By Steven Sonnenberg, President, Emerson Process Management
It's no secret the energy industry is grappling with a range of challenges, from fluctuating prices to unpredictable players and policy shifts. What many industry players are missing in this chaotic swirl are new opportunities to recover or save hundreds of billions of dollars in "dead money" in the process, in turn improving their return on assets and delivering improved shareholder value.
This week's IHS CERAWeek conference will be closely watched as the industry's thought leaders evaluate potential winning strategies in today's challenging market. Emerson (NYSE:EMR) will have a strong presence at the show, where we'll present a simple but powerful message: the companies who have the best control over their own operations are those that are best positioned to survive and thrive in this new era of energy uncertainty.
It's a huge opportunity, with dozens of potential sources of inefficiency and waste in a large plant, ranging from excess energy consumption to inefficient maintenance practices, unnecessary repairs and overstocked spare parts. With a strategic approach, the latest technologies and expert help, though, these challenges can be quickly identified and rectified, with return on investment often realized within weeks or months. Emerson is helping forward-looking companies to realize substantial boosts in performance, reliability and safety today.
Research from sources like Solomon Associates and Independent Project Analysis, Inc., shows that leaders performing in the Top Quartile, or the top 25 percent of their peers, can realize dramatically reduced costs and increased operation time, reliability and safety. The difference between Top Quartile Performance and bottom-quartile performance is staggering, with costs often cut in half or more for those at the top. The industry is wasting staggering sums - an estimated $430 billion - through poorly executed construction projects. Process industries could save an additional $50 billion in wasted maintenance, and more than $10 billion in energy costs.
For energy industry players, these improvements mean increased flexibility to navigate the turbulent market, and freed capital that can support the bottom line. For both companies and investors, these qualities can equate to more predictable returns.
Top Quartile Performance starts with deploying 'pervasive sensing' technologies throughout a facility… the foundation of an Internet of Things strategy. Integrated with process control instruments and software, this advanced automation provides real-time insight into production and asset health, with analytics to help operators model and execute improved operating strategies with dramatically improved accuracy. Production is improved, equipment damage is prevented and safety incidents are averted. Companies applying these game-changing technologies as a core business strategy enjoy best-in-class performance amongst their peers.
Whatever your role or stake in the energy sector, you will want to keep a close eye on news coming out of IHS CERAWeek, and on industry performance initiatives like Emerson's Top Quartile Performance. We certainly expect to hear a lot of discussion on factors outside of the industry's control, but future industry leaders will be focused on the areas where operators can determine their own fate.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Employee of Emerson
Additional disclosure: N/A