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Released August 01, 2019 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--McDermott International (NYSE:MDR) (Houston, Texas) took a big hit in second-quarter 2019 after earnings proved much weaker than expected, and the company acknowledged that it was expecting a full-year net loss. The engineering, procurement and construction (EPC) giant reported a drop in new contract awards and said that benefits from its biggest project, a liquefied natural gas (LNG) plant in Louisiana, would come later than expected. Industrial Info is tracking nearly $130 billion in active projects involving McDermott, more than $53 billion of which are under construction.
Click on the image at right for a graph detailing the top 10 industrial sectors for projects involving McDermott.
David Dickson, the chief executive officer of McDermott, noted in a quarterly earnings-related conference call that the company now has a "record-setting" $20.5 billion backlog, having booked more than $19 billion in awards since last year's acquisition of Chicago Bridge & Iron (CB&I). But the company's consolidation of CB&I has proven more challenging than initially expected; as with Cameron LNG, the benefits to McDermott's bottom line from legacy CB&I projects will take longer than once thought.
Although the $10 billion first liquefaction train of the Cameron LNG complex in Hackberry, Louisiana, is still set to be fully completed within the next year, owner Sempra Energy (NYSE:SRE) (San Diego, California) announced earlier this year that the massive project likely is looking at a three-month delay. Nonetheless, Dickson checked off some accomplishments in the conference call: "First cargo shipped from Cameron's Train 1 during the quarter, with substantial completion of Phase I expected within this quarter. Trains 2 and 3 continue to progress on schedule, with the overall project reaching 93% completion during the quarter."
For more information on the Cameron LNG project, the first train of which is expected to produce 15 million metric tonnes per year, see Industrial Info's project report.
The largest project McDermott inherited in its CB&I acquisition, ConocoPhillips' (NYSE:COP) (Houston, Texas) $18 billion Freeport LNG liquefaction and export complex in Quintana, Texas, saw its start date pushed back by flooding from Hurricane Harvey, among other factors; the $5.5 billion first liquefaction train is now expected to enter service in September, with the $5.5 billion second and $4.5 billion third trains expected to start in January and May of next year, respectively. Each train is expected to produce 5 million metric tons per year. For more information, see Industrial Info's reports on Train 1, Train 2 and Train 3.
Despite these setbacks, McDermott executives see plenty of opportunity in numerous markets, particularly in petrochemicals. The $1.6 billion construction of an ethane cracker at the Bayport Polymers refining and petrochemical complex in Port Arthur--a joint venture among Total S.A. (NYSE:TOT) (Paris, France), NOVA Chemicals Corporation (Calgary, Alberta) and Borealis AG (Vienna, Austria)--is making progress and is expected to be fully completed toward the end of 2020. It is expected to produce about 1 million metric tons per year of ethylene. For more information, see Industrial Info's project report.
"[The] petrochemical market, in particular, is poised for another wave of investment in the next 12 to 24 months, with an expected increase of more than 40% between 2019 and 2028 in the the world's ethylene capacity, in a market where we are one of the world leaders," Dickson said in the conference call.
Puget Sound Energy's (Bellevue, Washington) $275 million Tacoma LNG project in Tacoma, Washington, a "micro LNG" plant that is expected to produce at least 250,000 gallons per day, took a step forward recently with approval from the Puget Sound Clean Air Agency for an air permit. McDermott is performing EPC services for the project. For more information, see Industrial Info's project report.
Other McDermott projects coming along include Phillips 66's (NYSE:PSX) (Houston) $150 million expansion of a crude and refined petroleum terminal in Nederland, Texas, which is expected to increase the number of crude storage tanks from 74 to 79, and LLOG Exploration Company LLC's (Covington, Louisiana) Stonefly subsea installation in the Gulf of Mexico, which includes $35 million of infrastructure installation and a $25 million pipeline tieback.
LLOG awarded its contract to McDermott earlier this year, for installations running from the Stonefly development to the Ram Powell platform, which is 140 miles southeast of New Orleans. For more information, see Industrial Info's reports on the Nederland terminal, Stonefly infrastructure and Stonefly tieback.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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/.
Click on the image at right for a graph detailing the top 10 industrial sectors for projects involving McDermott.David Dickson, the chief executive officer of McDermott, noted in a quarterly earnings-related conference call that the company now has a "record-setting" $20.5 billion backlog, having booked more than $19 billion in awards since last year's acquisition of Chicago Bridge & Iron (CB&I). But the company's consolidation of CB&I has proven more challenging than initially expected; as with Cameron LNG, the benefits to McDermott's bottom line from legacy CB&I projects will take longer than once thought.
Although the $10 billion first liquefaction train of the Cameron LNG complex in Hackberry, Louisiana, is still set to be fully completed within the next year, owner Sempra Energy (NYSE:SRE) (San Diego, California) announced earlier this year that the massive project likely is looking at a three-month delay. Nonetheless, Dickson checked off some accomplishments in the conference call: "First cargo shipped from Cameron's Train 1 during the quarter, with substantial completion of Phase I expected within this quarter. Trains 2 and 3 continue to progress on schedule, with the overall project reaching 93% completion during the quarter."
For more information on the Cameron LNG project, the first train of which is expected to produce 15 million metric tonnes per year, see Industrial Info's project report.
The largest project McDermott inherited in its CB&I acquisition, ConocoPhillips' (NYSE:COP) (Houston, Texas) $18 billion Freeport LNG liquefaction and export complex in Quintana, Texas, saw its start date pushed back by flooding from Hurricane Harvey, among other factors; the $5.5 billion first liquefaction train is now expected to enter service in September, with the $5.5 billion second and $4.5 billion third trains expected to start in January and May of next year, respectively. Each train is expected to produce 5 million metric tons per year. For more information, see Industrial Info's reports on Train 1, Train 2 and Train 3.
Despite these setbacks, McDermott executives see plenty of opportunity in numerous markets, particularly in petrochemicals. The $1.6 billion construction of an ethane cracker at the Bayport Polymers refining and petrochemical complex in Port Arthur--a joint venture among Total S.A. (NYSE:TOT) (Paris, France), NOVA Chemicals Corporation (Calgary, Alberta) and Borealis AG (Vienna, Austria)--is making progress and is expected to be fully completed toward the end of 2020. It is expected to produce about 1 million metric tons per year of ethylene. For more information, see Industrial Info's project report.
"[The] petrochemical market, in particular, is poised for another wave of investment in the next 12 to 24 months, with an expected increase of more than 40% between 2019 and 2028 in the the world's ethylene capacity, in a market where we are one of the world leaders," Dickson said in the conference call.
Puget Sound Energy's (Bellevue, Washington) $275 million Tacoma LNG project in Tacoma, Washington, a "micro LNG" plant that is expected to produce at least 250,000 gallons per day, took a step forward recently with approval from the Puget Sound Clean Air Agency for an air permit. McDermott is performing EPC services for the project. For more information, see Industrial Info's project report.
Other McDermott projects coming along include Phillips 66's (NYSE:PSX) (Houston) $150 million expansion of a crude and refined petroleum terminal in Nederland, Texas, which is expected to increase the number of crude storage tanks from 74 to 79, and LLOG Exploration Company LLC's (Covington, Louisiana) Stonefly subsea installation in the Gulf of Mexico, which includes $35 million of infrastructure installation and a $25 million pipeline tieback.
LLOG awarded its contract to McDermott earlier this year, for installations running from the Stonefly development to the Ram Powell platform, which is 140 miles southeast of New Orleans. For more information, see Industrial Info's reports on the Nederland terminal, Stonefly infrastructure and Stonefly tieback.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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/.
