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Dominion Virginia Power, a division of Dominion Resources Inc. (D - Snapshot Report), has handed Fluor Corporation (FLR - Analyst Report) the full notice to begin construction on its new 1,358-megawatt, natural gas-fueled power station in Brunswick County, VA. The contract is valued at approximately $800 million, which Fluor has booked in its backlog for the third quarter of 2013 in the Power segment.
Dominion Virginia Power had received the go ahead from the Virginia State Corporation Commission on Aug 2, 2013 for the construction. Once operational by 2016, this natural gas-fired power station is believed to meet the growing customer demand and replace electricity from older coal-fired generating units to renewable natural gas. Prior to this, Dominion Virginia Power had successfully converted Altavista Power Station from coal to renewable biomass as its fuel source. The idea behind the conversion is to reduce the green house gas emissions in the process of electricity generation.
The Dominion Virginia Power division primarily deals with regulated electric transmission and distribution operations that serve residential, commercial, industrial, and governmental customers in Virginia and North Carolina; and non regulated retail energy marketing operations.
Fluor had already begun the engineering and procurement services on the Brunswick Country Power Station in 2012, from its Charlotte, N.C. office, as Dominion Virginia Power was awaiting the regulatory approval. In May 2013, Fluor Corporation, in a consortium with GE Hitachi Nuclear Energy, had received a contract from Dominion Virginia Power to provide project development services for its proposed 1,470MW nuclear unit at its North Anna Power Station in Louisa County, Va. The project still awaits regulatory approval to proceed.
The contract from Dominion Virginia Power further emphasizes the expertise and core competence of Fluor’s engineering, procurement and construction services (EPC) for the energy projects. Specifically, over the past decade, Fluor has provided EPC services to about 34,000 megawatts of gas-fired power facilities.
Fluor’s Power Group segment provides a full range of services to the gas fueled, solid fuels, environmental compliance, renewables, and nuclear and power services markets. Its services include engineering, procurement, construction, program management, start-up and commissioning, operations and maintenance and technical services. In the latest reported quarter, revenues grew 105% to $423 million from $206 million in the year-ago quarter. The significant increase was driven by progress in gas-fired and solar projects. New contracts in the quarter totaled $59 million.
Fluor currently carries a Zacks Rank #3 (Hold). Stocks in the same sector that are worth a look include Lennox International, Inc. (LII - Snapshot Report) and Meritage Homes Corporation (MTH - Snapshot Report). While Lennox has a Zacks Rank #1 (Strong Buy), Meritage carries a Zacks Rank #2 (Buy).