September 2016 - Water Market Insights 200

Emerson has signed an agreement to purchase the Valves & Controls business of Pentair for $3.15 billion. The acquisition is expected to close in the next four to six months, subject to various regulatory approvals.

“This acquisition delivers on our strategic plan of investing in Automation Solutions and in markets where we have a global leadership position and see significant long-term growth opportunities,” said Chairman and Chief Executive Officer David N. Farr. “By adding Pentair’s Valves & Controls leading technologies and services to our already broad portfolio, we have positioned our businesses to grow while continuing to provide our customers around the world with more complete solutions to their toughest challenges.”

“The Pentair Valves & Controls business is a strong fit for us as they share many of the same management principles that have defined success for Emerson over the years such as global customer support, service, best cost sourcing and manufacturing,” said Mike Train, Executive Vice President and Business Leader for Emerson Automation Solutions. “In addition to adding great people and brands to our business, it will allow us to expand our market position and create new opportunities for growth, while also being able to offer our customers the most complete valve solutions portfolio and most extensive service network in the world.”

McIlvaine updates more than 50,000 valve forecasts continually and also provides market share rankings based on the latest 12-month performance. See N028 Industrial Valves: World Market

Company	Valve and Actuator Sales $ Millions	General Performance $ Millions	High Performance $ Millions	High Performance Market Share %
Pentair	$2,100	600	1,500	4
Emerson	$1,980	600	1,360	3
New Emerson	$4,080	1,200	1,880	7
Cameron	$1,520	200	1,320	3
Flowserve	$1,470	400	1,070	2
Other	$78,850	47,000	32,870	81
Total	$90,000	50,000	40,000	100

The new Emerson will hardly be a player in the general performance valve market with just a 2 percent market share. However, with a 7 percent market share in high performance valves and sales which are twice that of its nearest competitor, it will be exercising its “right to win” position. This position could be substantially enhanced by the Decision Guide program initiated by McIlvaine.

High performance valves have been defined by McIlvaine to include both severe and critical service. Each needs to be purchased based on lowest total cost of ownership (LTCO) and not on initial price. These high performance valves are important elements in the Automation Solutions cited by Emerson as the target market for the expanded company.

Automation Solutions requires process knowledge far beyond what is easily acquired and understood. The supplier needs the knowledge to offer the system and the end user needs the knowledge to justify its LTCO. McIlvaine is offering Decision Guides to address this need. The guides cover all aspects of coal-fired, gas turbine and reciprocating engine operation. Narrow guides in specific subjects in oil gas such as molecular sieve switching valves and choke valves are also kept current.

This approach is radically different than current practice and can best be explained by an example. Emerson is pursuing a large multi-plant automation project for a major utility. The success of the optimization depends on the quick and precise reaction of many valves. The degree of success in the boiler impacts a number of valve related decisions in the back end portion of the upgrade. The utility has been using the McIlvaine Power Plant Air Quality Decisions Guide (PPAQD). A series of five webinars including three already conducted and two to be held in early September are helping the utility, consultants and the suppliers maximize the value of the material in PPAQD. At this point it looks as if the PPAQD will result in an approach which will save over $200 million in capital costs.

There have been discussions with the executives of the utility as to why the Decision Guide would be critical in determining the best options. There is agreement that the relevant information particularly about total solutions is doubling every few years. Conventional approaches to take advantage of the voluminous data are clearly inadequate. The consultants and the utility personnel both can take advantage of the Decision Guide.

Emerson can take advantage of this new route to market to ensure that end users around the world understand the lowest total cost of ownership benefits. For more information on Decision Guides click on Decision Guides. The upcoming webinars are described at Hot Topic Hour Schedule and Recordings

Yes, Landfill Gas Engines Will Produce More Poison Ivy but also More Tomatoes

A New York Times article warns of the impending growth of poison ivy. Yes, but this fertilization effect of CO₂ has been put to good use by thousands of greenhouses around the world. GE, Cummins and other engine manufacturers are actively pursuing CHP projects which provide greenhouses with electricity, heat, light and CO₂. Is it better to increase the production of tomatoes or retard the growth of poison ivy?

The Southcoast Air Quality Management District (SCAQMD) struggled with this question in the recent analysis of the 1110.2 biogas emission amendment. The question is whether landfill gas engines would be a better choice than just flaring. The Beverly Hills estate owner who can easily buy whatever tomatoes are desired but is struggling to keep poison ivy under control will have a completely different value judgment than a starving child in Sudan. Should SCAQMD prioritize the desires of its residents above those of the starving people in the world? The answer is “Yes.” But this does not mean that every government in the world should reflect the values of SCAQMD residents.

There is a broader implication which greatly affects the market for reciprocating engines. These engines contribute to the increase of CO₂ in the world. A recent study by a number of collaborating universities now supports the long held theory that the earth is growing greener. Other studies have estimated that the increase in crop value is in the $billions and possibly even the $trillions. Many engines are being purchased by developing countries to provide critical power and, in turn, save lives and increase the welfare of the residents.

Decisions about the environmental impacts of these initiatives are being made on a simplistic basis. Engine manufacturers should support a more complex analysis which better represents the true desires of citizens. The three key analysis elements are (1) quality of life, (2) tribal values and (3) discounted future. The evaluation should not be based on the standard life quantity guide but on life quality. The highest honor gold medal goes to the soldiers who sacrificed decades of life quantity for one heroic life quality moment.

The tribal value question is put to rest by the fact that no government provides more than a tiny fraction of a percent of GDP for foreign aid. The SCAQMD biogas analysis reflects the values of the district. It points out that the CO₂ from flaring and the biogas engine are the same but that organic emissions could be higher with the engine option. Since the SCAQMD residents are the ones primarily impacted by the organic emissions, there is a tribal consideration which is contrasted to the CO₂ which is global.

The analysis further points out that the potential lost electricity with the flaring is not consequential because the electricity furnished in the district is efficient and green. By contrast, the starving Sudanese child lives in a district without any electricity. The potential to convert flared gas into electricity has enormous benefits to the child and other residents of the district.

The third element is the discount rate for future values. The parents of the Sudanese child and the wealthy grandfather setting up trusts are discounting future values at greatly different rates. The value of one more tomato today vs. one 50 years from now to the wealthy grandchild and the Sudanese child is very different. This discount rate is at the heart of the controversy between the Chinese government and international environmentalists. China has a program which will convert large amounts of coal to clean gas. Sinopec is building a $20 billion pipeline to distribute this gas throughout China. Many engines will be required to drive the thousands of compressors in the pipeline. The gas will replace solid fuels burned in many residences. China believes that this cheap gas supply will result in eliminating the severe smog problem. The health of Chinese citizens today is being prioritized over worldwide health consequences fifty years from now.

There is no simplistic answer in choosing between poison ivy and tomatoes. The world deserves the more complex analysis explained at Sustainability Universal Rating System.

Details on the technical, commercial, and application information on the use of engines for greenhouses, pipelines, compressors, data centers and wastewater plants is available through a service described at GTRE Decisions.

Utility E-Alert Tracks Billions of Dollars of New Coal-fired Power Plants on a Weekly Basis

The 41F Utility E-Alert is issued weekly and covers the coal-fired projects, regulations and other information important to the suppliers. It is $950/yr. but is included in the $3020 42EI Utility Tracking System which has data on every plant and project plus networking directories and many other features.

DATE	HOT TOPIC HOUR AND DECISION GUIDE SCHEDULE *The opportunity to interact on important issues*
September 1, 2016 11:30am CDT	PacifiCorp Webinar 4 on back end NOx removal - Review of options from webinar 3 to determine suitability of catalytic filters, Sorbocal injection for ABS control, H202 with SNCR, in duct catalyst, raising air heater temperature and fan adjustments.
September 8, 2016 11:30am CDT	PacifiCorp Webinar 5 on front end NOx reduction - Review of options for NOx reduction including combustion modifications, reburn, SNCR, and optimization with review of previous presentations of Emerson, Doosan, Siemens and GE. A number of case histories, now being posted to PPAQD, will also be reviewed. Summaries of phone calls to end users may also be included.
TBA *Markets*	Food - Analysis of 12 separate applications within food and beverage with analysis of valve, pump, compressor, filter, analyzer and chemical options; impact of new technologies such as forward osmosis.
TBA *Markets*	Municipal Wastewater - Quality of pumps, valves, filters, and analyzers in Chinese and Asian plants; new pollutant challenges; water purification for reuse.
TBA *Markets*	Mobile Emissions -Reduction in CO, VOCs, and particulate in fuels, oils, and air used in on and off road vehicles; impact of RDE and failure of NO_x traps and the crisis in Europe created by the focus on clean diesel.