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Turnkey Redefined

Engineering and construction firms adapt to a changing market.

Fortnightly Magazine - December 2011
“Owners are looking for EPC firms to provide parent-company guarantees. High bonding and liquidated damages provisions are common these days.” – John Olander, Burns & McDonnell

utility can undertake and be successful with their business.

Alan Champagne, Vice President, CH2M Hill: There’s still a big need for renewable energy, particularly in California, where they committed to a 33-percent renewable portfolio. And there’s also demand in a few other Southwest states. They’re building solar plants in the desert, so there’s a significant need for new transmission lines to bring the power to where it’s needed. That’s definitely booming.

Also T&D infrastructure is getting old and needs replacement. I see reliability concerns driving activity now and in the near future.

“Having so much uncertainty causes things to freeze up. Developers and utilities are trying to figure out their potential options and outcomes.” – Dean Oskvig, Black & Veatch

There was a big wave of new nuclear plants, but that has moved outward. That’s driven by all the shale gas finds that have increased U.S. gas reserves from 30 years supply to more than 100 years. That makes gas-fired plants attractive to owners, because they can predict gas prices out for an extended period of time. Gas prices went from $3 to $14, and now it looks like they’ll remain steady in the $4 to $5 range. Owners can put gas prices in the pro-forma and not worry much about escalation.

David Eppinger, Vice President, Fluor Corp.: We think the PV project market has some legs. The Treasury cash grant is set to expire at the end of this year, but the ITC [investment tax credit] will be available for another two years, so we see the solar market continuing.

With new solar projects coming online, there’s a need for new transmission. We’re looking at a large number of transmission projects that will move bulk power to load centers. Also we see prospects for energy storage projects. We have a keen focus on that technology and we’re looking to position for that opportunity.

Fluor recently commissioned the 580-MW Bear Garden project, which it built for Dominion Virginia Power in New Canton, Va.

Also there are gas-fired projects that clients have been developing for a number of years, and now with a stable forecast for gas prices they’re moving ahead.

We see a large amount of environmental retrofit work coming up in the near future, and we also see fossil maintenance projects. Companies are looking to keep their plants running efficiently and smoothly.

In the longer term, we’re positioned for nuclear, solid-fuel, gasification, and carbon capture and sequestration projects. We’re doing front-end work in all of those markets, but I’m not sure any will close in the next couple of years.

Larry Thies, Vice President (Generation), Burns & McDonnell: A lot of wind has been installed in the past several years, and as a result we might see a need for quick-start generating capability. We’ll probably be building some reciprocating-engine or simple-cycle turbine plants to follow the wind. We’re doing one now in Lake County, N.M.

Also the EPA regulations will continue driving environmental retrofit projects at existing coal plants, including FGD [flue-gas desulfurization], SCR [selective catalytic reduction], and baghouses, as well as ash disposal and wastewater discharge systems. Also a number of coal plants will be retiring, and because of that there will be new combined-cycle projects.

We’ve got the capability to build wood-fired projects, but they don’t seem to go forward. However there will be activity in