TOGY talks to
Technology to move the industry forwardNovember 2, 2017
Jim Nyquist, group president of systems and solutions for Emerson Automation Solutions, talks to TOGY about how companies operating in the oil and gas industry adapt to new technologies and automation opportunities in the industry. Emerson Automation Solutions is a core division of multinational engineering and technology firm Emerson.
• On using new technology: “Senior players in the industry are ready to make a change. However, deeper in the organisation of the industry, people are uncomfortable with taking risks. This is where the industry is still standing while the technology continues to move. It is a mindset that needs to change.”
• On opportunities in Mexico: “The past few years have been tough in Mexico for us with Pemex. However, we have a lot of promise from Mexico, deriving from the midstream sector, privatisation, new leases in the Gulf of Mexico and construction. There is a great investment to be made in the country.”
Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find an abridged version of our interview with Jim Nyquist below.
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How receptive is the oil and gas industry to new technologies?
The technology is moving faster than the industry. From an automation perspective, we have launched new technologies, some of them for capital project performance, as well as the architecture around digitising and IOT [internet of things] technologies. Early adopters and industry leaders are aggressively taking advantage of the launch of these technologies and seeing huge value. A lot of people in the early majority and late majority are still not moving that fast. There is a lot of opportunity for automation technology.
The organisation of the industry has been working in such a way for so long that they do not want to risk trying something new. The industry includes end users as well as the EPC sector. An end user such as ExxonMobil may say it wants to use the technologies developed with Emerson, but the insurance company may say that that adds risk and that it prefers its own template.
Senior players in the industry are ready to make a change. However, deeper in the organisation of the industry, people are uncomfortable with taking risks. This is where the industry is still standing while the technology continues to move. It is a mindset that needs to change.
The downturn in oil prices has made people start to do things differently. More people want to take new risks and employ new technologies. This will help us in terms of increasing the adoption rate for new technology. The technology is available, but the mindset of the industry is apprehensive.
Which oil and gas sectors will yield opportunities for new technologies in the near future?
Shale gas will be very active, particularly in the Permian Basin. Between now and 2021, we foresee an incredible amount of capital going there. Production will move from 2.3 million bopd to approximately 2.6 million bopd. Pipeline capacity is 2.5 million bopd and midstream capacity will be limited. We can see a need for construction of pipelines to gas plants. We foresee an enormous investment in the Permian Basin and we are already very active there.
There are other shale projects that we could look into. Argentina will probably see the next big shale investment and it will create great activity.
We are also seeing more onshore. Deepwater activities still seem to be a bit tentative. Shallow-water projects, particularly in the Gulf of Mexico, will also emerge. We are very active in the Mexican market, which will be more privatised.
We are very active in the Caspian region. BP is there and we foresee a continued investment there.
How important will Mexico be for Emerson in the long term, given the recent privatisation of the industry?
It will be very important for us. The past few years have been tough in Mexico for us with Pemex. However, we have a lot of promise from Mexico, deriving from the midstream sector, privatisation, new leases in the Gulf of Mexico and construction. There is a great investment to be made in the country.
Emerson has a positive outlook for investment in the country’s energy infrastructure moving forward. Local measures, such as the effective roll-out of the country’s recent energy reforms, are encouraging investment from international companies in the sector, strengthening Mexico’s energy industry and output capacity. More than 10,000 kilometres of new pipelines and several hydrocarbons terminals are already being built in Mexico as a result of the reforms.
We are also seeing important initiatives by companies with existing operations in Mexico to continue to expand and optimise production, particularly by restructuring their midstream operations. Automation plays a key role in these efforts, and Emerson is providing support to companies seeking to implement new process control systems and technology to enhance their performance, increase output, cut costs, reduce energy use and emissions, and improve safety. Emerson’s range of solutions, global industry knowledge and IIOT [industrial internet of things] technology, paired with our local team of experts, enable us to provide customised solutions and support to client operations in Mexico.
Automation might only represent 4% of project costs for new construction, but earlier implementation of an automation strategy can drive flexibility to help stay on budget and schedule, potentially saving millions in cost overruns and contract penalties. Our goal is to continue providing a unique integrated automation solution to minimise product integrity surprises and hit profitability targets, meet changing customer and market demands and remain HSSE-compliant. The goal is to provide the right tools and technologies for our customers to reach top-quartile performance of their operations and to support new players in the market to achieve top-quartile performance.
What opportunities is Emerson seeing in the LNG sector?
We have been very active as a main automation contractor within the LNG sector. LNG and floating LNG are very interesting for us.
I am interested to see what happens in terms of pricing. There is an oversupply of LNG in the world, so world prices have decreased. As the world turns to gas, this demand curve will increase. The conversion of more power plants to run on gas will continue to drive that. LNG is clearly a long-term operation.
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