• Safety considerations
• Production efficiency improvement
• Digital transformation
• Environmental concerns
• Innovative Manufacturing Techniques
The purpose of this article is to determine how these trends may potentially impact the valve industry.
Safety has been on the O&G industry leadership radar for decades. However, the disrupting events noted above have forced an enhanced focus that translated into thorough reviews of the industry’s safety practices including valve operation. There is a consensus throughout the industry that projects in general are not executed efficiently, most miss either cost or schedule targets and similar projects are engineered differently with numerous customized solutions. The International Association of Oil and Gas Producers (IOGP) initiated their JIP33 initiative in part to address the lack of standardization of specifications for specific applications that exist in their projects. The industry believes that by standardizing on the equipment used in projects regardless of the company’s engineering, procuring, and building practices, they will have greater probability of meeting cost and schedule targets and more importantly, achieve a reduction of safety risks. The JIP33 initiative may have significant consequences to the valve industry in that customized solution opportunities may diminish in numbers thus, reducing high profitability transactions for valve manufacturers.
As a consequence of the 2014 -2018 O&G crisis and subsequent reduction in qualified human resources many companies are struggling to manage their operations efficiently. Furthermore, due to the scarcity of qualified human resources numerous operators adopted run to fail maintenance practices leading to an increase in unplanned shutdowns. Oil and Gas operator concerns related to the above have pushed for innovative approaches to equipment maintenance including valves. In particular, O&G operators are more receptive to equipment with some level of artificial intelligence (AI) allowing for reliable predictive forecasting of potential failures, components at risk and timing of such failures. Valve companies would be best served to providing devices that guarantee reliability and consequently avoid or reduce the number of unplanned shutdowns.
The O&G industry is embracing the current wave toward digitization of their assets. They realize that truly automated operations if well designed could increase production reliability, reduce overall production cost, and increase safety as well as yields. There are concerns and needs that remain unmet including but not limited to the following list.
Clearly climate change is having an impact on O&G companies. As you know, the renewable energy market growth is beginning to make small yet appreciable inroads into the energy sector. To a degree, some O&G majors are seeking ways to reinvent their organizations and participate in the renewable energy sector whether it be solar or aeolic. Valve makers dependent on O&G based revenue may be negatively impacted by this trend as the number of valve units in solar and/or aeolic operations is a fraction of the number of units required in a traditional oil and/or gas production site. Additionally, O&G companies are looking for ways to reduce methane emissions in the oil patch. As the electrification of on-shore production sites develop we could expect a shift in the way valves are actuated. Clearly there is a developing trend to reduce the use of produced natural gas to drive pneumatically operated equipment including actuated valves. As a result of this trend the potential to automate valves with electric or electric/hydraulic actuation devices as opposed to pneumatic actuators may evolve. Valve manufacturing companies may wish to discuss this trend with their strategic O&G customers in order to align with their actuation strategy.
Finally, we envision an increase in the price of metals that will clearly impact material cost of all valve makers. Furthermore, the current shortage of human resources is also causing a negative impact on valve manufacturing cost. The abovementioned cost headwinds will put pressure on valve makers to find ways to reduce overall manufacturing cost to offset the current inflationary environment. Some valve makers are testing the waters with new additive manufacturing techniques to improve quality, increase first pass yield, and reduce labor cost. Note though that 3D printing is a nascent technology not fully adopted in the manufacture of industrial equipment. Thus, there are not many standards that would be applicable or acceptable by O&G companies. However, there is an ongoing effort with standards organizations including API to develop guidelines that would address additive manufacturing processes. Valve makers should evaluate additive manufacturing as it may provide a competitive advantage or at a minimum allow them to keep pace with this new trend.
In summary, the disruptive events of the past decade have distorted the valve industry playing field and subsequently, new market trends are taking form. In the O&G sector one may expect a continued focus on safety, an enhanced concern for the environment, and a tenacious drive to reduce cost and improve productivity. We foresee an increase in the appetite of the O&G industry for digitization of their assets, adoption of the digital transformation wave, and a push toward unmanned production operations. Furthermore, the O&G industry is looking to smooth the way for the application of additive manufacturing techniques by writing and publishing guidelines and/or standards. All of the above will definitely have an impact on the valve manufacturing industry. Valve makers must keep a close eye to these trends and develop appropriate strategic plans to capitalize on them.
About the Author
Before co-founding S&H Strategic Sales Consulting LLC and entering the consulting field in early 2020, Richard Santucci was the Global Key Account Director, O&G for Emerson Final Control (a business unit within Emerson Automation Solutions) and held the same position with Pentair Valves and Controls, a division of Pentair PLC acquired by Emerson Automation Solutions in 2016. Prior to Pentair Valves and Controls, Richard held several positions with Tyco Valves and Controls, including Vice President Latin America, leading all commercial and operational activities for the Latin America and Caribbean Region including sales, marketing, service and repair, valve automation and strategic planning activities. Prior to his Latin American post Richard held several general management, sales, strategic planning, and marketing positions with Tyco Flow Control. Richard entered the Tyco Flow Control organization as part of the acquisition of Varec Vapor Control where he initiated the Environmental and Biogas Business Unit. Richard also has extensive experience in the process control, instrumentation and analysis markets having held several sales and marketing positions with Teledyne Analytical Instruments. Richard holds a Bachelor of Science (BS) degree in chemistry from California State University, Los Angeles, and is fluent in English, Spanish, and Portuguese.