KBR and DL E&C to Advance Sustainable Aviation Fuel Production
KBR, Inc. KBR received a feasibility study contract from DL E&C Co., Ltd (“DL E&C”) for sustainable aviation fuel (SAF) production. Leveraging KBR's ATJ (Alcohol to Jet) technology — PureSAF — KBR and DL E&C are set to explore opportunities in the sustainable aviation fuel sector, marking the first stride toward expanding their market presence.
Per the agreement, DL E&C will oversee FEED, EPC (engineering, procurement, construction) and pre-commissioning of production plants. KBR, serving as the licensor, will manage the basic design stage, offering source technology and solutions for catalyst selection and maintenance. This strategic collaboration represents a significant milestone, with both companies aiming to deliver a complete and integrated solution for the entire SAF industry.
In response to the aviation industry's goal of achieving carbon neutrality by 2050, leading oil refineries are pursuing business development and technology R&D for SAF production. According to TMR, a global market research firm, the estimated value of the global SAF market was $186.6 million (KRW 235.5 billion) in 2021. TMR projects a CAGR of 26.2%, projecting the market to reach $402 billion (KRW 508 trillion) by 2050.
Strategic Initiatives to Boost Backlog
KBR's determination to reduce emissions, diversify products, improve energy efficiency and implement more sustainable technologies and solutions have been driving its performance. The demand for the company’s technologies in ammonia for food production, olefins for non-single-use plastics and refining for product diversification and more green solutions to meet tighter environmental standards have been strong.
In November, KBR's Purifie ammonia technology was chosen by PT Pupuk Sriwidjaja Palembang (Pusri), a subsidiary of PT Pupuk Indonesia, for its upcoming Pusri 3B Ammonia Plant in South Sumatera Province. This marked KBR's 12th licensed ammonia plant for Pupuk Indonesia.
KBR is working on multiple initiatives and contracts to expand its low-carbon ammonia offerings for energy transition, which is a crucial step toward global decarbonization efforts. It has been a world leader in ammonia technology and has been at the forefront of innovation in the same market for decades. Since 1943, this Zacks Rank #3 (Hold) company has licensed, engineered and constructed more than 250 grassroots ammonia plants throughout the world.
As of Sep 29, 2023, the total backlog (including award options) of KBR was $21.8 billion compared with $19.76 billion at 2022-end. Of the total backlog, Government Solutions booked $12.28 billion and the Sustainable Technology Solutions segment contributed $4.98 billion.
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The stock has fallen 11% in the past three months against the Zacks Engineering - R and D Services industry’s 3.2% rise. Nevertheless, the company is likely to benefit from increased new contracts and on-contract growth within all Government Solutions business units and rising demand for the Sustainable Technology Solutions portfolio.
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