Jersey deal creates buzz for Snc-lavalin
MONTREAL – SNC-Lavalin’s power division was abuzz Tuesday after securing a contract with its Swedish partner to build a major gas-fired power plant in New Jersey.
The Montreal-based company said that it will provide engineering, procurement, startup and commissioning services for a 655-megawatt power plant in Newark, N.J. Its joint venture partner, Skanska, is responsible for construction and site management.
No value for the contract was provided, but industry analysts pegged total capital costs at about $655 million, with SNC-Lavalin’s share estimated at more than $200 million.
The announcement came a day after the Newfoundland and Labrador government gave the green light to the $7.7-billion Muskrat Falls hydroelectric project in the Lower Churchill region. SNC will be the lead engineering firm on Muskrat Falls, which will have a capacity of 824 MW and will have both overhead and undersea transmission lines that will carry power to Nova Scotia and the United States.
The Newark Energy Center is being developed by a joint venture of Hess Newark Plant Holdings, a subsidiary of Hess Corp., and EIF-NEC, a subsidiary of private equity funds managed by Energy Investors Funds.
The plant will use General Electric combustion gas turbines to generate power and sophisticated emissions control technology to make it one of the cleanest of its kind in the United States, SNC-Lavalin said in a news release. The facility is scheduled to begin generating power in 2015.
SNC-Lavalin has installed 70 of the GE F-class gas turbines around the world, including Astoria Energy in New York’s Queen’s borough.
The new contract represents about 10 per cent of the power division’s sales backlog and two per cent of SNC-Lavalin’s overall backlog, said Maxim Sytchev of AltaCorp Capital. “The company’s power division is going through improved and what we would qualify as a steady momentum phase right now,” he wrote in a report. “We are also pleased to see that the gradual move towards adding some work south of the border is starting to bear fruit.”
SNC-Lavalin’s shares closed down nine cents at $41.06 Tuesday on the Toronto Stock Exchange.