The joint venture between Chicago Bridge & Iron (CBI) and Zachry Industrial, Inc. recently received two contracts from FLNG Liquefaction, LLC and FLNG Liquefaction 2, LLC for the construction of first two trains of the Freeport Liquefaction Project. Each of the contracts are valued at $2.5 billion.
The scope of the contract requires the joint venture to provide engineering, procurement and construction services primarily to convert the existing LNG regasification terminal in Freeport, Texas, into an LNG liquefaction terminal.
The U.S. has a hundred years of supply of natural gas owing to the substantial increase in the nation’s natural gas resource base, primarily shale gas. Further, due to increased production, gas prices have fallen to a level that makes exporting natural gas economically attractive, and these relatively low prices are expected to continue.
As a result, Freeport LNG is expanding its terminal to enable liquefaction and export of approximately 1.9 billion cubic feet per day of US natural gas in the form of LNG. The terminal will still be able to import LNG if it is needed for the domestic market.
The newly constructed two train LNG liquefaction facility is expected to have a total capacity in excess of 8.8 million tons per year of LNG.
Chicago Bridge & Iron is a leader in the LNG storage niche market. The companywins strong contracts, particularly for LNG/low temperature storage systems (petrochemicals), an area where CBI is currently the leader and plans to aggressively capture the entire market share. In addition, the company also specializes in the waste and waste water tanks, mineral processing storage and power applications, such as liquefaction/vaporization and storage facilities.
Given its core competence and expertise in LNG storage market, the company in March had received a contract from JKC Australia LNG Pty Ltd. to provide engineering, procurement, construction and pre-commissioning for non-cryogenic storage tanks for the Ichthys Project LNG facilities in Darwin, Australia.
This apart, CBI on Dec 9, received a contract from JSC Gazprom Neft for front end engineering and design (FEED) services for a new oil refining complex at Gazprom Neft's refinery in Omsk, Western Siberia, Russia. The financial details of the contract were not disclosed.
Chicago Bridge & Iron currently has a Zacks Rank #3 (Hold). Investors interested in the heavy industries sector can consider VSE Corp. (VSEC), Quanta Services, Inc. (PWR) and Rexnord Corp. (RXN). While VSE carries a Zacks Rank #1 (Strong Buy), Quanta and Rexnord carry a Zacks Rank #2 (Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment