GE Energy Rice Global E&C Forum Monthly Roundtable A perspective on managing market changes and planning for the future January 22, 2010 Houston
Topics GE Energy Oil & Gas Industry Environment & Market Realities The response... Discipline & Investment for the Future 2 / GE 2009 All Rights Reserved
Deflation GE Energy... Market has reset Cost indexed 2000=100 250 200 O&G industry capital cost indices Exploration & Production Q3 2008 Demand for hydrocarbons has softened Spare capacity increased Economic volatility... investment decisions 150 100 50 Refining/ Processing 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (12%) vs. 2008 peak (7%) % vs. 2008 peak Q3 2008 Source: Cera 150 145 140 135 130 125 120 But...hydrocarbon demand still trending upward... Mboe/d O&G 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: EIA
Change is Constant... changed growth GE Energy 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 CO 2 /H 2 S handling... complex reservoirs CO 2 -EOR offers early opportunity for carbon capture & storage Mbbl/d 120 100 Projected oil demand 35 mbpd 10 mbpd 3.5 X Saudi Arabia 1 X Saudi Arabia 60 20 08 10 15 20
Australia GE Energy and Iraq will play a key role Kboe 6,000 Turbomachinery related additional oil & gas capacity (project start up 2012-2016) Iraq 29% only onshore Australia 31% mainly offshore Deep water Shallow water Onshore 4,000 Total 26,838 Kboe 2,000 0 Middle East & North East Gulf Sub Saharan Africa Asia Pacific North America Russia/ CIS Latin America Europe Source: PFC Energy, GE O&G internal analysis
Monetize GE Energy stranded gas Australia LNG Natural gas monetization 90 TCF proven reserves Aspiration to be the major LNG exporter in 2020 100 Australia 91 MTPA Qatar 77 76 24 20 2009 2016 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
Iraq GE Energy a key platform for growth From 2.4 to 3.3 mbpd by 2012 targeting 6 mbpd by 2019 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
Market implications of fiscal stress Governments driving markets $ Financial assistance Industrialized nation targets Industrialized nations Developing world targets Developing world Efficiency Stimulus Spending Energy Security Jobs Emissions Green House Gases Open R&D Open Intellectual Property 8
GE Energy Oil & Gas. Drilling & Production LNG & Pipeline Refinery & Petrochemical Industrial Power Gen Pipeline Solutions Global Services Supporting more than 1,000 customers in 115 countries Technology and innovation heritage Broad and deep domain expertise
GE Energy Discipline
EHS GE Energy 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 Industry and Gov t awards Customer awards ISO 14001
Complex Business Built on Operations Discipline GE Energy Costs Rationalized Risk Management Execution Efficiency Process Driven
Deliver total quality on products Tech investments $100M/y for the next 2 years Reduce variation Product structuring Meet cost targets collaborative costs workouts Quality compliance 2x quality resources Resulting in reduced cycle time and increased completeness 13
GE Energy Our Future: Developing People
Regionalization Local resources, empowerment & community outreach Commercial Operations Local execution shops 13 Sales Regions 9 CO/AE Hubs 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 15
Expertise in the field Field Service Engineers Training & development (# of GE FSEs) (Training Khours) 1.8x 14x Hands-on Site GSI O&G 2007 08 09 94 Classroom 08 09 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 structured certification program 16
Adding Technology Experts Science Disciplines: Combustion Composite Materials Advanced Sensors CFD Power Density Products Disciplines: Drilling Systems Subsea X-mas Trees Rotating Machinery Electrification & controls Pipeline inspection tools Systems Disciplines: Drilling Operations Flow Assurance LNG Pipeline Refineries Adding scientists Adding chief engineers Adding specialists Plus access to broad GE resources 17
Sharing expertise & developing talent Collaborating with Academia & Industry Partners Enhancing rotor dynamics analysis and performance Optimizing manufacturing techniques and material selection Oil & Gas University 6 months technology & leadership program for customers Now in it s 9 th edition. over 100 participants from around the world Improving testing capabilities for increased equipment reliability & safety Addressing oil & gas industry challenges together 18
Our Future: Investing in Technology 19
Service Technology: Remote Monitoring & Diagnostics Production data analysis to tailor upgrades MO.R.E. Eng assessment data MOnitoring integrated performance RM&D UCP data download Site visit Compressor Gas Turbine Recommendation improved materials advanced aerodynamics Re-staging asset Enhancement Upgrades for entire train & LP HP e.g., 10% turbocompressor efficiency in brown fields 20
Investing GE Energy for the Future: Technology LNG... large heavy duty gas turbines World s largest LNG project 7.8 MTPY capacity Qatar Petroleum + 1 st subsea compressor - Blue-C Validating a 12 MW subsea compressor for Ormen Lange StatoilHydro Gas storage Integrated Compressor Line - ICL Seal less, oil free compressor zero fugitive emissions Total Access to $6.0B of research & development yearly
Green GE EnergyTechnology Steam Turbines Concentrating Solar Power & other solar thermal technologies Acciona CO 2 Capture for Gorgon LNG High pressure CO 2 sequestration Chevron 1 st 540 bar CO 2 reinjection pump Petrobras Advanced Centrifugal pumps for Enhanced Oil Recovery using compression technology ~50% of R&D focused on ECO-solutions
Results for the Industry GE Energy Italy Avenza Yard Brazil Caju 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
Contact points Marco Caccavale Turbomachinery General Manager of Sales USA marco.caccavale@ge.com TEL +1 (713) 458-3673 Inventing the future together GE10 PowerGen Module, Adriatic LNG Thank You! 24