Fluor CEO Sees Shale Gas Reviving U.S. Industries
Fluor Corp. (FLR), the largest U.S. publicly traded engineering and construction company, anticipates growth in the country’s chemical and manufacturing industries as a result of rising shale-gas output.
Producers and industrial users of natural gas from shale deposits are at the start of a long-term spending drive, which should benefit contractors such as Fluor, Chief Executive Officer David Seaton said in an interview in Dubai today. In the U.S. Gulf of Mexico coast region alone there are $30 billion of potential projects tied mainly to shale production, he said.
“Shale gas, and the downstream derivatives of that, is what’s going to drive a resurgence of manufacturing in the U.S.,” he said. Seaton described the U.S. as the only developed economy with an opportunity “to really grow.”
Developed economies such as those in Europe and the U.S. have suffered as the global financial crisis dried up capital liquidity and cut spending on projects. Emerging markets have been sustaining global economic growth as rising populations in China, India and the Middle East demand more consumer goods and add industrial production to meet their needs and add jobs.
“The U.S. is building capacity for petrochemicals for the first time in decades and cost in the U.S. is becoming very competitive,” Omar Blouos, Middle East regional director for management consultant Accenture Plc (ACN), said in a separate interview in Dubai. “The Middle East will continue to be a player in this industry,” he said.
Fluor, based in Irving, Texas, sees prospects for growth in the Middle East and Australia, where production of chemicals and commodities is rising along with demand for them. The company foresees a resurgence in mining worldwide when the global economy recovers and doesn’t plan to cut back on its minerals projects, Seaton said. Fluor removed two mining projects in Peru and Australia, valued at a combined $2 billion, from its backlog in the third quarter.
The company, with a cash pile of about $2.8 billion, plans to use about $1 billion for projects already under way for clients and another $1 billion on company operations. The rest could be used for acquisitions that help add capacity in areas like pipeline or power plant construction, or to buy its own shares, Seaton said.
Fluor, with a project pipeline of about $40 billion in contracts, is looking at two planned chemical projects in Qatar, conducting a pre-feasibility study for a joint-venture refinery Saudi Arabian Oil Co. will build in the Red Sea port of Yanbu and is bidding on two refinery contracts in Kuwait, Jose Bustamante, Fluor’s senior vice president for regional sales, said in the same interview today.
The company expects to hear by the end of the year if it’s been short-listed as a bidder for engineering and construction contracts in Kuwait, he said. The country may announce a winner for the contracts by summer, Bustamante said.
Seaton said he views Iraq as a long-term market with great potential. Fluor is working on oilfield operations for Exxon Mobil Corp. at the West Qurna field and is also partnering with Royal Dutch Shell Plc (RDSA) on feasibility studies for a project to collect and use natural gas at Iraq’s southern oil fields, he said.
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