Pilkington and Air ProductsCA

SEST

UDY New horizons

in Russia

“With all the real and perceived risks of theRussian market, the people at Pilkingtonwere looking for a partner they could feelcomfortable with – not just a gas supplier.”Gavin Whitlock, European marketing manager, Generated Gases, Air Products

Pilkington and Air Products Case Study

When glass manufacturer Pilkingtonneeded supplies of nitrogen, hydrogen andcompressed air for a new world-scale floatglass factory near Moscow, the companyturned to long-time business partnerAir Products for help. The result – a plantof outstanding reliability achieved underdemanding working conditions – has beena success story for all concerned.

Reliability was one of the mostimportant requirements for the new gasplant. Since Russia does not yet have anextensive infrastructure for industrialgases, it was essential that the on-site gasplant would be self-sufficient in theproduction of liquid nitrogen.

Air Products met Pilkington’s reliabilityconcerns through a combination oftechnical and commercial benefits.

Destination MoscowEquipment redundancy and a plant

design that is entirely self-sufficientminimise the risk of an unplannedshutdown. On the commercial side, a long-term supply contract provides Pilkingtonwith guaranteed gas supplies and securityof supply within a defined contractstructure.

Air Products owns, operates andmaintains the gas plant, so Pilkington canconcentrate on its core business ofglassmaking and leave the gas supply tothe experts. Though onsite agreements likethis one are still a novelty to Russiancompanies, Air Products is confident thattheir commercial advantages will ensurerapid acceptance in this growing market.

Pilkington looks East

Glass companies expect highlyreliable equipment to helpmake glass efficiently. With theAir Products Glass Technologysolution, that’s exactly whatthey have. As one Pilkingtonemployee was heard saying,“That’s a glass maker’s plant”

Pilkington and Air Products Case Study

Developing markets like Russia are key toPilkington’s future business strategy. Thecompany has supplied the Russian marketthrough sales offices since 1996, and by2002 had decided to build a world-classfloat glass plant in the Moscow area.Construction began in summer 2004, andthe plant was commissioned in winter2005. Capacity is 240,000 tonnes/year.

The new plant is near the city ofRamenskoye, around 35km south-east ofMoscow. Ramenskoye itself is a centre fortextiles and engineering, as well as aresidential suburb of Moscow. The 37haplant site, outside the city, is located near aquarry that supplies good glassmaking sand.

The manufacture of float glass needsa protective atmosphere of pure, drynitrogen and hydrogen to prevent oxidation

of the bath of molten tin on which theglass sheet floats. Mike Hevey, EuropeanBusiness Manager: Metals, Glass andMinerals says, “Gas quality and continuityof supplies is critical to such a sensitiveprocess. An interruption in supply or off-spec gas can have a detrimental effecton glass quality, resulting in the loss ofproduction at potentially great expense.Our experience in the glass industrytogether with a high-quality innovativesolution specifically for the float lineindustry, meant we were well placedto meet and exceed the expectationsof Pilkington, who are themselvesleaders in flat glass production.”

Pilkington and Air Products have worked together for many years, andAir Products supplies nearly half of Pilkington’s gas requirements worldwide.

A well-tested collaboration

Air Products won the gas supply contractfor the Ramenskoye plant after a lengthybidding process. “The bid was a globaleffort, involving groups from the UK,Canada and the USA, and from Operations,Commercial Technology, Engineering andSales,” says Dimitri Wittevrongle. “Rightfrom the start we could see thatPilkington’s concerns were plant reliability,low winter temperatures, and our ability tomanage and optimise the plant remotely.Our technical capabilities, operatingreliability and infrastructure enabled us toshow Pilkington that we could meet theirneeds in this new region.”

On the key question of building andoperating air separation plants in coldweather, Air Products was able to point totwo of its plants designed for even more

extreme winter conditions than atRamenskoye. An air separation plant thatAir Products operates in Yellowknife,Canada, is 400km south of the Arctic Circleat latitude 62°N, compared to Rameskoye’slocation at 55°N. Another plant, built forSyncrude in Alaska, is just 100km south ofthe arctic circle and sees wintertemperatures down to -40°C.

The two companies agreed that AirProducts would build an on-site cryogenicplant producing 18,500 tonnes/year ofhigh-purity nitrogen, plus compressed dryair (CDA) to operate the glass plant’spneumatic systems. There is also aseparate electrolysis unit with a capacity of85 tonnes/year of high-purity hydrogen. AirProducts’ total investment in the gas plantwas around $10m.

Pilkington and Air Products Case Study

Designing for peace of mindmain air compressors, each able to meet50% of the average demand, and 100%redundancy on the compressed air dryers.There’s also a dedicated standbycompressor for the CDA, and the gas planthas its own diesel generator in case ofpower failures.”

“Flexibility is one of the benefits we canbring to Russian industrial gas customers,”adds Katrin Michaels, Air Productsmarketing manager for Russia. “Russian-built cryogenic plants are available, but theytend to be very standardised, and basedaround machinery rather than service. Weoffer better and more modern technology,and we are also better at customising theplant to suit the customer – both in atechnical sense and in terms of thealternative business models. So really ourcustomers get the best of all worlds.”

Reliability and independence from externalservices were key issues in the selection ofthe gas plant. With this in mind, the twocompanies decided to use a plant designthat produces nitrogen in liquid as well asgaseous form. Storing liquid nitrogen onsite allows the plant to be started upwithout the need for external liquidnitrogen supplies, and contributes to theplant’s overall reliability of 100% byproviding back-up during both planned andunplanned shutdowns.

Redundancy in key componentsincreases the plant’s reliability. “A typicalon-site cryogenic nitrogen plant has asingle compressor,” says Air Productsproject manager Andy Cocksedge, “but forthis job, we used redundancy tocompensate for the lack of infrastructure inthe region. At Ramenskoye we have three

Braving the coldConstruction began early in 2004,bringing together staff from three AirProducts locations: the Moscow office;the company’s European headquarters atHersham, UK; and Prague, the base forAir Products’ operations in central andeastern Europe.

“There was never any doubt that wecould meet the technical requirements forthe plant, but making it work in Russia wasalways going to be challenging,” saysCocksedge. One of the main issues was

how to communicate with local contractors,since even in the Moscow region manypeople do not speak English. “Our Russianspeaking staff were crucial here due totheir understanding of local culture andbusiness practices,” he explains.

With average winter temperatures of-25°C and no prospect of a thaw untilApril or May, site work was challenging.A heated building measuring around 40mx 20m houses the compressors and othersensitive equipment. Large items such asthe cold box and liquid nitrogen storagetank are sited outside. Since these aredesigned for cryogenic temperatures,winter cold was not a problem; the onlydesign modification needed was to makethe cold box frame from low-temperaturesteel instead of ordinary carbon steel.“Air Products used best practice andexperience gained working in extremeclimates throughout North America todeliver what we had promised toPilkington,” says Cocksedge.

By late summer, construction was welladvanced and Air Products was ready tobring in the largest single equipment item,the liquid nitrogen storage tank. This wasan epic journey: from a fabrication yard inthe Czech Republic, up the river Elbe toHamburg, by sea to St Petersburg, by riverto Moscow, past the Kremlin and finally byroad to Ramenskoye.

Pilkington and Air Products Case Study

Russian paperwork, from customs totechnical approvals, can be frustrating towestern companies unused to theexperience. “Customs clearance wascomplex, and there are a lot of inspectionsto make sure imported equipment meetsRussian safety standards,” saysCocksedge. “Understanding the process ishalf the battle. We chose specialistcompanies in Russia and the CzechRepublic to help us prepare thedocumentation required. The experiencecertainly puts us in a great position forfuture projects.”

For the next project, says Cocksedge,Air Products will be able to draw onexperience and local contacts to streamlinethe construction process. “We will certainlyuse more local contractors and morelocally-sourced equipment in the future,and that will help to keep costs down,” hesays. “It takes time to build up good

Local customsworking relationships with Russian suppliers,but we have made an excellent start. Nowwe have an office in Moscow, all thenecessary pre-qualification of contractorsand vendors can be done locally.”

Understanding the local culture is part ofdoing business in any new territory, and AirProducts’ attention to detail allows thecompany to meet every requirement of theRussian system. “We have shown that wecan work successfully in Russia, buildingand operating a plant that’s appropriate tothe local conditions,” says Gavin Whitlock,european marketing manager, GeneratedGases with Air Products. “We foreseeplenty of new business from westerncompanies operating in Russia, and fromRussian companies too, once they realisethe advantages we can offer in nitrogenand oxygen plants of all sizes.”

Under the onsite contract at Ramenskoye,Pilkington does not own the gas plant,even though it is located on the Pilkingtonsite. Instead, the gas plant is owned,operated and maintained by Air Products.Air Products sells the nitrogen produced bythe plant to Pilkington at fixed prices undera long-term contract.

The onsite system is an example ofoutsourcing, a concept that works well forwestern companies but may be lessfamiliar to Russian firms.

Air Products’ experience in the CzechRepublic has been important in gaining abusiness foothold in Russia, says ZdenekCejka of the company’s Prague office,because of the two countries’ geographicaland cultural closeness. “Anyone who waseducated here before 1989 speaks at leastsome Russian, so it’s quite easy for us tocommunicate with Russian engineers whodon’t always speak good English,” heexplains. “Doing business with Russianpeople is a personal affair: you need tomeet them, and preferably speak to themin their own language.”

Russian and Czech culture has a certainamount in common, so Czechs may be lessinclined than their western European or UScolleagues to become frustrated byRussian bureaucracy. “After all, thepaperwork is really there to ensure safety,”says Cejka. “Most Russian engineers areextremely well qualified, even though someof their equipment is old-fashioned bywestern standards.”

As well as saving money, long-term “saleof gas” (SOG) contracts also give customerspeace of mind by transferring the operatingrisk and guaranteeing security of supply. Inthe unlikely event of the plant becomingunavailable, the gas company will typicallysupply back-up by road tanker.

Air Products offers on-site generationsystems and SOG contracts for nitrogen,oxygen and other gases, in a variety of purities.Quantities cover the range 50-5,000m3/day,depending on customers’ requirements.

Don’t buy a plant, buy gas

Czech experience is keyA phenomenon that until recently was

unknown to both Czechs and Russians isthe onsite contract, under which a gasplant located on a customer’s site is ownedand operated by a specialist gas company.“Ten years ago this was a new idea to us,”says Cejka, “but since Air Products movedinto the Czech Republic, Czech companieshave been quick to see the advantages. I’msure the same thing will happen in Russia,so our future business prospects there arevery promising.”

“And now that Air Products has an officein Russia, there will be less need for directsupport from the Czech Republic. ThePrague staff are always here as a backup,but in future most commercial andtechnical matters will be handled directlyfrom Moscow.”

Pilkington and Air Products Case Study

Liquid nitrogen on tap

Typical plant layout

Process flow diagram

About PilkingtonFounded in 1826 and a member of the Japanese NSG group since June 2006, Pilkington isa leader in the global Flat Glass industry. The combined annual sales of NSG/Pilkington arearound £4 billion and the newly-enlarged group has ownership or interests in 50 float lineson five continents, with a total annual capacity of around 6.4 million tonnes. NSG Groupemploys 36,000 employees worldwide, with manufacturing operations in 26 countries andsales more than 130 countries. The Float process, invented by Sir Alastair Pilkington in1952 is now the world standard for high quality glass manufacture.

Air Products in the glass industryAir Products, the world’s only combined gases and chemicals company, has been a leaderin oxy-fuel technology for the glass industry for over 30 years.

Air Products has the technology and expertise glassmakers need to improve their glassmelting operations. The high-luminosity, low-momentum Cleanfire® burner is the industrybenchmark, with well over 1,000 burners installed today. Customers worldwide haveentrusted Air Products with their furnaces and implemented our technology in over 150furnaces producing more than 7,000 tonnes/day of glass.

By combining this world-leading technology with its expertise in furnace modelling andcombustion control systems, Air Products can help glassmakers improve the efficiency oftheir melting processes and reduce overall costs.

Air Products PLCMillennium GateWestmere DriveCreweCheshire CW1 6APTel +44(0)800 389 0202www.airproducts.com/GasGeneration/www.airproducts.ru

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© Air Products and Chemicals, Inc., 2007 07-010-UK