Gas Production Management: The Next Big Thing

Honeywell's innovative new system is the future of energy plant control technology.

Jul 11, 2014 at 3:06PM

The pursuit of more efficient and effective control systems is big in today's energy sector. Gas plants need systems that maximize production potential. Honeywell (NYSE:HON) Process Solutions just revolutionized this concept, creating the holy grail of energy plant control systems, the Experion PKS Orion, in hopes of taking control of the soon-to-be $15 trillion industry Automation and Controls. Last week, Qatar Fuel Additives Company, known as QAFAC, announced it will have Honeywell supply and its large Mesaieed Plant with the new integrated control and safety system. 

This new system can increase the production of methanol and methyl tertiary butyl ether (MTBE), in addition to substantially lessening operating costs, subsequently increasing efficiency. 

Nasser Al Kuwari, the QAFAC general manager noted that the Experion PKS Orion system, "will help us meet the growing demand for methanol, MTBE, and clean fuels efficiently." QAFAC actually plans to become one of the top five global producers of butane and methanol derivatives by 2020, and it is a glowing testimony to the innovation of Honeywell that the gas producer is confident its lofty goal is possible to achieve. 

A giant leap in technology
Honeywell's solution combines its Experion PKS control system with its Safety Manager and  XLS Fire Detection technologies to improve automation, cyber-security, and operation effectiveness. In other words, it combines the jobs that several separate systems would need to do into one system. It's like the phone being able to access the Internet. You see, the Experion PKS Orion maintains a more sustainable, agile, and safe automation platform, significantly improving gas production efficiency for plants, giving it an extremely sizable edge over the competitors.

A brief comparison to the competitor GE's (NYSE:GE) Mark* VLE Integrated Control System reveals just how impressive the Honeywell's new system is. The GE VLE provides a bit of increased efficiency, similar to Honeywell's, but falls behind in numerous other ways.

Firstly, Honeywell's new solution is the first system to use blade server technology, which increases virtualization, reducing the amount of hardware needed to run the plant. GE's VLE, unfortunately, does not. Honeywell's solution also includes its own Safety Manager software, which  increases reliability and process up-time. Again, GE's system does not. Honeywell's unique design even utilizes Universal Channel Technology, allowing for a reduced footprint, as well as minimal hardware. And once again, GE's VLE system does not.

According to Honeywell, its system can reduce installation costs by 33%, and asset configuration time by 80%, staggering amounts in the realm of energy production. 

A leap in returns as well?
The Honeywell Automation and Controls Segment, the umbrella of Honeywell Process Systems, contributes 42% of the total revenue, making it the company's largest division. Last year the segment enjoyed a 7% increase in sales, also the largest among Honeywell's segments. The demand for the segment is also on the rise. In fact, the global Automation and Controls Industry is forecasted to reach $15 trillion in worth by 2025. Luckily, Honeywell is already a large force in the industry, but even more promising, the Experion PKS Orion could help the company capitalize further on this rapidly growing market, and it would not be unreasonable to see another 6% to 9% increase in the segment's revenue each year until then.

Honeywell currently expects double-digit EPS growth in the next five years. It's EPS grew 11% in 2013, and is expected to grow at least 10% in 2014. Imagine what dominating a $15 trillion industry in the next 10 years would do. 

It can definitely be acknowledged that this innovation could buoy long-term revenue and share price alike. Honeywell has a P/E ratio of 18.89, meaning that for every one dollar of earnings, investors are willing to pay $18.89. It is slightly lower than GE's ratio of 21.88, as well as the industry average of 21.1, but still valued pretty highly. However, with the recent pursuits of the integration system, which should be finished by the end of the second quarter of this year, Honeywell's long-term potential is undervalued.

The system created is the future of energy plant management, so the demand, and sales for Honeywell Process Solutions could skyrocket, especially if a rival is unable to develop an integrated control and safety system able to match the Experion PKS Orion. Thus, in a fast growing industry, the simple truth is this: Honeywell has the next big thing, and GE does not, so it would be foolish to miss out.


Drew Stern has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers