System integration insights: Oil and Gas
SI Insights: CFE Media spoke with representatives from some of the 2014 System Integration Giants to get their views on how the oil and gas market will evolve and what role their companies expect to play with automation and control system integration.
There has been very little time to reflect on the emergence of the U.S. as a world leader in oil production. Such has been the pace of growth in the market over the past three years. The race to extract and deliver oil and gas reserves from the U.S. Great Plains and into Canada had driven investment in new systems and retrofits to handle this market surge.
While economic and geopolitical issues are part of the equation, the emphasis for the system integration market is how to best assist its existing and emerging customer base with new solutions and new technology.
CFE Media spoke with representatives from some of the 2014 System Integration Giants to get their views on how the oil and gas market will evolve:
Dave Blaida, vice-president, Matrix Technologies, Maumee, OH (ranked #20 in the 2014 SI Giants):
"From our perspective, we're seeing a lot of upgrading of older facilities. They are processing heavier oils-Canadian crude, shale oil-and a lot of refineries not meant to handle that.
"In our experience, companies somewhat hesitant in investing in distributed control system (DCS) equipment before they absolutely have to. They're less apt to do that, and it has to be a hot cutover. Programmable logic controllers (PLCs) are a lot easier, and they are being upgraded as needed. It depends on the site, on the financial situation. It's very strategic.
"Outside of oil and gas, on the chemical side, we see a lot of upgrades happening in the consumer packaged goods (CPG) market. We're seeing PLC replacements in older technology. It's now 20-30 years old and starting to get to the end of life.
Jerry Smith, president of Integrity Integration Resources, Plano, TX (ranked #34 in the 2014 SI Giants):
"Down here what we've seen guys slowing down a little. It's not like people are canceling projects in last month or two, but we've seen quotes soften. What's happened has more to do with over-production than price of oil. I don't think we have enough space to store it and enough pipeline to transport it.
"Some of the markets are going gangbusters. At the end of the year, guys are trying to figure out budgets for next year, and guys spending at the end of the year.
Rick Rhoten, vice-president of domestic operations for Mustang Automation & Control, Houston, TX (ranked #2 in the 2014 SI Giants):
"Where we're seeing a lot of activity is in transportation. There's a significant amount of shale derivative activities and ethylene production coming on line, and there is a bottlenecking of existing facilities.
"We're seeing quite a bit of fertilizer activity. We're doing some projects with a key client that include greenfield expansion as well as control and safety systems upgrades at those facilities. A lot of these plants have been somewhat neglected over the years, and the clients are now making significant investments in these facilities.
"In the transportation area, there are a lot of pipeline activities. There are a lot of fast-track projects.
"A lot of these areas are trying to get production on line as quickly as possible. The client lacks resources from expertise and from the standpoint of standards, so we've got to rely on some of the background information. There are very challenging schedules. They are trying to get as much production on line quickly, but as for the ability to move the oil and the gas, a lot of these areas are fairly immature from an infrastructure standpoint."
Paul Galeski, president and CEO of Maverick Technologies, Columbia, Ill. (ranked #4 in the 2014 SI Giants):
"All of these first and second-generation DCS systems are at the end of life. We see about two-thirds of the systems degrading and about one-third have some upside. It's hard to quantify control system replacement as being an advantage,, but what we at Maverick try to do is go in and justify the project.
It's not just return on investment (ROI). You've got to look at the total cost of ownership. You've got to look at entire lifecycle. You've got to get people to buy in—the VP of operations, the plant manager—whoever is responsible.
"Anything that's mobile, moving further to the forefront. That's becoming more and more of a requirement."
Learn what System Integrator giants had to say about trends in system integration below.