for a typical ammonia project, but the variable costs are exceedingly low. As you said, it's seawater, wind and sun that are your input costs here. And then after it goes through this ammonia process and it's transported around, that's going to be fairly conventional transportation costs in terms of moving the product around. And then your expectation would be that when it is dispensed and consumed by the end customer, that there is a premium associated with this being green hydrogen rather than blue or gray.

Well, yes. I think that's absolutely true. And again, all you have to do is you have to look at the various government announcements, the rules, the regulations, whether that be California's low carbon fuel standard. And again, we go back to carbon intensity. One of the reasons why we think that's a very good program is the California program doesn't dictate how the hydrogen should get made. It has more value, the lower the carbon intensity, and sort of says, okay, the market will go figure out exactly how to do that, which is what we think is a great approach. And again, I think we're going to find cases where there's, let's say, incentives to use lower carbon hydrogen but there's also going to be places where there's mandates to use lower carbon hydrogen. And whoever it is, the city bus authority, the trucking fleets are going to be required to. So we do think that there will be significant value there. And maybe I would just want to pivot to kind of one other point that I didn't say I think is obvious, but I want to make it clear to the investors that Air Products is not getting in the ammonia business. There's nothing wrong with the ammonia business. There's people in the ammonia business. The only purpose for us to kind of get involved in ammonia here is to move those hydrogen molecules. So really, it's -- we could joke could say, we have nothing to do with ammonia. We're just going to attach a nitrogen molecule to the hydrogen molecule to help us move it around and not even call it ammonia. But at the end of the day, we're not getting in the ammonia business. We're not getting in what the ammonia business is today. We're using that as a transport mechanism for the hydrogen.

All right. Another question is coming from the audience. Aramco is running television commercials talking about moving blue ammonia over using tankers to Japan. Can you compare and contrast that with the NEOM project? Do you view Aramco as a friend or a foe? Maybe compare and contrast what they're doing and what the element is going to be doing.

Yes. I mean I think one of the things, again, back to, okay, this is not just Air Products talking about this. So you got Aramco taking out ads on CNBC that they seem to run about 28 times a day, so I mean, the world's biggest corporation. I mean, if you stop and think about this, Mike, here's Aramco, who some would argue is "just an oil company" and they are clearly committing resources to being part of this energy transition. So I think you've actually seen Aramco demonstrating that they're very forward thinking in how this is going to go. And look, again, there's going to be so many of these different types of projects. There will be projects we do with Aramco. The Jazan project, right, although not green is a big project we're doing with Aramco. We've got a very strong relationship. But to be honest with you, to pretend that everything Aramco is going to do, they're going to do with Air Products, I think that would be a little bit ridiculous as well. They're going to do significant projects. So if I'm listening to that, I am reassured because clearly, here's another person who has a pretty valid opinion and really believes the energy transition is happening. And not only that, but they're traditionally an oil company. So I think that there's a specific reference in that ad is to a sort of a -- I think it's a fairly small quantity, almost like a test to trial program, and that has happened some products gone to Japan. I wouldn't focus on the specific statement of how many tons of blue ammonia have been moved. I'd be focused on the world's largest oil company taking out ads saying we're going to be a player in the hydrogen ammonia, green energy transition. And quite frankly, that's exactly where our products is moving as well.

Wanted to give you an opportunity also to talk about the Louisiana project. We haven't really touched on it yet, but it seems like that's maybe a little bit different in that you're going to be putting that blue hydrogen into your existing pipeline network, which helps kind of reinforce your position as the leader in hydrogen in the Gulf Coast. Maybe talk a little about how you see the market for blue hydrogen evolving in the Gulf Coast, where I think of a lot of carbon emissions taking place, a lot of hydrocarbon being produced and used and changing hands there.

Yes, great. Well, thanks for the opportunity. Well, I think, again, you see -- you can see sort of this mix and match idea. So on the one hand, Louisiana project is also gasification of natural gas. So again, that allows us to capture greater than 95%. So some of that hydrogen, as you said, Mike, is going to go in the pipeline network and serve existing and expansions with our customers. So that part of it is very similar to the Canada project. Some of the hydrogen and Canada project is going to go in our existing pipeline network there and go to our customers, existing and future. But again, if you look at the specific situation, Canada is a little bit more about local distribution. In Louisiana, we see the opportunity to, again, take some of that hydrogen that we produce, turn it into ammonia and then use ammonia to transport that hydrogen around the world. So the Louisiana project will support not only our hydrogen pipeline network on the U.S. Gulf Coast, which is the world's largest but it will also produce hydrogen in the form of ammonia that, again, we can move around the world to support the transportation market. So you know who our customers are on the pipeline network. They're the world's largest refining chemical, petrochemical companies. Every single one of those is thinking about how do they move in this energy transition. And then while again, we think conventional petroleum refining is going to be critical for decades to come, is there a chance that somebody would prefer to use lower carbon hydrogen in their traditional refinery? I think that's a possibility. There's a lot of dialogue about renewable diesel these days. And clearly, if you're going to sort of go to the effort to make renewable diesel, you're going to have to have hydrogen and the lower the carbon intensity of the hydrogen would seem to be valuable to that type of customer base. So again, you're going to see us leveraging our existing pipeline infrastructure. And to make a key point, you don't have to build a new separate blue or green hydrogen. You can intermingle this hydrogen. As you know, Mike, we have more than 20 sources of hydrogen on our pipeline network today. So I could mix, if you will, the blue hydrogen in -- one at the end of the pipeline, take out the same quantity of hydrogen at the other end, and sort of account for that as blue. So we can absolutely leverage our existing almost 700-mile pipeline network down in the U.S. Gulf Coast. So again, that project, $4.5 billion, very significant project, capture and sequester more than 95% of the CO2. And the state of Louisiana is very excited about carbon capture. Obviously, they're very focused on their role in the future like the province of Alberta is, and that's why we had the Governor of Louisiana standing literally shoulder to shoulder with Seifi when we announced that project, because the governor sees the natural resources that Louisiana has to be very amenable to using natural gas and also sequestering the CO2. So we're excited about this project as well.

Well, obviously, the company has undergone a tremendous transformation itself under Seifi. And I think as you point out, there's obviously a huge opportunity around this energy transformation for Air Products to tap into. So I think we'll wrap it up there, Simon Moore, I want to thank you for your time. Thanks for everyone else who joined, and happy holidays.

All right. Thanks, Mike. Thanks, everybody. Have a great day.