Revealing the true costs of bulk nitrogen supply
There are a lot of costs to consider when it comes to bulk nitrogen supply, and they aren’t always obvious.
Nitrogen gas is required for a host of applications in manufacturing and processing businesses. This can be supplied in two ways: bulk supply or on-site nitrogen generation. Conventional bulk deliveries have historically been the most common and longer standing method but more and more businesses are recognising that the economics of bulk nitrogen supply don’t make sense, when compared with nitrogen generation.
Typically, there are three forms of bulk nitrogen supply, and each comes with its own set of hidden costs.
Cylinders are generally the most expensive form of nitrogen gas supply. The obvious upfront costs are the actual cost of buying nitrogen gas, which industrial gas companies increase the price on at least twice per annum, and the cost of gas cylinder deliveries. Unfortunately, these aren’t your only nitrogen costs when utilising this method of bulk nitrogen supply.
Over & above the base delivery and nitrogen costs, most industrial gas companies will charge for rental of the cylinders, in which the supplied nitrogen gas is stored and delivered. It’s always a good idea to check invoices and find out how much your supplier is charging you for rental – often this can be quite significant and it’s not uncommon to be paying around $50 per month per individual gas cylinder. Regardless of the amount, cylinder rental charges can really add up over the course of a year, all of which impacts on a business’ bottom line.
It is often advised to abandon the last 10% of gas from each cylinder, as this may contain desorbed impurities, however the concentration of these is likely to be extremely low and not critical to some applications. Regardless, it is impossible to completely empty a gas cylinder due to the effects of differential pressure, meaning around 10% or more of the gas becomes inaccessible. For a typical 9000 litre cylinder, that works out to more than 900 litres that customers are paying for but not using. Depending on production demands, over a year, that can add up to a staggering amount of wasted gas and wasted money.
Where cylinder change-over is managed manually, human error e.g. from a lack of monitoring, can lead to a nitrogen supply running out mid-production. If not identified and rectified immediately, production runs may continue and severely impact on final product quality – so much so that they become unsellable finished goods, all at a significant cost to the business and leading to a loss in profits.
Another method of bulk gas supply is via liquid microbulk tanks or dewars, which are typically large stainless-steel storage vessels. Liquid nitrogen is delivered via a truck and pumped in to refill the tank on a periodic basis, depending on demand. This is generally more economical than cylinders but there are still hidden costs to consider.
Off-gassing is a very common problem with liquified gas storage. With liquid nitrogen, some of the liquid will be continually converting to gas and venting off, depleting the available supply for your application – this process is called off-gassing and can consume upwards of 20% of your bought supply. In many cases, if there is a long enough delay between usage, your supply will be empty the next time you try to use it.
What this ultimately means is that, similar to cylinders, when buying your bulk nitrogen supply via microbulk tanks or dewars, there will always be nitrogen gas that has been paid for but not utilised – all of which has to be absorbed by your bottom line.
If your production demands are significant and high volume, then it is usually recommended that you install a fixed large bulk storage tank on the outside of your facility, which is then filled on request via large liquid nitrogen truck deliveries. By utilising this method, the nitrogen costs over the longer term may be lower than that of gas cylinders or liquid microbulk tanks or dewars, but large bulk storage tanks still come with several hidden costs.
Just like microbulk or dewars, off-gassing is a problem with any form of liquified gas storage and large bulk storage tanks are no different. However, it's important to be aware that with more liquid stored, there is far more gas to lose. Understandably, this all adds up to significant losses in profitability.
In order to install a large bulk storage tank of this scale, your business will need to acquire planning permission for ground works, which usually consist of digging up a plot of land & creating a concrete plinth that is sturdy enough to hold something of such significant size & weight. Naturally, this is a pre-requisite of installation and the bill has to be picked up by you, the customer.
Once the large bulk storage tank has been installed at your facility, it is then also subject to both monthly rental and maintenance or upkeep charges, which are over and above the cost of buying in deliveries of liquid nitrogen for your production applications.
Some hidden costs are circumstantial but still common, regardless of whether your bulk nitrogen is being supplied via gas cylinders, liquid microbulk tanks /dewars or large liquid bulk storage deliveries – so they should be considered no matter which of these methods are being used.
Sometimes delivered goods just can’t be guaranteed to arrive on time. Bulk gas deliveries can be delayed for any number of reasons, such as a delivery driver being unavailable due to illness, a delivery truck breaking down or simply because you are the last facility in a long delivery run. A failed or delayed delivery can hit your operations at any time and could lead to a halt in production, the cost of which your business will have to absorb – this can also put significant strain on customer relations and promised goods delivered by deadlines.
It is very common for bulk nitrogen suppliers to tie customers into to multi-year contracts, some as long as 10 years! This prevents them from being able to switch to a better deal where a customer feels they are being overcharged or when more cost effective alternatives are available – thus missing out on any potential savings.
Suffice to say, bulk supply methods are numerous, as well as significant; and come with several hidden costs. But businesses do not need to be held to ransom and are in a position to reclaim their profitability, avoiding these nitrogen costs altogether by meeting their facility needs with an on-site nitrogen generation system. With an N2 generator the gas is generated on demand and as required by the application. This means that it will never run-out mid-production or whenever you need it most.
N2 generators are an extremely cost-effective method of nitrogen gas supply. With a single investment, nitrogen deliveries can become a thing of the past. Not only will this eliminate the ongoing purchase of nitrogen gas required with other bulk supply methods, it also eliminates the headache of running out or having to factor in the ever-increasing nitrogen prices into operational budgets.
On-site nitrogen generation is convenient and reliable. After the initial investment, the only cost which needs to be factored in is for maintenance and electricity. Also maintenance costs are typically fixed per year, regardless of how much you are utilising your nitrogen gas generation plant. So this makes it easy to manage and predict for future outlays.
To eliminate hidden nitrogen costs and ensure your nitrogen supply needs are always met at your facility, contact Peak Gas Generation today – we are your local gas generation partner.
Why Peak use an air-receiver tank with your nitrogen generation systemPosted in all news on August 02 2019
An air receiver tank can be an important part of any compressed air & nitrogen generation system…Read More
Contaminants which could be affecting your compressed air systemPosted in all news on August 16 2019
There are 3 main types of contaminants which could pollute your compressed air. If compressed air…Read More
Majority of industries buy nitrogen gas supplies via nitrogen cylinder packs, others meet their needs through liquid nitrogen dewars, micro-bulk tanks or bulk liquid nitrogen delivery. There is a better, more sustainable & safer option. Reduce the cost of nitrogen gas to your organisation & become self-sufficient. Find out how much you can save with a Peak nitrogen generator system.