Today, IBM (NYSE: IBM) announced a collaborative project with Honeywell (NYSE: HON) for the delivery of business process integration and manufacturing execution systems (MES) at the new liquefied natural gas (LNG) terminal being built by Freeport LNG Development, L.P. on Quintana Island near Freeport, Texas. The re-gas terminal will receive LNG shipments from global sources and supply natural gas to various facilities in the Texas Gulf Coast region.
After a 20-year hiatus in LNG terminal development, the Freeport LNG re-gas terminal will be one of the first new terminals in the United States. It will serve industrial and electric power generation natural gas operations between Freeport, Texas and the Houston Ship Channel, and is expected to be commissioned by the fourth quarter of 2007. The first ship is expected to be unloaded by February 2008.
IBM Global Business Services and Honeywell are providing an innovative combination of leading ERP system integration skills (IBM) and MES solutions (Honeywell) to help minimize the systems integration effort and total cost of ownership at the facility. IBM is leading the implementation of the business process integration suite of applications, as well as the integration with Honeywell's advanced MES applications, to provide Freeport LNG with a complete terminal management system.
"In addition to our many intelligent energy solutions, this kind of teaming and collaboration is a key aspect of how IBM is helping energy clients innovate and make the right changes to compete more efficiently and profitably," said Jay Bellissimo, IBM Global Business Services leader for the Americas Chemicals & Petroleum Industry. "Through our relationship with Honeywell, we're addressing new opportunities in LNG around the world. LNG operators are looking for the complete system to meet the demands of the globalization of LNG as a commodity, and the complexities arising from Joint Venture assets. IBM's deep industry experience, background in designing business processes and ERP implementation skills make us uniquely qualified to meet these needs."
There are significant financial, logistical and operating challenges in the global value chain of LNG. LNG operators are seeking turnkey solution providers to improve capital project execution. The integration of IT, ERP, MES and process automation provide reduced cost, schedule, and technical risk on capital projects, as well as an enterprise business framework that boosts LNG value chain visibility.
"We are thrilled to be teaming with IBM and Honeywell on this project. We are keenly aware that the quality of our services directly impacts our Customers' ability to maximize the value of the LNG they process through our plant. Our goal is to become the LNG terminal of choice on the US Gulf Coast by providing the most flexible and highest quality LNG terminal services available. The underlying information systems are critical in reaching that goal," said Hugh Urbantke, Chief Financial Officer, Freeport LNG Development, L.P.
"Honeywell is delighted to collaborate with IBM in providing a truly integrated MES/ERP solution," said Mark Opheim, director of Oil & Gas Marketing at Honeywell. "We now deliver automation, safety, security and advanced applications integrated with ERP systems that deliver improved business performance and peace of mind to our LNG customers around the world."
According to the International Energy Agency, the LNG value chain networks, which took 60 years to develop, will double in size and complexity within the next five years, as the market moves from supply contracts to free market trading. To capitalize on this significant growth, a new study from the IBM Institute for Business Value contends, investors must mobilize quickly and establish flexible business and operational models for an unpredictable and high-stakes future. The study, titled "A High-stakes Race Against Time: Can investors move quickly enough to capture the liquefied natural gas opportunity before it evaporates?" explores the complexity and risk inherent in the LNG marketplace, and provides recommendations for LNG businesses as globalization creates additional uncertainties of supply and demand in what is already a complex commodity market. For more information on this study, visit www.ibm.com/iibv and click on "Chemicals and Petroleum and Executive Briefs."
About Freeport LNG Development, L.P.
Freeport LNG Development, L.P. (FLNG) is a Delaware limited partnership, whose sole general partner is owned 50 percent by Michael S. Smith and 50 percent by ConocoPhillips (NYSE: COP). The limited partners are Michael S. Smith, 45 percent; Cheniere Energy, Inc. (AMEX: LNG), 30 percent; Texas LNG Holdings LLC, a wholly-owned subsidiary of The Dow Chemical Company (NYSE: DOW), 15 percent; and Contango Oil & Gas Company (AMEX: MCF), 10 percent.
More information about the Freeport LNG receiving terminal may be found at www.freeportlng.com
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