(Archived) Praxair Finalizes Contract with Valero; Will Build New Hydrogen Plant

DANBURY, Conn., March 14, 2005 — Praxair, Inc. (NYSE:PX) has reached agreement with Valero Refining-Texas, L.P. to supply high-purity hydrogen to Valero’s Houston and Texas City, Texas, refineries for the production of ultra-low-sulfur motor fuels.

In addition, Praxair and Valero finalized long-term agreements for the supply of pipeline oxygen to Valero’s Houston and Texas City refineries and for recovering hydrogen from refinery process streams at Valero’s Texas City refinery.

“Praxair has been an important, strategic supplier to Valero for many years, with a strong focus on reliability. Their ability to adapt to changing requirements and to develop flexible supply arrangements further enhances that relationship,” said George Stutzmann, vice president, Energy and Gases, for Valero Energy Corporation.

“We are committed to providing our refining customers unmatched reliability and system capability as they meet more stringent clean-fuel regulations today and in the future,” said Dan Yankowski, vice president, South Region, for Praxair’s North American Industrial Gases business unit.

To supply the hydrogen, Praxair will build, own and operate a new steam-methane reformer with a capacity of 100 million standard cubic feet of hydrogen per day (119,000 cubic meters per hour). The new plant is expected to start up in the third quarter of 2006.

Praxair's 310-mile hydrogen pipeline is already connected to a substantial portion of refining capacity on the U.S. Gulf Coast. When the new plant comes on stream, Praxair’s Gulf Coast hydrogen capacity will be about 700 million cubic feet per day (1,000,000 cubic meters per hour).

Demand for Praxair’s hydrogen on the U.S. Gulf Coast is expected to increase by more than 20% per year through 2010 based on refiners’ need to comply with Environmental Protection Agency regulations. Valero is committed to being a leading producer of clean-burning fuels and will use the hydrogen for the production of ultra-low-sulfur gasoline and diesel fuels.

Praxair supplies a complete portfolio of large-volume industrial gases, cylinder gases and specialized services to refinery customers and is a leading supplier of hydrogen worldwide. It operates 25 steam methane reformers and seven major hydrogen pipeline systems that deliver more than 850 million standard cubic feet per day (1,250,000 cubic meters per hour) of hydrogen.

Valero Energy Corporation (NYSE:VLO) is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenues of approximately $55 billion. The company owns and operates 15 refineries throughout the United States, Canada and the Caribbean. Valero's refineries have a combined throughput capacity of approximately 2.5 million barrels per day, which represents approximately 12 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with more than 4,700 retail and wholesale branded outlets in the United States, Canada and the Caribbean under various brand names including Diamond Shamrock, Shamrock, Ultramar, Valero, and Beacon. More information is available at www.valero.com.

Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2004 sales of $6.6 billion. The company produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings. Praxair products, services and technologies bring productivity and environmental benefits to a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals and others. More information on Praxair is available on the Internet at www.praxair.com.