Honeywell's 10 Top-Valued Projects Tied Heavily to LNG Buildout in Texas

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Researched by Industrial Info Resources (Sugar Land, Texas)--Multinational conglomerate Honeywell International (NYSE:HON) (Morris Plains, New Jersey), which specializes partly in engineering services, is on a roll. It reported a strong operational performance and organic growth in its most recent full quarter, and establishing a foothold in some of the country's most closely watched energy-related projects, especially in the liquefied natural gas (LNG) industry. Industrial Info's database is tracking 77 projects worth $25.18 billion that involve Honeywell in some capacity, although more than 98% of the total is attributed to the 10 highest-valued projects, and almost the same percentage is in the Oil & Gas Production Industry.

Honeywell is playing a key role in the LNG export market, where the past decade's boom in shale gas production has transformed the U.S. from a net import to a net exporter of LNG. Although the global market is now seeing a glut of LNG, four U.S. developers have won export licenses and are building terminals with a total export capacity of roughly 63.5 million tons of LNG per year. Such large-scale projects have been a boon to Honeywell.

"Conversion of the global mega-project wins in backlog, where we serve as the main contractor providing control and safety solutions for large installations, picked up in the first quarter, and we expect this trend to continue throughout 2016," said Thomas A. Szlosek, the chief financial officer and senior vice president for Honeywell, in the most recent quarterly earnings conference call.

One of the four licensed developers is Freeport LNG Development LP (Houston, Texas), which is building a three-train liquefaction and export project in Freeport, Texas, on which Honeywell Automation and Control Systems is performing instrumentation, controls and safety work:

• $5.5 billion Train 1, currently set to be completed in the third quarter of 2018. For more information, see Industrial Info's project report.
• $5.5 billion Train 2, currently set to be completed in the first quarter of 2019. For more information, see Industrial Info's project report.
• $4.5 billion Train 3, currently set to be completed in the third quarter of 2019. For more information, see Industrial Info's project report.

Each of the three trains has a natural gas inlet capacity of 650 million standard cubic feet per day and an LNG production capacity of 4.4 million tons per year. The facility will source natural gas from the Eagle Ford Shale. Other companies involved include CB&I Incorporated (NYSE:CBI) (The Hague, Netherlands), also known as Chicago Bridge & Iron Company, Zachry Holdings Incorporated (San Antonio, Texas) and Mitsubishi Rayon Company Limited (Tokyo, Japan), which form a consortium for engineering, procurement and construction (EPC) services, and CH-IV International (Hanover, Maryland), which is serving as a consultant.

Also under construction at the Freeport LNG complex is a $200 million natural gas pretreatment plant and a $90 million natural gas-fired, simple-cycle unit. The plant will process 2.2 billion cubic feet per day of natural gas, which will be sent via Freeport LNG's pipeline to be liquefied and exported; it will be powered, in part, by the 87-megawatt (MW) unit's turbine generator set. Honeywell, CB&I, Zachary Holdings, Mitsubishi Rayon and CH-IV are working in the same capacities on these projects. For more information, see Industrial Info's project reports on the pretreatment plant and the simple-cycle unit.

Honeywell also would perform instrumentation, controls and safety work on the proposed, $4.5 billion Train 4 addition at Freeport. Like the three trains under construction, it would have a natural gas inlet capacity of 650 million standard cubic feet per day, although the proposed LNG production capacity would be slightly higher at 5 million tons per year. The project still is in its earliest stages, and is now undergoing an environmental review by the U.S. Federal Energy Regulatory Commission (FERC); if approved, is unlikely to begin construction until mid-2018, at the earliest. For more information, see Industrial Info's project report.

Honeywell is performing the same services for another high-profile project: Texas LNG Limited's (Houston, Texas) LNG liquefaction plant in Brownsville, Texas, which includes the $1.5 billion Train 1 and the $1.5 billion Train 2. Each is designed to convert 275 million standard cubic feet per day of natural gas, sourced from the Eagle Ford Shale, into 2 million metric tonnes per year of LNG. The project still is in its permitting phase; in late March, Texas LNG formally filed an application with FERC to build the terminal, which would ship LNG to customers in Latin America, Europe and Asia. For more information, see Industrial Info's project reports on Train 1 and Train 2.

Texas LNG already has received authorization from FERC to export to Free Trade Agreement (FTA) markets, and is seeking authorization to export to non-FTA markets. Other companies involved in the Texas LNG project include Samsung Engineering, which is performing front-end engineering design; Honeywell's subsidiary UOP LLC, which is handling pretreatment technology; and Braemar Engineering (Houston), which is performing various engineering work.

The largest project outside the U.S. to involve Honeywell is Kuwait Energy Company's (Salmiya, Kuwait) $1.2 billion Siba Natural Gas Field development in Al Jadidah, Iraq. The project, which is expected to wrap up in the near future, involves drilling 18 wells to reach 100 million standard cubic feet per day; constructing a 110 million-standard-cubic-foot-per-day natural gas processing plant, including a gas-gathering station; gas and condensate separation units; a gas-sweetening and regeneration unit; a gas dehydration and regeneration unit; and any associated pipelines. UOP is serving as a construction contractor. For more information, see Industrial Info's project report.

The only Honeywell-related project among the 10 highest-valued that is outside the Oil & Gas Production Industry is in the Chemical Process Industry: Honeywell's own $300 million in unit additions at its hydroflurocarbons plant in Geismar, Louisiana. Honeywell is installing the units to produce HFO-1234yf, a refrigerant for automobiles. Construction is expected to wrap up in the third quarter of 2017. For more information, see Industrial Info's project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.