November 11, 2020 7 min read
Dry-ice manufacturers have been sounding the alarm for months that demand for cold storage of eventual Covid-19 vaccine samples is going to far outpace supply. So when pharmaceutical giant Pfizer announced this week that the vaccine candidate it developed with German firm BioNTech is demonstrating 90% efficacy rates in late-stage trials, Buddy Collen found himself in a conundrum.
Collen is Executive Vice President of Midland, Texas-headquartered Reliant Dry Ice Pacific, a nearly half-century-old supplier of trapped-and-frozen CO2 (dry ice) to food-processing giants like Tyson and Smithfield, along with clients in sectors ranging from biotech to oilfeld markets.
The 42-year-old industry veteran, who’s based out of Reliant’s Amarillo office, wasn’t surprised to receive my call. The phone’s been ringing plenty of late, including what Collen calls “precursory” outreach from the federal government, as well as concerted inquiries from various state health departments. It could be a blessing in disguise for Reliant, but as Collen tells it, the company can’t exactly sideline its stalwart clientele, nor can it manifest more natural or ethanol-derived CO2 from thin air.
I spoke with Collen for more insight into what news like Pfizer’s breakthrough means for businesses up and down the supply chain, what the government’s role should be and whether all this will translate to a widely innoculated American population any time soon.
Firstly, how pressing is the nation’s reported dry-ice shortage?
They’ve made mention of it on various news channels, but I don’t know if anybody’s seeing it as being a serious issue, and it is a very complicated issue. We’ve had internal meetings trying to figure out, “Who are we going to be when this time comes?” Because there’s a moral obligation we have, but we have contractual commitments to our current customers. They expect to receive dry ice to run their operations, and so really, we’ve decided that for anything more than what we have on an as-available basis, we’re going to wait for the government to step in and tell us, “You will allocate product for this instead of your contractual customers.” That way it lets us off the hook.
Are you referring to the Defense Production Act?
Well, between 40 to 50 percent of all the CO2 manufactured in the United States of merchant quality comes from hydrocarbon. Without people consuming gasoline, those sources dry up. And so refineries began to shut down, ethanol plants shut down. There was no place to go with ethanol to blend it into gasoline, because all the refineries were full. California is probably the best example. There are six refineries that host CO2 plants, and at one time, only one of them was running. So, all the available product coming in from the east — and when I say east, I really mean the midwest — was supporting the west, and then the east started having the same issues. It’s gotten a little bit better. We’ve been having enough trouble supplying our own customers, and most of that product is coming from alternate plants. So, we’re getting all these calls from health departments throughout the states, and it’s a sizeable quantity of dry ice. It beats me. I’m not sure how this is gonna come about. We have some abilities, but Pfizer is just one step, and we’re going to choke, probably, in supplying that quantity, because we don’t have the product. And I don’t know that our competition is in as good a shape as we are. There are going to be some trials here. It’s gonna be difficult.
Have you talked at all with your competitors to take their temperature on all this?
No, not really. We hear things and wonder how much of that is true. I know that hearsay is my competitor up in the north has signed a deal for commitments on shipping from Pfizer’s plant. [Editor’s note: Collen later confirmed he was referring to Matheson Tri-Gas in Irving, Texas.] But that’s just to get it out to the various locations where it’s going to be utilized. For instance, it will go to a hospital system in Miami, and from there it’s gonna be distributed out, and all this has to be done at -70 degrees [Celsius], and so the element for failure is pretty high. What I’ve seen so far in the health departments’ requests … I’m not sure they’re really understanding how they’re gonna do this. They’re looking at shipping out to their substations a certain quantity, and that’s what their inquiries have been. But once it gets there, it still has to be maintained at that temperature. So, the hospitals are saying, “We’re just going to fit it in all the ultra-[low] freezers” in those facilities, and if you look at the United States, there are maybe 10 ultra-[low] freezers in inventory.
Are you worried that enterprising manufacturers in other sectors may pivot to making dry ice, a la the way distillers started producing hand sanitizer?
Yeah, definitely, and I think some of that’s going on. But, it still comes back to the fact that the base product for dry ice is liquid carbon dioxide. That’s where the shortage is. It’s not in the capacity of dry-ice machinery.
I appreciate that your existing customers come first and there’s a shortage of natural materials, but have their nevertheless been internal discussions about how you could see a way to ramp up production?
We do have some plants running that aren’t based on hydrocarbon. What’s been our success is that we’re tied to several naturally occuring CO2 deposits. So, that’s like natural gas under the ground, only it’s pure CO2. That’s been what’s gotten us by, and where it didn’t used to go, it’s now going.
Have your existing clients been reaching out in a panic?
No, they haven’t shown any concern. I don’t think they realize.
Have any other pandemic-related trends driven new demand in the industry?
The door-to-door ecommerce business has boomed, so when people were on lockdown, they were ordering food via the internet, and those all use dry ice for shipping. So, that business has gone through the roof and also put pressure on the supply side.
I know the federal government casually poked around, but just to clarify, Pfizer has not?
Pfizer has not, nor have we contacted them. We’re hiding from them. [Laughs]
This reminds me of when I asked a pair of Covid-testing facilitators in Utah about their forecast for successful, widespread vaccine distribution, but can I basically pose the same question to you?
For this first shipping time for Pfizer in December, I woud say the shipping would be waiting on the production of dry ice. Really, what I hope out of this is that — and I never thought I’d ever say this — the government steps in and tells we have to. I feel like we have a moral obligation to make it happen, but following that links us to a lot of trouble. If the government helps us, it takes the weight off our shoulders.
Original article source was posted here