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GE Energy
GE © 2010 – All Rights Reserved
Rice Global E&C Forum Monthly Roundtable
January 22, 2010 | Houston
A perspective on managing marketchanges and planning for the future
GE Energy
GE © 2010 – All Rights Reserved
Topics
2 /GE © 2009 – All Rights Reserved
• Oil & Gas Industry Environment & Market Realities
• The response ... Discipline & Investment for the Future
GE Energy
GE © 2010 – All Rights Reserved
Cost indexed2000=100
50
100
150
200
250
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
O&G industry capital cost indices
Exploration & Production
Refining/ Processing
(12%) vs. 2008 peak
(7%) % vs. 2008 peak
Q3 2008
Q3 2008
Source: Cera
Deflation ... Market has reset
120
125
130
135
140
145
150
200020
0120
0220
0320
0420
0520
0620
0720
0820
0920
10
O&G
Mboe/d
Source: EIA
Demand for hydrocarbons has softened
Spare capacity increased
Economic volatility ... investment decisions
But.....hydrocarbon demand still trending upward..........
GE Energy
GE © 2010 – All Rights Reserved
• Cheap oil is over … with price volatility
• Declining fields - 34% avg. oil recovery … 1% more recovery yields 3 yrs. of production
• New fields remote … new geographies
• End of easy oil … Sour reserves need CO2/H2S handling ... complex reservoirs
• CO2-EOR offers early opportunity for carbon capture & storage
Projected oil demandMbbl/d
20
60
100
120
Mbbl/d
20
60
100
120
‘08 ‘10 ‘15 ‘20
3.5 X Saudi Arabia
1 X Saudi Arabia
10 mbpd35mbpd
Change is Constant ... changed growth
GE Energy
GE © 2010 – All Rights Reserved
Middle East & North East Gulf
Sub SaharanAfrica
Asia Pacific
North America
Russia/CIS
Latin America
Europe0
2,000
4,000
6,000
Australia and Iraq will play a key role Turbomachinery related additional
oil & gas capacity (project start up 2012-2016)Kboe Deep water
Shallow waterOnshore
Total 26,838 Kboe
Source: PFC Energy, GE O&G internal analysis
Australia … 31%…mainly offshore
Iraq … 29%…only onshore
GE Energy
GE © 2010 – All Rights Reserved
Monetize stranded gas … Australia LNG
Australia
24
76
2009 201620
100
MTPA
77
Qatar
91
2020• Access to markets …. Asia natural gas demand … +117% 2005 to 2030• Environmental and regulatory sensitivity• Modules technology … restricted local labor
Source: DOE EIA Outlook – May 2009
Natural gas monetization… 90 TCF proven reserves
Aspiration to be the major LNG exporter in 2020
GE Energy
GE © 2010 – All Rights Reserved
• Oil revenues crucial to rebuild infrastructure
• IOC quickly moving … no fully fledged operating base yet
• Technology upscale
• Security constraints
• Need solid EPC partnership for execution
From 2.4 to 3.3 mbpd by 2012 … targeting 6 mbpd by 2019
Iraq … a key platform for growth
8
GE © 2010 – All Rights Reserved
Market implications of fiscal stressGovernments driving markets
$ Financialassistance
Industrializednation targets
Developingworld targets
Industrializednations
Developingworld
Efficiency
Stimulus Spending
Energy Security
Jobs
Emissions
Green House Gases
Open R&D
Open Intellectual Property
GE Energy
GE © 2010 – All Rights Reserved
GE Oil & Gas …. Drilling &Production
LNG &Pipeline
Refinery &Petrochemical
GlobalServices
• Supporting more than 1,000 customers in 115 countries
• Technology and innovation heritage
• Broad and deep domain expertise
IndustrialPower Gen
PipelineSolutions
GE Energy
GE © 2010 – All Rights Reserved
Industry and Gov’t awards Customer awards
EHS excellence … it’s the way we work
Safety Leadership and 1 Million Work Hours awards …
• 5 sites with 5 years and 1 Million + hours
• Zero days away from work
ISO 14001
GE Energy
GE © 2010 – All Rights Reserved
Complex Business … Built on Operations Discipline
• Costs Rationalized
• Risk Management
• Execution Efficiency
• Process Driven
13
GE © 2010 – All Rights Reserved
Deliver total quality on products …Tech investments …$100M/y for the next 2 years
Resulting in reduced cycle time … and increased completeness
Quality compliance …2x quality resources
Reduce variation …Product structuring
Meet cost targets …collaborative costs workouts
15
GE © 2010 – All Rights Reserved
Regionalization …Local resources, empowerment & community outreach
Commercial Operations Local execution … shops
• Application Engineers & Commercial Managers deployed regionally
• More direct customer interaction and project development
• New hires & experienced talent
• Doubling Service Center network over 5 years … US, Qatar, Algeria
• Repair time <30% in 2 yrs… Lean
• Technology… Laser cladding …Renewalloy™ … Modular exchange
13 Sales Regions
9 CO/AE Hubs
16
GE © 2010 – All Rights Reserved
• Almost doubled capacity in 3 years
• Located in 24 countries
• GE vs. 3rd party mix shift ... bringing more service in house
• Doubled training budget in 2009 vs 2008
• Launched Technical Academy …… new hands-on training
• Training path by skill & level … structuredcertification program
Expertise in the fieldField Service Engineers
1.8x
(# of GE FSEs)
Training & development
(Training Khours)
‘09‘08
94 Classroom
Hands-on
Site
14x
‘09‘082007
O&G
GSI
17
GE © 2010 – All Rights Reserved
Adding Technology Experts
Disciplines:
• Combustion
• Composite Materials
• Advanced Sensors
• CFD
• Power Density
Science
… Plus access to broad GE resources
Products
Disciplines:
• Drilling Systems
• Subsea X-mas Trees
• Rotating Machinery
• Electrification & controls
• Pipeline inspection tools
Adding chief engineers
Systems
Disciplines:
• Drilling Operations
• Flow Assurance
• LNG
• Pipeline
• Refineries
Adding specialistsAdding scientists
18
GE © 2010 – All Rights Reserved
Sharing expertise & developing talentCollaborating with Academia
& Industry Partners
•Enhancing rotor dynamics analysis and performance
•Optimizing manufacturing techniques and material selection
•Improving testing capabilities for increased equipment reliability & safety
Oil & Gas University
•6 months technology & leadership program for customers
•Now in it’s 9th edition …. over 100 participants from around the world
Addressing oil & gas industry challenges together
20
GE © 2010 – All Rights Reserved
Service Technology: Remote Monitoring & Diagnostics
e.g., 10% turbocompressor efficiency in brown fields
• RM&D• UCP data download• Site visit
Eng assessmentintegrated performance
asset EnhancementUpgrades for entire train
Recommendation• improved materials• advanced aerodynamics• Re-staging
&
Compressor Gas Turbine
HP
LP
dataMOnitoring
Production data analysis to tailor upgrades … MO.R.E.
GE Energy
GE © 2010 – All Rights Reserved
Investing for the Future: Technology
LNG ... large heavy duty gas turbines
1st subsea compressor - Blue-C™
Gas storage …Integrated Compressor Line - ICL
World’s largest LNG project …7.8 MTPY capacity
Seal less, oil free compressor …zero fugitive emissions
Total
Qatar Petroleum +
Validating a 12 MW subsea compressor for Ormen Lange
StatoilHydro
Access to $6.0B of research & development yearly
GE Energy
GE © 2010 – All Rights Reserved
Green Technology
~50% of R&D focused on ECO-solutions
High pressure CO2sequestration
CO2 Capture for Gorgon LNG
Chevron
Advanced Centrifugal pumps for Enhanced Oil Recovery …using compression technology
1st 540 bar CO2reinjection pump
Petrobras
Concentrating Solar Power & other solar thermal technologies
SteamTurbines
Acciona
GE Energy
GE © 2010 – All Rights Reserved
Results for the IndustryBrazil … Caju’ YardItaly … Avenza Yard
• Exported 40+ yrs module design & engineering expertise to Brazil in 2004
• Built 200+ modules ... most recently P56/57 for Brazil and Kashagan HP barges
• Developed ability to replicate construction locally
Fully capable to construct locally
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