A subsidiary of Foster Wheeler AG’s (FWLT - Analyst Report) Global Engineering and Construction Group (E&C) recently received a contract from Statoil ASA (STO - Analyst Report) to conduct a feasibility study to upgrade the latter’s Mongstad Refinery in Norway. Foster has put the contract in its second quarter bookings, but other financial terms of the contract were kept under wraps. The study is expected to complete by the end of 2013.
The scope of the contract requires Foster to discover the best possible technical solution for the upgradation of the refinery. Statoil requires a detailed study report and also the total cost estimate. The upgrade is important for Statoil in order to withstand the competition in the highly demanding oil & gas market.
Through this study, Statoil primarily aims to understand the crude feedstock flexibility requirements to increase diesel production. In addition, the study will also enable Statoil to produce ultra-low-sulfur diesel. For upgrading the refinery, Statoil expects to install a new vacuum distillation unit along with the new diesel hydrotreaters.
Foster’s E&C Group has the core competence and the technical expertise in conducting such detailed feasibility study. This is because, it owns one of the leading technologies (SYDEC SM delayed coking) that is used in refinery residue upgrading, in addition to other refinery residue upgrading technologies (solvent deasphalting and visbreaking), and a hydrogen production process used in oil refineries and petrochemical plants. The Global E&C Group also has a proprietary sulfur recovery technology, which is used to treat gas streams containing hydrogen sulfide for the purpose of reducing the sulfur content of fuel products and to recover a saleable sulfur by-product.
Foster Wheeler’s Global E&C Group provides technical and economic analyses and study reports to owners, investors, developers, operators and governments. These services include concept and feasibility studies, market studies, asset assessments, environmental assessments, energy and emissions management, product demand and supply modeling and technology evaluations.
Foster currently has a Zacks Rank #3 (Hold). Other stocks in the industry worth buying at the moment are Pernix Group Inc. (PRXG) and VSE Corp. (VSEC - Snapshot Report). Both have a Zacks Rank #2 (Buy).