Dresser deal lets GE tap into shift to natural gas

New York :  General Electric Co. is expanding its energy business by tapping into the growing reliance of utilities and factories on natural gas.

The addition on Wednesday of privately held energy equipment maker Dresser Inc. for $3 billion (Dh11 billion) bolsters GE's already sizeable position in energy. GE builds natural gas-fired turbines for power generation, equipment for pipelines and liquefied natural gas terminals.

It also provides water treatment and recycling for oil and gas drilling operations. Last week the company announced a mobile version of its water treatment technology designed to reach remote gas drilling locations.

Analysts predict that recent development of huge, cheaply accessible reservoirs of natural gas found deep underground in shale formations worldwide will mean relatively low and stable natural gas prices for years to come. As a result utilities, chemicals producers and other industrial companies are beginning to use more natural gas instead of coal or oil either as a feedstock or to generate electricity.

GE, based in Fairfield, Connecticut, follows some corporate peers that also want to cash in on the natural gas boom. ExxonMobil agreed to buy natural gas company XTO Energy for $31 billion last December.

Natural gas assets

Royal Dutch Shell said in May that it will acquire East Resources, which has natural gas assets in two US shale formations, for $4.7 billion.

Dresser's motors, pumps and flow-control equipment help move gas and liquids through pipelines and power plants. Its natural gas fuelled generators produce power for factories, dairy farms, landfills and rural areas.

Dresser's products will complement similar equipment and technology that GE already uses on a larger scale. For example, GE provides some of the pumping infrastructure for large new natural gas pipelines stretching across India, according to John Krenicki, vice chairman of GE and chief executive of GE's energy unit.

Dresser's small engines will allow GE to expand on that by building branch lines to rural areas.

The same kind of infrastructure construction is booming in China, too. Dresser's equipment will also be used in liquefied natural gas facilities now being built in Australia to export fuel to Asia.

Dresser, based in Addison, Texas, designs and builds fuel dispensers for filling stations as well.

GE wants to use that expertise and experience to roll out a line of electric vehicle charging stations it unveiled recently.

GE had signalled it was ready to begin buying companies again, long a growth strategy for the company. This is its first major purchase since the beginning of the financial crisis in 2008, according to a report by Deutsche Bank analyst Nigel Coe.