August 2016 - Water Market Insights 199

Maximizing Flow Control and Treatment Revenues in the Oil and Gas Industries

Flow control and treatment companies such as Flowserve who relied on the oil and gas industry for more than one-third of its revenues are recalibrating their market strategies to deal with capital reduction expenditures by their clients which approach 50 percent. A webinar on August 25 will invite discussion as McIlvaine proposes routes to both maximizing future oil and gas revenues and protecting against future swings in the market.

Position	Build up Asian position
Execution	Differentiate from competitors and focus on total solutions
Adaptation	Pursue the fast growing niches
Concentration	Focus on products offering lowest total cost of ownership
Creation	Help create a format where customers can easily determine lowest total cost of ownership

In general, there will be continued growth but with major fluctuations as oil and gas companies over compensate in both up and down markets. So the execution strategy includes a game plan for the down cycles. Liquid fuel usage in 2015 was under 200 quadrillion Btu. By 2040 world usage will be close to 250 quadrillion Btu or a 25 percent growth rate for the 25 years. Gas consumption will grow from 130 quads to 210 quads for a growth of over 60 percent during the period.

Part of the adaptation strategy is to focus on the high growth areas both by geography and process. Non OECD Asia is expected to account for 55 percent of the world’s energy increase in the period to 2040. The production of natural gas plant liquids is expected to increase by 10 million barrels per day compared to gains of less than 3 million barrels per day for refined oil. U.S. production of non-conventional gas including shale gas, tight gas and coal bed methane will increase by 10 trillion cubic feet. So this will be a major opportunity for flow control and treatment companies.

The expense of maintaining a valve used on an offshore oil rig is considerably higher for the same service as a valve used in a land based application. Adaptation strategies take advantage of this fact by creating valves with higher prices and margins which can be justified based on total lowest cost of ownership

The world’s relevant information is doubling every few years while the individual using conventional decision making tools has a fixed ability to absorb information. This leads to two opportunities for flow control and treatment suppliers. One is in adaptation and one is in creation. The adaptation strategy dictates expanding the product line to provide total solutions and operational support. The creation strategy involves supporting companies such as McIlvaine who are providing free Decision Guides to oil and gas companies to help them make decisions based on total cost of ownership. This includes more than just the evaluation of existing products but the ability to accurately evaluate the advantages of new products.

China has to balance the health and welfare of its citizens today with longer range impacts of climate change. McIlvaine has a number of services which shed light on the resolution of this difficult choice. One is N049 Oil, Gas, Shale and Refining Markets and Projects. In this service, McIlvaine is following the very ambitious program in the northern mining regions of China to convert coal to clean gas and transport it around the country. Sinopec is proceeding with a $20 billion pipeline. Various gasification projects are in the planning or construction stage. There has been international criticism of this program due to its climate change implications. Since smog in major cities has been very high on the list of citizen complaints, a program to economically reduce it has considerable support. The clean gas will be piped to cities around the country and will replace dirty fuels presently burned in residential, commercial and light industrial plants. New research substantiates this argument.

"Coal and other dirty solid fuels are frequently used in homes for cooking and heating," said Denise Mauzerall, a professor of civil and environmental engineering and public and international affairs at Princeton University. "Because these emissions are essentially uncontrolled they emit a disproportionately large amount of air pollutants which contribute substantially to smog in Beijing and surrounding regions."

Households account for about 18 percent of total energy use in the Beijing region but produce 50 percent of black carbon emissions and 69 percent of organic carbon emissions, according to a research team from institutions including Princeton, the University of California Berkeley, Peking University and Tsinghua University. In the Beijing area, households contribute more pollutants in the form of small soot particles (which are particularly hazardous to human health) than the transportation sector and power plants combined; in the winter heating season, households also contribute more small particles than do industrial sources. The researchers said the high levels of air pollutant emissions are due to the use of coal and other dirty fuels in small stoves and heaters that lack the pollution controls in place in power plants, vehicles and at some factories.

This syngas program would eliminate much of the smog problem. Its impact on net CO₂ emissions will be smaller than what is claimed by the international opposition. The residential heating sources are inefficient. So they emit more CO₂per unit of energy produced than will a new gas furnace replacement. Another argument against the initiative is the impact on water resources in the mining areas. McIlvaine has done extensive analysis of water related activities in China. All of these plants will be equipped with zero liquid discharge (ZLD) systems. This activity is tracked in N020 RO, UF, MF World Market.

In order to make the best decisions, China has to weigh the relative harm of CO₂, NO_x, PM_2.5, water depletion and other resource impacts. It also has to weigh present vs. future values e.g. smog today vs. climate change tomorrow. McIlvaine has a common metric to weigh all harm and good Sustainability Universal Rating System.

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

· MHPS receives Order for Steam Turbine and Generator Set for Cogeneration Facility expansion at Miaoli Plant in Taiwan

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*
August 25, 2016 10:00am CDT *Markets*	Oil, Gas, Refining - Supply and demand; impact on flow control and treatment products; regional impacts e.g. subsea in North Atlantic vs. shale in the US vs. Oil Sands in Canada.
September 1, 2016 11:30am CDT	PacificCorp 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	PacificCorp 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.