Fluor hopes to build more gas-fired power plants

Fluor (NYSE: FLR), one of the world’s largest providers of engineering and construction services for power plants, said in a May 3 earnings call that it is encouraged by the growth of gas-fired power generation.

At the same time, company executives said uncertainty about U.S. Environmental Protection Agency regulations is delaying issuance of new contracts for utility customers looking to retrofit existing coal plants.

On the nuclear front, Fluor said that development is ongoing at its NuScale Power affiliate, which is seeking to commercialize its small modular reactor design.

As for natural gas power plants, depending on their size, they typically involve a capital investment of between $600m and $800m, said Fluor CEO David Seaton. “We’re beginning to see a visible pickup in the number of opportunities for gas-fired power generation, which is encouraging,” Seaton said. “We’re also anxiously awaiting clarity on the proposed but stalled pollution control guidelines.”

“With gas at $2, obviously, gas is, at least, being talked about as baseload power generating capacity and it’s easier to permit,” Seaton said in a transcript posted on the website Seeking Alpha.

“I think that we’re well positioned on many of those to make those into EPC [engineering, procurement and construction] programs and start to grow our Power group again,” Seaton said.

On the coal compliance side of Fluor’s power business, Fluor is working with a number of coal-fired utilities. “Many of our customers are ready to spend money based on the front end [development studies] that we’ve done and others have done to upgrade coal production, to change oversights from coal to some other fuel as well as shut down some of these facilities, all of which fall into our capability,” Seaton said.

“The challenge is, as I mentioned in my prepared statements, we can’t get a regulatory environment that has any surety to it that would allow customers to pull that trigger on capital expenditures. That’s a huge input into their business model and they need surety,” Seaton said.

Fluor invested in mini-reactor developer NuScale last year. NuScale is preparing an application for U.S. Department of Energy funding to assist in making small modular reactors a reality, Fluor executives said. NuScale plans to develop a small modular reactor at the Savannah River site in South Carolina, NuScale said in an April news release.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.