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09th March 2018

Oil and Gas Technology spoke to Siemens’ senior vice president for oil and gas strategy, Thomas Sparks, about his company’s increasing footprint in the sector

Oil and Gas Technology spoke to Siemens’ senior vice president for oil and gas strategy, Thomas Sparks, about his company’s increasing footprint in the sector

Thomas Sparks, Senior Vice President for Oil and Gas Strategy, Siemens
Thomas Sparks, Senior Vice President for Oil and Gas Strategy, Siemens

Oil and Gas Technology (OGT): How does the Dresser Rand acquisition strengthen your position in the oil and gas sector?
Thomas Sparks, Siemens (TS): It’s part of our oil and gas strategy which we have followed for a few years already. We started looking at the upstream market and how we could create value there. At that point in time we also looked at our portfolio. We definitely have a strong electrical portfolio, we also have a strong automation portfolio and digital portfolio, and we also had some rotating equipment. But there were some pieces missing, especially if you go to offshore; there were aero engines, and that’s why we acquired, in late 2014, Rolls Royce aero engines for the industry in order to complete our portfolio there.

Then we also acquired Dresser Rand, a wellknown supplier to the industry, especially in the upstream market, this completed our portfolio in terms of rotating equipment, electrical, automation, digital portfolios, and now it is about bringing it to the industry, into the market. 

OGT: How has the market downturn affected that strategy? 
TS: We acquired these before the market downturn, which was interesting, but our strategy took over, and now with this portfolio we can address a much broader offering to the industry. For example, if you look at an asset like an FPSO or an LNG liquefaction plant, we have a complete, integrated portfolio to offer to create the right value for our oil and gas clients.

It’s a continuous strategy that we are applying. Our Topside 4.0 is demonstrating the strength of integrating rotating equipment, electrical equipment, automation, and the digital stuff, and bringing our learnings from other industries and applied technologies towards the oil and gas industry to cope with the challenges in the lower for longer oil price environment.

OGT: One of the biggest problems the sector has is obtaining value from data. How are you helping in this area?

TS: They understand that they need to do things differently. In the past when oil prices were high, there was not a lot of pressure to work at efficiency or become more competitive. It is just as easy to dig a hole into the ground, oil was flowing naturally, and they were just processing it and selling it. But nowadays with the rise of unconventionals we have a new competitive situation, we have a new oil price environment, and we must  look at how can we lower the cost.

Here the oil and gas industry can learn a lot from other industries because it was a given in other industries, it was in the automation industry, discrete manufacturing, and healthcare. For them it was a continuously  competitive situation and now that has also started in the oil and gas industry. This is where the industry needs to adapt, and you can’t adapt overnight. It’s not just an overhaul where you go to your doctor and say, ‘hey, please help me I need treatment’. It’s a cultural change because the culture was there in the past in the oil and gas industry, and now we need to change the culture. Changing the culture is not so easy with the sort of large companies that exist in the oil and gas industry.

OGT: oil and gas companies are increasingly looking for solutions not products. How are you addressing this need?
TS: Correct. But what you also need to understand is that they need to be an integrated part of solving these challenges, because the operation expertise lies with them. We are definitely an integrated solution provider, but this requires a new form of collaboration in going forward. That means we need to work very much closer in the early design phase with the oil and gas operators, with the IOCs, with the oil field service company, in order to develop the right solution from the start.

Here, digitalisation brings a lot of value if you use it in a digitised world. And this is where you need the software because if you create your integrated solution in a virtual world, that means you can also test it in a virtual world. And that means you connect the process equipment in a virtual world, together with the equipment, and therefore then you can see if it is operating to the needs, and then you can still carry out changes in the virtual environment where it’s not as costly as if you would have the physical equipment already in place.

Then you can go in to the manufacturing of your asset, and you can also go in to the production of your asset, maintaining your physical asset and your virtual equipment, what we call the digital twin.

OGT: The digital twin is one of the latest buzz words around industry. What does it really mean?
TS: No oil will come out of the digital twin. The use of the digital twin needs to be a decision by the operator that he really wants to run his processes in the future on a digital twin. That means you need to design with the digital twin from the outset, and then create a physical twin from it while maintaining the digital twin. Then you can always compare whether the physical equipment is behaving like the twin, and you can draw the analytics from it.

OGT: What are the challenges in operating these new business models?
TS: It is a challenge today, let’s be very honest with this, because everybody is obsessed about their data, and if you’re not used to sharing data or allowing this because you don’t see the value from it or you haven’t experienced the value from it, then it is currently hindering its value. But it’s something which you can overcome.

Other industries also have to overcome it, and there are some industries which are at least as critical as the oil and gas industry. Look at the aerospace industry. These things are also connected, and you’re flying with these connected devices. There are measures in place and there are also some solutions and we, at Siemens, have these solutions to reduce vulnerability in regard to cyber security.

OGT: What about data itself, is that a challenge?
TS: It’s about who owns the data, and that is a discussion you need to have. Some companies want to have data only on their side, other companies want to share this data, maybe some other companies want to share this openly. There will be some data that is so important you maybe don’t want to share, but there is some other data you can share which creates value.

It’s a journey where you enter into new collaboration, new trusted models of working together. It’s a journey and it will not change overnight but you need to get started. This is what we are doing and what we are offering,it’s putting all these new solutions out there and introducing us to the market. 

OGT: Can you tell me about your strategy for investment?
I guess it’s like every company strategy. You have a strategy in place, you have gap analysis in place, we call it a wish list, and then you must look to fill these gaps. The wish list is like Christmas, so sometimes you get your wishes and sometimes you don’t. Sometimes it depends on the availability of these opportunities, sometimes people also don’t want to dance with you and that’s also what you need to accept.

But this is part of every strategy. It’s  usual part of every company out there, and we are regularly reviewing it, and need to adapt it from time to time because market segments are changing. It is always watching if the opportunity is there, and then if the opportunity is there we need to get the people to support it.

OGT: With your background in automation and digitisation, Siemens should be almost in a unique position to take advantage of these business trends?
We can bring a lot to the industry in demonstrating that it is existing technology in other industries, so it’s something that is already there. There’s not a lot of R&D investment you need to spend in developing
and bringing it, it’s just how can you apply it to the market. And here we have understood that the market has changed, that the market has adapted, that the market is more open to apply these technologies. Now it’s
about engaging with the customer together in a collaborative way saying, ‘okay, where do you want to start?’ Because not every customer is the same, they have different needs. Not every region is the same, and, as you know, also not every oil field is the same.

Therefore, our solution needs to be adapted, and then it’s just making it happen. But there needs to be the commitment from the customer and the willingness to invest in new technologies from other industries.

We have stepped up to provide integrated solutions and not just products. Definitely we like to sell products, so that’s part of our strategy, but we need to also understand that the industry requires integrated solutions and requires a partnering model in order to bring our products into these markets, and that’s part of our strategy.

OGT: How do you see the industry developing over the coming years?
I believe the industry has realised that this is not going away, and that it needs to change things it has been doing in the past. And I think that has been accepted also on the C-level and organisations are changing towards these new environments. They are bringing in new expertise,diversity is a big topic, where you need to bring new talent in, you need to bring in different thinkers, you need maybe to partner with different companies than you have been in the past.

I think the oil price environment is here to stay, lower for longer, and I do see that companies are adjusting to this environment. This is a huge opportunity for the industry to become more efficient, to get more competitive, and also work on really challenging tasks for society which are out there because also we have to think about preserving our environment, so we need to make sure that whatever we are spending, whatever we are consuming, we’re doing it in a way which is sustainable.