Oxygen Supply Chain - Executive Summary

Oxygen

Direct Use Chemical Precursor Chemical

(liquified gas)

Inputs to Manufacturing Process:
Atmospheric air separation

¦*i Derivative Water Treatment Chemicals:
Sulfur Dioxide	Sulfuric Acid

^ % of Total Domestic Consumption
Attributed to Water Sector:

Less than 5%

/o\ Understanding Chemical Supply Chains
Map of Suppliers & Manufacturers

Product Family:
Atmospheric Gas

CAS No.: 7782-44-7

2 Shelf Life:
60 Months

— RISK OF SUPPLY DISRUPTION (Assessed in 2022)

RISK RATING: Moderate-Low

e-Low Moderat

RISK DRIVERS

Highly purified oxygen, though
widely produced, has signifi-
cant demand for critical use in
healthcare. Transport of liquid
oxygen to customers by truck
requires certified drivers with
specialized training. Increased
demand for medical oxygen
and insufficient transportation
resources has led to past
shortages.

RISK PARAMETERS

Criticality: High. Essential and widely used
for oxidation, aeration, and production of
water treatment chemicals.

Likelihood: High. History of price increas-
es, force majeure, and regional disruptions
in supply that impacted the water sector.

Vulnerability: Low. Distributed
domestic manufacturing and supply.
However, transport requires specialized
certification and can be costly.

MANUFACTURING PROCESS

Water Treatment Applications

Atmospheric Air Separation -

Oxygen

Input	End Use

DOMESTIC PRODUCTION AND CONSUMPTION, AND INTERNATIONAL TRADE

Domestic Manufacturing Locations (2021):
110, distributed throughout the U.S.

(S> International Trade (2019)

Primary Trading Partner (Imports): Mexico
Primary Trading Partner (Exports):
Dominican Republic

Domestic Consumption (2019):

10,335 M kg

¦	Domestic Production (10,993 M kg)

¦	Imports for Consumption (66 M kg)

¦	Export of Domestic Production (724 M kg)

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Oxygen Supply Chain - Full Profile

Product Description

Oxygen (02), an inorganic gas recovered from atmospheric air, is one of the most widely used industrial gases.
Purified oxygen is primarily recovered through cryogenic air separation at numerous plants throughout the U.S.
Oxygen is most commonly used for industrial combustion in steelmaking, and chemical manufacturing.

Use in Water Treatment

Oxygen has several uses in water treatment, including ozone generation and aeration (AWWA, 2018). Industrial
grade oxygen that is at least 99.5% pure is recommended for use in water treatment.

Use as a Precursor to Other Water Treatment Chemicals

Purified oxygen is used as a chemical reactant in the production of sulfur dioxide and sulfuric acid. Though
atmospheric air is commonly used in other chemical syntheses, an enriched oxygen environment or purified
oxygen may be used in the manufacture of many other chemicals such as ferric chloride, ferric sulfate, and
potassium permanganate. In these manufacturing methods, oxygen may be used to regenerate catalysts or
improve oxidation or combustion efficiency.

Other Applications

Consumption of purified oxygen can be considered in categories for industrial applications such as steel
manufacturing, and high-grade applications such as medical use. Common industrial applications include steel
manufacturing, chemical manufacturing, manufacturing combustion (e.g., cast iron melting, glass
manufacturing), metal fabrication, welding, and pulp bleaching. High-grade oxygen applications include use in
healthcare settings for applications such as oxygen deficiency and anesthesia, and in food preparation (FTC,
2018; NETL, 2022; NCBI, 2021).

Primary Industrial Consumers

The primary application of oxygen is industrial combustion. Historically, steel manufacturing has been the
largest single industrial application of purified oxygen, and has accounted for up to 65% of domestic
consumption, though it is unclear whether this accounts for on-site production of purified oxygen (NCBI, 2021).
Chemical manufacturing, other industrial combustion applications such as welding, glassmaking and ceramics,
and pulp and paper bleaching are other prominent industrial applications. Medical oxygen use, a subset of all
healthcare oxygen consumption, is estimated at approximately 6% of demand (Raquet, 2020). The overall water
sector market for oxygen is estimated at less than 5% of total U.S. consumption.

Manufacturing, Transport, & Storage

Manufacturing Process

Purified, commercial-grade oxygen is primarily produced through gas separation of air via cryogenic distillation
in an air separation unit (ASU). Most cryogenic air separation facilities produce liquid oxygen (LOX) at greater
than 99% purity to cover a broad range of applications, including industrial applications (Cockerill, 2021).

Cryogenic separation is used when a high purity, large quantity of liquified oxygen is required. Prior to cryogenic
separation, impurities such as carbon dioxide and hydrocarbons are removed via a silica and zeolite molecular
sieve. Subsequent fractional distillation based on temperature separation is used to separate oxygen from
nitrogen and argon. Further distillation and fractionation provides higher purity oxygen or LOX. The LOX is drawn
out of the bottom of the fractionating column and cooled (NETL, 2022; Rao and Muller, 2007).

Medical oxygen has a distinct supply chain and production requirements. Air separation plants generally
produce oxygen of varying grades and for a variety of industrial standards. Thus, an increase in the demand for

EPA 817-F-22-034 | December 2022

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Oxygen Supply Chain - Full Profile

medical oxygen utilizes air separation plant capacity that would otherwise be used to produce other grades of
oxygen (NETL, 2022).

Product Transport

LOX is considered a hazardous material, which dictates how it can be transported and may add significant cost
to long-distance transport. Methods of distribution and consumption are based on the volume of gas required.
Industrial LOX users generally require volumes too large to purchase in cylinders, but not great enough to
require an on-site ASU or pipeline. Cryogenic trailers are typically used for bulk deliveries of LOX. High
distribution costs determine the geographic distribution range from the production site, often necessitating
regional production for cost-effective distribution (FTC, 2004; Linde, 2018).

Storage and Shelf Life

Oxygen can be pressurized and cooled to a liquified gas and stored in pressure vessels. Pressurized storage
vessels should be stored in a cool, dry location away from direct sunlight. When stored properly, LOX can have a
shelf life of 60 months (Air Products, 2017).

Domestic Production & Consumption

Domestic Production

Production data was collected from a trade publication, gasworld, for the year 2019, while trade data was
collected from the USITC Dataweb, as shown in Table 1. Both production and trade data are specific to oxygen.

Table 1. Oxygen Production and Trade Data Sources

Production and Trade Data

Category

Data Source

Identifier

Description

Domestic Production

Trade Publication, gasworld

CAS No.: 7782-44-7

Oxygen

Imports and Exports

U.S. International Trade Commission

HS Code: 2804.40

Oxygen

Total U.S. domestic production of oxygen was approximately 10,335 Million kilograms (M kg) in 2019 (Raquet,
2020). The top domestic oxygen suppliers to the commercial market are Air Products, Air Liquide, Linde, and
Matheson Tri-Gas. All of these suppliers operate numerous oxygen production facilities and distribution
networks. Air separation plants that purify oxygen from air are widely dispersed across the country and each
provides significant production capacity. Many of these ASU plants produce LOX. Though supply is widespread,
some regions of the country may be served by only one or two producers. The number of domestic
manufacturing locations shown in Figure 1 represents operating facilities as of 2021. Supply of NSF/ANSI
Standard 60 certified oxygen for use in drinking water treatment is widely distributed throughout the U.S. (NSF
International, 2021). For a more current listing of manufacturing locations and supplier locations, visit the U.S.
Environmental Protection Agency's (EPA's) Chemical Locator Tool (EPA, 2022a).

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Oxygen Supply Chain - Full Profile

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Domestic Supply and Manufacturing of Oxygen

O 27 NSF/ANSI Standard 60 Certified Suppliers (NSF International, 2021)

® 110 Domestic Manufacturing Locations (Various sources, 2021)

Figure 1. Domestic Supply and Manufacturing of Oxygen
Domestic Consumption

U.S. consumption of oxygen in 2019 is estimated at 10,335 M kg. This estimate includes production of 10,993 M
kg, import of 66 M kg, minus export of 724 M kg (Raquet, 2020; USITC, 2021), as shown in Figure 2.

Domestic Consumption (2019):

10,335 M kg

¦	Domestic Production (10,993 M kg)

¦	Imports for Consumption (66 M kg)

u Export of Domestic Production (724 M kg)

Figure 2. Domestic Production and Consumption of Oxygen in 2019

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Oxygen Supply Chain - Full Profile

Trade & Tariffs

Worldwide Trade

Worldwide import and export data for oxygen are reported through the World Bank's World Integrated Trade
Solutions (WITS) software, as a category specific to oxygen. In 2021, the U.S. ranked first worldwide in total
exports and 16th in total imports of oxygen. In 2021, Netherlands ranked first worldwide in total imports (WITS,
2022), as shown in Table 2. Trade of oxygen was not reported by WITS in 2021 for numerous countries, including
Canada, China, France, and the Russian Federation.

Table 2. WITS Worldwide Export and Import of Oxygen in 2021

2021 Worldwide Trade
Oxygen (HS Code 2804.40)

Top 5 Worldwide Exporters

Top 5 Worldwide Importers

United States

1,252 M kg

Netherlands

206 M kg

Belgium

536 M kg

Luxembourg

133 M kg

Poland

74 M kg

Jordan

95 M kg

Germany

73 M kg

Greece

85 M kg

Guatemala

54 M kg

Slovak Republic

80 M kg

Domestic Imports and Exports

Domestic imports and export data are reported by USITC in categories specific to oxygen. Figure 3 summarizes
imports for consumption1 and domestic exports2 between 2015 and 2020. During this period, the overall
quantities of exports and imports fluctuated, with domestic exports consistently exceeding imports for
consumption. Over this five-year period, the Dominican Republic was the primary recipient of domestic exports
while Mexico and Japan were the primary sources of imports (USITC, 2021).

Domestic Trade of Oxygen
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Imports from Other Countries	Exports to Other Countries

Figure 3. USITC Domestic Import and Export of Oxygen between 2015 and 2020

1	Imports for consumption are a subset of general imports, representing the total amount cleared through customs and entering
consumption channels, not anticipated to be reshipped to foreign points, but may include some reexports.

2	Domestic exports are a subset of total exports, representing export of domestic merchandise which are produced or manufactured in
the U.S. and commodities of foreign origin which have been changed in the U.S.

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Oxygen Supply Chain - Full Profile

Tariffs

There is a 3.7% general duty for import of oxygen, and an additional 25% tariff on imports from China (USITC,
2022), as summarized in Table 3.

Table 3. 2020 Domestic Tariff Schedule for Oxygen

HS Code

General Duty

Additional Duty - China
(Section 301 Tariff List)

Special Duty

2804.40

3.7%

25%

Free (A, AU, BH, CL, CO, D, E, IL, JO,
KR, MA, OM, P, PA, PE, S, SG)3

Market History & Risk Assessment

History of Shortages

In the summer of 2021, COVID-19 hospitalizations, and the accompanying demand for LOX in healthcare
settings, soared. During this same period, several LOX suppliers issued force majeure notices to industrial
customers, which included drinking water and wastewater systems. In extreme cases, water system customers
were placed on zero allocation for an unspecified duration. Force majeure notices were also issued to water
treatment chemical producers which require LOX. The two primary reasons cited in force majeure notices were
the increased demand for LOX in healthcare settings for COVID-19 patients, as well as a lack of commercial
drivers with a Flazardous Materials Endorsement and experience offloading LOX. The increase in demand due to
dramatic regional increases in COVID-19 hospitalizations coupled with insufficient transportation resources
resulted in a severe regional shortage in Florida.

Risk Evaluation

The complete risk evaluation methodology is described in Understanding Water Treatment Chemical Supply
Chains and the Risk of Disruptions (EPA, 2022b). The risk rating is calculated as the product of the following three
risk parameters:

Risk = Criticality x Likelihood x Vulnerability
Criticality	Measure of the importance of a chemical to the water sector

Likelihood Measure of the probability that the chemical will experience a supply disruption in the
future, which is estimated based on past occurrence of supply disruptions

Vulnerability Measure of the market dynamics that make a chemical market more or less resilient to
supply disruptions

The individual parameter rating is based on evaluation of one or more attributes of the chemical or its supply
chain. The ratings and drivers for these three risk parameters are shown below in Table 4.

3 Symbols used to designate the various preference programs and trade agreements. A full list of special trade agreements and
associated acronyms can be found at https://help.cbp.gov/s/article/Article-310?language=en US and the General Notes Section of the
Harmonized Tariff Schedule https://hts.usitc.gov/current

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Oxygen Supply Chain - Full Profile

Table 4. Supply Chain Risk Evaluation for Oxygen

Risk Parameter Ratings and Drivers





1

ICriticality High

iLikelihood High

(Vulnerability Low 1

Oxygen is essential and has
widespread application as an oxidant
(ozone) and for aeration in both
drinking water and wastewater
treatment. It is a precursor in the
production of other critical water
treatment chemicals, and changes in
availability or price may impact
availability of derivative water
treatment chemicals.

The water sector has experienced
regional oxygen supply disruptions in
the past. From 2020 through 2022
disruptions in the supply of oxygen
occurred due to an increase in
demand due to the COVID-19
pandemic and insufficient
transportation logistics.

Strong domestic manufacturing
capabilities and a distributed
manufacturing base provide some
resilience to supply disruptions.
However, long-distance transport is
costly and requires specialized
equipment and certification.

Risk Rating: Moderate-Low

te-Low Moderaf

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References

Air Products, 2017. Safetygram 6- Liquid Oxygen, retrieved from https://www.airproducts.com/-
/media/airproducts/files/en/900/900-13-078-us-liquid-oxvgen-safetygram-
6.pdf?la=en&hash=186006835357D54E196DF13FF41DB3B4
American Water Works Association (AWWA), 2018. B304 Liquid Oxygen for Ozone Generation for Water,

Wastewater, and Reclaimed Water Systems. Denver, CO: American Water Works Association.

Cockerill, R., 2021. The Covid-19 oxygen crisis: How did we get here? Part 5. The discovery of medical

oxygen, gasworld, October 13, 2021, retrieved from https://www.gasworld.com/the-covid-19-oxygen-
crisis-part-5/2021944.article
EPA, 2022a. Chemical Suppliers and Manufacturers Locator Tool, retrieved from

https://www.epa.gov/waterutilityresponse/chemical-suppliers-and-manufacturers-locator-tool
EPA, 2022b. Understanding Water Treatment Chemical Supply Chains and the Risk of Disruptions, retrieved

from https://www.epa.gov/waterutilityresponse/water-sector-supplv-chain-resilience
Linde, 2018. 2017 Annual Report Praxair, Inc., retrieved from

https://investors.linde.com/archive/praxair/annual-reports
National Center for Biotechnology Information (NCBI), 2021. PubChem Compound Summary for CID 977,

Oxygen. Retrieved from https://pubchem.ncbi.nlm.nih.gov/compound/oxygen
National Energy Technology Laboratory (NETL), 2022. Commercial Technologies for Oxygen Production,

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Oxygen Supply Chain - Full Profile

retrieved from https://netl.doe.gov/carbon-management/gasification
NSF International, 2021. Search for NSF Certified Drinking Water Treatment Chemicals, retrieved from

https://info.nsf.org/Certified/PwsChemicals/

Rao, P., and Muller, M. 2007. Industrial Oxygen: Its Generation and Use. Center for Advanced Energy
Systems, Rutgers, the State University of New Jersey, retrieved from
https://www.aceee.org/files/proceedings/2007/data/papers/78 6 080.pdf
Raquet, John, 2020. Covid-19 versus oxygen supply - the status on supply and demand, gasworld, April 3,
2020, retrieved from https://www.gasworld.com/storv/covid-19-versus-oxygen-supplv-the-status-on-
supply-and-demand/2089433.article/?red=l
U.S. Federal Trade Commission (FTC), 2004. Analysis of Agreement Containing Consent Orders to Aid Public
Comment: In the Matter of L'Air Liquide, S.A., and American Air Liquide Inc., retrieved from
https://www.ftc.gov/sites/default/files/documents/cases/2004/04/040429analQ410020.pdf
U.S. Federal Trade Commission (FTC), 2018. Analysis of Agreement Containing Consent Orders to Aid Public
Comment: In the Matter of Linde AG, Praxair, Inc., and Linde PLC, retrieved from
https://www.ftc.gov/system/files/documents/cases/1710068_praxair_linde-analysis.pdf
U.S. International Trade Commission (USITC), 2021. USITC DataWeb, retrieved from
https://dataweb.usitc.gov/

U.S. International Trade Commission (USITC), 2022. Harmonized Tariff Schedule (HTS) Search, retrieved from
https://hts.usitc.gov/

World Integrated Trade Solutions (WITS), 2022. Trade Statistics by Product (HS 6-digit), retrieved from
https://wits.worldbank.org/trade/countrv-byhs6product.aspx?lang=en#void

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