Surviving the crash in oil prices

The GE Oil & Gas Annual Meeting (AM) in Florence gives a window into the world of oil and gas where it is possible to discern the dominant trends impacting the industry. This year was all about the continuing fallout from the collapse in oil prices, how to drive out inefficiency and how to survive in the long run by focusing on innovation.

Lorenzo Simonelli, President & CEO of GE Oil & Gas, kicked things off by stating that the industry required unprecedented levels of flexibility and agility (Figure 1).

(Lorenzo Simonelli, President & CEO of GE Oil & Gas, briefed over 1000 attendees at the Annual Meeting that the answer to ongoing economic pressures was to find greater productivity via data, analytics and software.)

His answer was to find greater productivity via data, analytics and software. GE’s strategy is to use software development to add more automation, digitization, remote monitoring and integration to its own products as well as those of its partners within the industry.

“Every industry that is not bringing software to the core of its business will be disrupted,” said Simonelli. “The combination of software and machines has laid the foundation for a new wave of innovation — and the economic and environmental impact of industry and software cannot be understated. That’s why we at GE have been transforming into a digital industrial company.”

Simonelli noted that the company could not achieve this alone. He invited others to come together to develop in new ecosystems and partnerships to create more effective business and operating models. This message appeared to resonate with those in attendance.

What is particularly interesting in this is how GE has used the AM to navigate itself from being a turbomachinery supplier (albeit a major one) into a position of leadership within oil & gas despite being a relatively recent entrant to the market.

The company became a serious player in the sector in 1994 with the purchase of NuovoPignone. This provided it with compressor factories in Florence and Massa, and the ability to deliver massive LNG trains to projects around the world. Over the past decade, GE has expanded its oil & gas portfolio beyond turbomachinery to span the upstream, midstream and downstream marketplace. It now encompasses fields as diverse as oil platforms, subsea compression stations, drilling, surface control technologies, and measurement and control.

Accordingly, the scope of the AM has seen a marked change. This year’s event attracted over 1,000 executives from around the world, up less than 800 a few years ago. They came from all corners of the world, representing the entire spectrum of the industry to hear presentations from companies such as BP, Shell, Saudi Aramco, Chevron, Novatek, Amec Foster Wheeler, Technip, Maersk Oil, Columbia Pipeline Group, Woodside Energy, ExxonMobil Development, Welltec, GLNG Operations and Statoil.