Energy Voice spoke with GE’s Oil and Gas president Lorenzo Simonelli about how business and the industry is coping. Hundreds of people will be attending the conference today, including BP’s Bob Dudley, who will be hosting fireside chat. Check back tomorrow for more.
Q. A year ago GEAM was held when oil was skimming $27 barrel, how has the sentiment shifted since then?
A. Things have certainly moved on and the industry has shifted its focus. It’s not just about increasing production, it’s about maximizing productivity and lowering operating costs while still maintaining flexibility. Companies are looking for reliability and efficiency, and that’s happening, courtesy of digital technologies and disruptive business models. The pace of technology-driven change is really transforming our industry.
Q. The whole industry took a battering in 2016. How has GE Oil & Gas managed to roll with the punches, and what are you doing differently to meet changing customer demands?
A. We have said it many times: this is a cyclical industry with peaks and troughs, and for the past two years, the industry has been stuck in the trough part.
We’ve been focusing our efforts on what we can control and how we can make a real difference for our customers. Our business has been evolving rapidly and we’re introducing new business models and partnerships. The industry has its challenges, but it is on the road to recovery.
For me, it’s about helping customers find ways to get the most from their assets and operations. The performance-based service agreement we recently announced with Transocean is a good example. We’re providing monitoring and maintenance services that will result in improved equipment reliability and availability, reduced downtime, lower costs, better efficiency, optimized production and increased safety. Being prepared to do things differently really can make businesses stronger for the long term.
Q. What were the silver linings that emerged for the industry despite the challenges in your opinion?
A. In my experience, hard times drive innovation and in many ways the downturn has acted as a catalyst for real, positive change. Legacy structures have been forced to evolve and industries have had to transform, often for the better.
This downcycle has brought us closer to our customers. Traditionally, there has been a more transaction-based relationship between customers and vendors, but we’ve been disrupting that approach. We’re now collaborating and creating solutions together, as partners. The key is to remain focused on finding new, smarter ways to meet customers’ needs, no matter what conditions the market throws at us.
Q. GE has been talking about how digitization will redefine the industry. Do your customers share that view?
A. Very much so. As I’ve said, the pace of change has revolutionized the way customers do their business and the types of solutions they’re looking for. They are becoming increasingly aware of the benefits of harnessing the data that their operations create. Their appetite for digital solutions is growing and that’s clearly demonstrated by some of the tremendous partnerships we have been embarking on with some of the biggest operators in the world today. For example, in November, BP announced a new pilot program that would put GE’s Plant Operations Advisor (POA) software in one of its largest offshore oil production platforms in the Gulf of Mexico. The solution is designed to improve efficiency, reliability and safety of BP’s production operations and subject to the pilot’s success, the potential is there for POA to be deployed to BP facilities around the world. And that would be our biggest deployment of our Predix-powered APM technology to date.
Q. We’ve seen other industry leaders adopt mantras or catch phrases like ‘Doing business lower for longer’. What has leading in the downturn taught you?
A. It has underlined the fact that we can expect to go through many more cycles but we need keep focusing on what we can control. We need to recognize that this is the time for innovation and collaboration. Disrupting the traditional customer-vendor relationship is at the core of that. It has taken some time for the industry to truly collaborate and create symbiotic relationships, but we are getting there.
Q. Two years ago the sector was all about ‘bespoke’. What do you think will be the driving force or buzzword in this new era for the sector?
A. As an industry, we have made monumental strides in digital innovation and integration, but it’s still the tip of the iceberg. Disruptive innovation is going to continue driving new digital technologies and business models that create value for operators and the supply chain. Disruption comes in many forms: human, industrial and now digital … we’re working across all three.
Q. Where is GE Oil & Gas looking to grow in 2017?
A. We know the environment in oil and gas will remain challenging and overall activity levels are still on the low side, but we’re seeing plenty of indicators that things are stabilizing. No matter the price of oil and gas, we’re a trusted partner to our customers.