Emerson Electric Co’s (EMR) Process Management division recently received a contract worth $86 million for providing automation services and technology to North West Redwater’s Sturgeon Refinery, located in northeast of Edmonton, Alberta. The advanced automation technology will help the refinery reduce emissions at lower costs with lesser risks. The plant will also utilize technologies designed for cleaner refining, including removal of petroleum coke – a common waste product in traditional refining. However, the news failed to impress the market as Emerson’s shares declined 1.2% yesterday.
Per the contract, Emerson will be the main contractor providing automation services which will include engineering, configuration, start-up, training, commissioning and support, among others. The services will be deployed through the proprietary DeltaV and DeltaV SIS control systems. This apart, Emerson will also install Rosemount transmitters, Fisher control valves, and Micro Motion flowmeters to carry out the necessary measurement and control functions at the refinery.
Meanwhile, the Sturgeon refinery will primarily capture carbon dioxide emissions and sell them to the traditional oil extraction operations, who will instill the carbon dioxide into wells under pressure to improve the oil extraction process. This entire approach is expected to cut emissions by 1.2 million tons annually from the first phase of the refinery and will also generate significant income for North West Redwater.
The contract was awarded to Emerson based on its industry experience, expertise and proven technological skills in handling and successfully executing similar projects. Notably, the company’s Process Management division – primarily provides intelligent control systems and software, measurement instruments, valves – is one of the main revenue drivers for the company. In the last reported quarter (third quarter of 2014), the segment reported revenue growth of 6% year over year.
Emerson Electric is a global technological solutions provider for industrial, commercial and consumer markets. The company currently has a Zacks Rank #3 (Hold). Some better-ranked companies in the machine and electrical sector include Willdan Group Inc. (WLDN), VSE Corp. (VSEC) and ITT Corp. (ITT). While Willdan sports a Zacks rank #1 (Strong Buy), VSE and ITT carry a Zacks Rank #2 (Buy).
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