February 2018 - McIlvaine Insights 51

WELCOME

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

Brief Insights
Large Combust, Flow and Treat Purchases by Offshore Oil and Gas Operators Will Accelerate Starting in 2019
Impact of IIoW Empowered IIoT on the Combust, Flow and Treat Market
Scrubber Adsorber Knowledge System Covers Industrial Gas Purification

Brief Insights

The Offshore Markets and IIoT webinar on February 28 is one of a long series of recorded webinars which include the recent Shale Gas webinar, the Refinery webinar and one a year ago on the broader Oil and Gas Market and the Impact of IIoT.

You can register for the offshore webinar at Free Market Webinars

View the Shale Gas Webinar at https://youtu.be/UxZCfMhBJ7k

View the Refinery Webinar at https://youtu.be/N0CgrGcfMAU

View the Oil and Gas Webinar at https://youtu.be/o7kJSXixFHs

Large Combust, Flow and Treat Purchases by Offshore Oil and Gas Operators Will Accelerate Starting in 2019

The offshore oil and gas industry even at its low point this year will invest over $150 billion. While total investment has been falling the investment in IIoT and Remote O&M has been increasing. With total investment moderately increasing through 2022 coupled with accelerated IIoT investment, this market will be significant for combust, flow and treat suppliers.

One reason it will be very important is that cutting edge IIoT and remote monitoring technologies are needed due to the remote surface locations of rigs and the difficult challenges of subsea operation.

Rystad Energy believes global offshore investments will bottom out at $155 billion in 2018, and then investments grow steadily year by year going forward. This growth comes from high offshore activity, driven mainly by an increasing oil price and companies' ability to cut costs to improve the profitability of their projects. These two factors are resulting in companies actually deciding to go through with more investments, compared to the last three years. Several large projects demanding significant investments in the upcoming years, with Mad Dog Phase 2, ACG, and Bonga Southwest as the most important. Another factor explaining the investment growth is the increased share of ultra-deep-water projects, defined as assets in waters deeper than 1,500 m.

At a country level, the picture is mixed. Both in the years before and after the downturn, the five most important countries, in terms of offshore investments, were the US, Norway, Brazil, Australia and the UK. These countries' offshore investments summed up to $155 billion in peak year 2014, nearly half of the global total. However, Rystad sees slightly different developments after the price collapse and going forward. Norway and Brazil follow the global trend, with investments dropping roughly 50% before recovering to about 70% of 2014 peak investments. The US and UK investments were hit a bit harder, down roughly 65%, and only managed to recover to 60% (US) and 42% (UK) of 2014 levels.

The market for guide, control and measure will grow faster than the total offshore capital expenses.

Choke Valves in Offshore Oil and Gas

The choke valve market ranges between $250 million and $400 million per year depending on the definition and where we are in the oil and gas cycle. A significant portion of choke valve sales are to oil and gas companies. The definition also has a major effect on the revenue determination. The terms choke, control and axial are used in different ways. With some definitions, the market is much larger than with others. Here are some ways the term is defined:

Flow path: Angle most important - if it is axial it is control, if it is angle it is choke.
Trim: If one type of trim is used it is most suitable for choke, if another it is for control.
Location: If it is extraction it is choke, if it is other applications it is control.
Valve type: For some valve suppliers "choke" is just one of a number of applications and not a type of valve.

With remote monitoring and IIoT evaluation of choke valve performance it is important that the relevant decisive classification of applications, valve types, and materials be clarified. This is an ongoing project. To view the questions and present status click on:

Choke Valve Decision Guide

Subsea platforms for oil and gas extraction provide a lot of advantages compared to floating fabrication - first and foremost in terms of cost savings and reduced environmental impact. The high-pressure pump is the heart of the Subsea Hydraulic Power Unit, required to work non-stop 24/7 with outstanding reliability.

Danfoss offers chemical liquid pump solutions designed according to the API 674 and 675 standards and optimized for subsea applications, operating smoothly at depths up to 3,000 meters. The pumps for subsea applications are delivered in Super Duplex. The compact and lightweight pump unit guarantees constant operation for six years without service and maintenance. The only lubricant needed is the pumped fluid that keeps the pump running subsea, cycle after cycle.

Subsea applications are characterized by limited space and an extremely harsh environment. In the Danfoss product portfolio you will find chemical liquid pumps fulfilling all requirements to subsea systems. The axial piston technology delivers powerful performance and reduces the pump size and weight to a minimum. The use of high-grade stainless steel and carbon-reinforced PEEK from surface to core of the pump ensures complete corrosion resistance when submerged.

To register for the February 28 webinar click on Free Market Webinars

For information on the Guide, Control, and Measure Market click on N031 Industrial IOT and Remote O&M

For information on the Oil and Gas Markets, Profiles, and Projects click on N049 Oil, Gas, Shale and Refining Markets and Projects

Impact of IIoW Empowered IIoT on the Combust, Flow and Treat Market

There is a sea change in the obtainable combust, flow and treat market. Those companies leveraging the Industrial Internet of Wisdom (IIoW) to empower the Industrial Internet of Things (IIoT) will generate both higher revenues due to higher margins per unit sale but also increased market share. An example would be condition monitoring at the dozens of BASF plants around the world. The process management system is built around use of Samson valves and E+H instrumentation. At the very least Samson and E&H have expanded their market share at all the BASF plants around the world. to the extent that the sales include edge computer software built upon product and process knowledge the unit sales are also increased.

Markets can be divided into four categories including the three traditional ones and a new one created by the sea change in the business environment.

· TAM or Total Available Market is the total market demand for a product or service.

· SAM or Serviceable Available Market is the segment of the TAM targeted by your products and services which is within your geographical or asset reach.

· SOM or Serviceable Obtainable Market is the portion of SAM that you can capture.

· WOM or Wisdom-based obtainable market is the bigger opportunity created by a sea change in the route to market.

Two pump companies will be substantially impacted by the sea change. One embraces it and one does not.

Revenues Before and After IIoW Empowered IIoT
Company	Before	After- Based on SOM	After - Impacted by WOM	After - Total
A	$$	$$$	$	$$$$
B	$$	$	(Loss of Market Share)	$

In this example two pump companies had equal sales before the sea change. After the sea change one company loses half its market while the other one doubles revenues. The unit revenues for Company A are up 50% ($$ to SSS). This is because the customers will buy from the company with WOM capability. Due to WOM edge computer and controls additions the revenues per unit of sales add another $ to the total.

The impact of IIoW will be more important than that of IIoT. Steps to leverage IIoW can be taken immediately independent of eventual edge computing process development. In fact the edge computing process management product will be based on IIoW initiatives. These initiatives include greater knowledge of how products present and future can improve specific processes for specific customers. This wisdom in turn is based on interconnection of people and knowledge.

The five-step program to leverage IIoW is found at www.mcilvainecompany.com.

Scrubber Adsorber Knowledge System Covers Industrial Gas Purification.

Here are the headlines for the February Scrubber Adsorber newsletter which is part of the Knowledge Network described at 2ABC Scrubber/Adsorber/Biofilter Knowledge Systems

SCRUBBER/ADSORBER
^NEWSLETTER

February 2018

No. 524

Table of Contents

MARKETS

· Detailed Forecasting of IIoT by Country and Company in the IIoT and Remote O&M Report

IRON AND STEEL

· Tokyo Steel's Tahara Works in Japan has Placed an Order for One NextGen^® System for their DC EAF-Consteel^®

· ArcelorMittal Kryvyi Rih Wins All-Ukrainian Environmental Competition

· PSC ArcelorMittal Kryvyi Rih Awards SMS Group a Contract for Two Secondary Metallurgy Plants and Two Continuous Billet Casters

ODOR CONTROL

· Maintenance the Key to Maintaining Performance of Pig House Scrubbers