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Fueling the Future — Q&A with Lorenzo Simonelli

Beyond headlines about oil prices, innovation is helping to bring about a more efficient oil and gas industry.

 

The oil and gas industry is experiencing a transformation, one that is broader and more long-term than what you read in the headlines about market swings. There’s a fundamental shift underway toward more innovative, efficient practices across the whole oil and gas value chain.

A key focus of the GE’s Oil & Gas Annual Meeting in Florence this week will be on innovative responses to these challenging, cost-constrained times, as well as the need for more sustainable energy development.

“Global energy demand is growing, requiring greater efficiencies alongside consideration of new energy sources,” says Lorenzo Simonelli, president and CEO of GE Oil & Gas. “As a global oil and gas industry leader, we are designed for a world of complex resources because we have a unique capability to accelerate the development of technology-leading energy solutions.

During an interview, Simonelli also discusses the importance of establishing local partnerships when investing globally, as well as the potential of the Industrial Internet in driving a more efficient and sustainable oil and gas industry:

 

The Industrial Internet promises to transform the way humans and machines communicate and create value. What’s the potential in the oil and gas industry?

The convergence of industrial machine, data and the Internet — termed the Industrial Internet — has the power to lift machine productivity, improving reliability and uptime, and bringing down costs.  The future revenue potential from these solutions is immense. By 2020, the total technology spend on industrial Internet is estimated to reach $514 billion, creating nearly $1.3 trillion in value — which translates into to a return on investment of around 150 percent.

At GE Oil & Gas, Industrial Internet technologies underpin our technology and service strategy. More data means more control, which means less unplanned downtime. And the oil and gas industry, where assets and technology are often remote and hard to access and downtime is costly, is a particularly important market for this.

These new software technologies range from managing networked fields in artificial lift, to “intelligent pipeline” software and analytics, to underwater remote monitoring systems. For example, we have connected gas turbines to scanners with sensors and software that monitor and collect data on the health of different parts of that machine. A cloud-based Internet platform then analyzes this data through advanced analytics involving historical data points to provide machine operators and maintenance engineers with real-time information, which is used to schedule predictive maintenance checks that improve machine efficiency as well as prevent downtime to improve overall productivity.

 

GE has been expanding its investment in developing economies around the world. How important is it to establish local partnerships?

For GE, localization is a strategy, separate and distinct from local content compliance. Our approach to localization focuses on capacity building — in human capital growth, supply chain development and partnership with local organizations and businesses for talent and infrastructure development. As a global company, GE has the opportunity to have a well-rounded economic impact on the regions where we operate, enabling growth in the communities in which we work, while increasing our productivity. And our commitment to localization is paying off.

It pays off for the economy.

In Algeria, we helped establish ALGESCO, which plays a vital role in maintaining the country’s power generation fleet, servicing everything from gas and steam turbines, to centrifugal and reciprocating compressors, to expanders. Through this we are also helping to prepare Algerian professionals for careers in the energy sector, with a dedicated learning center that can train up to 250 people annually, giving local talent an opportunity to lead.

It pays off for communities.

In the UAE, a key market for our turbo-machinery technology, we’re working with ADNOC, ADGAS and GASCO on a range of industry challenges. And at the same time, we are building the skills of young professionals, building bridges between academia and industry, and promoting a culture of innovation, including the Ecomagination Center, with its focus on sustainability.

And it pays off for us.

In Africa alone, GE has tripled its revenues since 2011, and we now have more than 2,300 employees in 30 countries. This is being repeated across all the regions in which we work, and we are seeing a positive impact in communities and we continue to forge productive partnerships with local organizations.

 

A big focus of the summit is on sustainability. How important of a role will technology and innovation play in achieving more sustainable energy development?

Energy is a fundamental need – powering lives and driving economies. But in recent years there has been a growing awareness of the impact that energy production activities have on the environment.  Simultaneously, global energy demand is growing, requiring greater efficiencies alongside consideration of new energy sources.

As a global oil and gas industry leader, we are designed for a world of complex resources because we have a unique capability to accelerate the development of technology-leading energy solutions. And at GE we fundamentally believe that the more collective insight we bring to the table, the more likely we are to solve pressing problems.

This is what our partnership with Statoil — announced last week — is designed to harness. We will use our collective knowledge and talent to drive innovative, industrial responses to some of the greatest challenges facing energy production, including flaring, CO2 and methane emissions and water usage, while optimizing business operations.

Importantly, at the same time we want to set the tone for more intra- and inter-industry cooperation. It’s good for industry to continue to push innovation forward by developing new and more efficient means of energy production. Creating solutions that drive efficiencies in our operations, lower our cost of production and support the long-term sustainability of the industry while reducing our overall environmental impact are critically important. We hope our leadership on these issues encourages others to continue to pursue solutions in this space.

(Top image: Courtesy of Arne Hoel)

 

Lorenzo Simonelli is President and CEO of GE Oil & Gas.

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