January 2018 - McIlvaine Insights 46

WELCOME

Weekly selected highlights in flow control, treatment and combustion from the many McIlvaine publications.

U.S. Based Companies will make Twenty-five Percent of the Valve Purchasing Decisions in the New IIoT Environment

Refinery Webinar and Decisions System

Shale Oil and Gas Webinar on February 7 will cover IIoT and Combust, Flow and Treat Markets

Pump Report Continually Updated

U.S. Based Companies will make Twenty-five Percent of the Valve Purchasing Decisions in the New IIoT Environment

The infiltration of IIoT and remote O&M into the valve industry will profoundly impact the purchasing approach of plant owners. The 550 largest valve operators are increasingly making decisions for all their plants at the corporate offices. Traditional business strategy has started with forecasts of valve purchases by geographic region. This was logical because most valve decisions were made at the plant level. In the new environment decisions will be made at a central location which has access to valve performance data at all the plants. As a consequence, valve company sales efforts will need to be aligned with the corporate office locations.

The U.S. has lost importance as the dominant operator of processes utilizing valves. The large U.S. operators have been making most of their recent investments in countries where demand is increasing. These companies have become increasingly international. Now with remote monitoring and data analytics these companies can make better informed valve decisions for each plant from the corporate office.

This is good news for the valve salesmen assigned to the U.S. The reason is that 25 percent of the 550 largest valve purchasers are based in the U.S. On the average their purchases are larger than operators based in other countries. So, the role of the U.S. sales force will become increasingly important.

Valve Purchases 2018 $ millions by U.S. based Companies
Company	Role	Industry	Purchases
AbbVie	Operator	Pharma	36
ADM	Operator	Food	15
AECOM	EPC	Total	175
AEP	Operator	Power	93
Amgen	Operator	Pharma	32

The rapid development of IIoT is being analyzed in N031 Industrial IOT and Remote O&M

The forecasts for the 550 purchasers are included in N028 Industrial Valves: World Market

The five-step program to navigate the IIoT sea change is discussed.

Refinery Webinar and Decisions System

McIlvaine conducted a webinar on the market for combust, flow, and treat equipment and services in refineries last week.

A small number of companies make the decisions relative to combust, flow and treat purchases for refineries. The refinery IIoT and Remote O&M market will rise from $18 billion in 2018 to more than $36 billion by 2024.

Companies building new refineries are well aware of the benefits of using IIoT through pervasive sensing applications. A typical modern facility will thus have about 50,000 inputs and outputs to and from control and monitoring systems, with all connections made through plant intranets, which replaces the Internet in these IIoT applications. But an older refinery will typically have closer to 20,000 inputs and outputs, with the 30,000 shortfall the root cause of much inefficiency, operational issues and safety incidents. So, the IIoT potential at existing plants is bigger than for new plants.

McIlvaine tracks all refinery projects daily. There are relatively few refining companies. Many of them also own chemical plants and or extract gas and oil. A marketing program for refining combust, flow, and treat products and services was discussed.

Recorded 41 Minute webinar on January 10, 2018 View YouTube Recording: https://youtu.be/N0CgrGcfMAU

The webinar also covered the markets of individual components by the major purchasers using the following sample.

Refinery Purchases 2018 - $ millions
	Total	lukoil	Aramco	SK	Repsol	Exxon
%		1.27	2.53	0.85	1.15	5.87
Pumps	3200	41	81	27	37	188
Valves	8485	108	215	72	98	498
Treatment Chemicals	3100	39	78	26	36	182
Filtration/ Separation	5400	69	137	46	62	317
Sub Total	20185	257	511	171	233	1185
Guide	5877	75	149	50	68	345
Control	12,400	157	314	105	143	728
Measure	5600	71	142	48	64	329
Sub Total	23877	303	605	203	275	1402
Total	44,062	560	1116	374	508	2587

A refinery Decisions System can now be accessed free of charge for the next three months. One decision guide will cover air pollution control for catalytic cracking and consider new technologies such as catalytic filters for recovery of more catalyst fines and NOx removal. Fence line monitoring and the new requirements for benzene monitoring nationally and 15 pollutants in California is another subject.

You can contact Bob McIlvaine rmcilvaine@mcilvainecompany.com to sign up for the three month free access.

Shale Oil and Gas Webinar on February 7 will cover IIoT and Combust, Flow and Treat Markets

Unlike conventional extraction shale oil and gas involves large numbers of small wells with very complex extraction processes. This combination makes IIoT and Remote O&M very cost effective. There are also many more combust, flow and treat products and services required. McIlvaine tracks all the oil and gas activity on a daily basis. N049 Oil, Gas, Shale and Refining Markets and Projects Remote monitoring of pumps and valves is very important due to the high pressures and abrasive environment in which these components must operate. The cost of shale and gas extraction has been falling due to process and component innovation. Greater use of IIoT and Remote O&M will make this technology even more competitive. This webinar will provide an extension of the March oil and gas webinar which can be viewed at https://youtu.be/o7kJSXixFHs

The total oil market is growing. OPEC now sees demand reaching 102.3 million barrels a day in 2022, up from 95.4 million barrels a day in 2016.

The United States will meet much of the demand increasing its oil output by 3.8 million barrels a day through 2022, OPEC says. That will be equal to about 75 percent of all supply growth outside the 14-member OPEC, which provides about one-third of the world's crude. Much of that growth will come from U.S. shale. U.S. shale oil production could exceed 9 million barrels per day by 2025. Capex is likely to grow at 25%/yr. The US shale oil market is in recovery. WTI has rebounded from its February 2016 low of $30/bbl, and reached $70/barrel last week.

Those prices have driven shale oil rig counts to over 500 rigs-more than 2.5 times the April 2016 bottom of 193. Several factors enable operators to continue producing in this lower-price environment:

1. high-grading, since ~50% of sub-basins have uneconomic average break evens at these prices;

2. a 5-day reduction in average drilling days since 2014; and,

3. an average Initial production (IP) improvement of 33% since 2014.

To register for the webinar click on Free Market Webinars

Pump Report Continually Updated

Subscribers to the McIlvaine pump report just received forecasts for the pump expenditures for the top 550 purchasers. In addition to updates to the networking directory and forecasts there is a monthly news update. Here are the headlines for the December issue.

Pumps World Markets Update - Table of Contents - December 2017

Acquisition

Iron Pump Buys Ellehammer

New Facilities

Maag Opens Two New Plants in China

Grundfos Opens New Manufacturing Plant in India

Gruppo Aturio Adds Testing Facilities

Finance

Clyde Union Reduced Work Force in UK after Losses

People

Xylem UK Managing Director Appointed New President of BPMA

SPX Flow Announces New Sales Manager for Johnson Marine in Americas