Russ: Hi I’m Russ Capper and this is The EnergyMakers Show, coming to you from CERAWeek 2017, and my guest: Ed Monser, President of Emerson. Ed, welcome to The EnergyMakers Show.

Ed: Thank you. Glad to be here.

Russ: You bet. So, Emerson has a broad spectrum of products and services for oil and gas, but share with our audience. Tell us about Emerson in 2017.

Ed: Well, as you probably know, we’ve done quite a bit of work over the last couple of years to focus our company into an automation business, with oil and gas being the biggest segment. We work upstream, midstream, downstream, on automation projects, but really what we try to do is come in and help customers run the most efficient project. And what we’ve learned is there’s a big variation in how effective projects are managed, how effective projects are executed. So, with the breadth that we have from the devices, the analytics, and the optimization equipment, and routines and processes that we have, we can help quite a bit move people to what we call the first quartile, where we’ve looked at all these projects over the last decade and say, “What does it take to be in the first quartile: lowest costs with the best productivity?”

Russ: Very interesting. Ok, so you talked about oil and gas being maybe the biggest industry, but you go beyond oil and gas too, right?

Ed: Sure. We have a very big presence in power, so as the energy is delivered what do you do with it? A very big presence downstream in petrochemical, but also work in food and beverage; other process industries, batch industries; so, including pharmaceutical, all those things where high integrity, safety, environmental protection; those kinds of things that are important, that’s where you will find us.

Russ: Ok, so back to automation though. Automation is so significant now. It’s really cool the amount of sensing devices that can be used, particularly in oil and gas. But they’re also, when you’re using them, you’re creating big data there too, right? I assume at some point you guys get into analyzing the big data.

Ed: Right, so our primary business model is to generate that data, and we think we’re exceptional that we have the field devices for measuring and actuating, but then it’s connected to an application layer where that data is analyzed, and we work on that analysis with our own products and tools, as well as others and then the optimization. So, any time we can measure, create data, optimize, and analyze, we think we’re in the right space. That’s where Emerson’s business model is focused. Some people call that the Internet of Things. We’ve been doing this kind of process for over twenty years, and so we’re glad there’s a bigger name for it, but that measure, create data, optimize, that’s what we do.

Russ: Ok, really cool.  Alright, so you got on my radar though because at Emerson, as president, I understand that you’re really in charge of globalization of the company, and I can’t help but hear at CERAWeek, every time I turn around people are talking about the potential over the next few years in both India and China. I assume you’ve been spending time in India and China.

Ed: Yeah, I’ve been spending time in India and China for thirty years now, as we built out, and China right now is our second biggest market. The US remains the biggest. The fastest growing is probably India; it goes back and forth, but right now I would say it is. The plans for energy in India have never been more vibrant. Both India and China have had, you know, as you know, a big focus on coal.  They have a domestic low cost supply. From their view, it’s almost free, so they use that coal, but they’ve gotten in trouble. They’ve had pollution issues, they’ve had other issues with coal. They’ve put in subcritical power stations. They didn’t put in critical or supercritical, which means that there’s even more pollution, and now they’ve had to step back in both cases and say, “What’s a better mix?” And what we’re seeing is a bigger push on gas. In China, it’s pipeline gas from the Caspian Sea, Indochina; or its coal to gas, which they’re turning out to be the world leader in that process, and how that works, as well as LNG. And they’ve been able to participate in the LNG market in a significant way, and as we see the China plans, that’s going to expand dramatically as they get the internal distribution network built out. There’s a huge amount of hardware needed to build this out. They don’t have anything close to what we have in the United States, but they know where the big centers are, they know what they need to do.

Ed: India, much the same. As you know, the most polluted city on the planet last year was New Delhi, and that was coal based issues, and they have to back away from it, they know that. And right now, there’s a plan to put pipelines to connect the top one hundred cities in India. They funded it at the government level, they’re going to put that in place, and then they have to bring in the LNG. They have gas fields available for about half, but half is going to have to come in in terms of import into India. Last year at CERAWeek you probably remember the Indian government and the US announced US export of LNG to India, which is a big deal, a breakthrough way of thinking about energy in our part of the world. But that first set of contracts is with India, and they’re building the LNG terminals to be able to receive that and then distribute it. Right now, gas in India is seven percent of the mix. In three years it will be fifteen, in ten years it will be thirty, and it’s going in that direction.

Russ: You said in India it was government funded, and you know, China has their unique government too. Do you find yourself working mostly through government entities, or private enterprise?

Ed: It’s a combination.  Much of the energy investment is coming through the government; government and partnership. Now, I just was at a meeting with India where they said the role of government is government, not business, but on the other side, they own the oil companies and the gas companies or a percentage of each, so they have a big voice in terms of where the money is spent and how it’s spent.  And the issues are so immediate and critical that I think it’s appropriate for the government to not just wait, but to help accelerate.

Russ: Ok, so I take it from all of this, Emerson’s future looks pretty bright now. Particularly, on the global world market.

Ed: What we have seen, just like everybody else in this industry, the last two years globally have been kind of a calm period. What we did is we decided to use that down period to restructure our company to become a focused automation business.

Russ: To be ready for it, wow.

Ed: And be ready for the upturn. So, we changed the fundamental structure, sold a bunch of businesses, so we could invest more in automation that supports this set of industries.  So, we did that during the downturn, but we do see it getting better, and what we see on the project side, very robust set of projects at the feed stage, the very front end, much different than last year. So, we expect a good 2018, 2019, and 2020 for the industry as China, India, but also the US invests; builds out. And we expect a very vibrant Texas, and we see it today and we expect that to continue.

Russ: Well, Ed I really appreciate you sharing your perspective with us today.

Ed: It’s a pleasure, thank you.

Russ: You bet. And that wraps up my discussion with Ed Monser, the President of Emerson.  And this is The EnergyMakers Show.

Russ: Hi I’m Russ Capper and this is The EnergyMakers Show, coming to you from CERAWeek 2017, and my guest: Ed Monser, President of Emerson. Ed, welcome to The EnergyMakers Show.

Ed: Thank you. Glad to be here.

Russ: You bet. So, Emerson has a broad spectrum of products and services for oil and gas, but share with our audience. Tell us about Emerson in 2017.

Ed: Well, as you probably know, we’ve done quite a bit of work over the last couple of years to focus our company into an automation business, with oil and gas being the biggest segment. We work upstream, midstream, downstream, on automation projects, but really what we try to do is come in and help customers run the most efficient project. And what we’ve learned is there’s a big variation in how effective projects are managed, how effective projects are executed. So, with the breadth that we have from the devices, the analytics, and the optimization equipment, and routines and processes that we have, we can help quite a bit move people to what we call the first quartile, where we’ve looked at all these projects over the last decade and say, “What does it take to be in the first quartile: lowest costs with the best productivity?”

Russ: Very interesting. Ok, so you talked about oil and gas being maybe the biggest industry, but you go beyond oil and gas too, right?

Ed: Sure. We have a very big presence in power, so as the energy is delivered what do you do with it? A very big presence downstream in petrochemical, but also work in food and beverage; other process industries, batch industries; so, including pharmaceutical, all those things where high integrity, safety, environmental protection; those kinds of things that are important, that’s where you will find us.

Russ: Ok, so back to automation though. Automation is so significant now. It’s really cool the amount of sensing devices that can be used, particularly in oil and gas. But they’re also, when you’re using them, you’re creating big data there too, right? I assume at some point you guys get into analyzing the big data.

Ed: Right, so our primary business model is to generate that data, and we think we’re exceptional that we have the field devices for measuring and actuating, but then it’s connected to an application layer where that data is analyzed, and we work on that analysis with our own products and tools, as well as others and then the optimization. So, any time we can measure, create data, optimize, and analyze, we think we’re in the right space. That’s where Emerson’s business model is focused. Some people call that the Internet of Things. We’ve been doing this kind of process for over twenty years, and so we’re glad there’s a bigger name for it, but that measure, create data, optimize, that’s what we do.

Russ: Ok, really cool.  Alright, so you got on my radar though because at Emerson, as president, I understand that you’re really in charge of globalization of the company, and I can’t help but hear at CERAWeek, every time I turn around people are talking about the potential over the next few years in both India and China. I assume you’ve been spending time in India and China.

Ed: Yeah, I’ve been spending time in India and China for thirty years now, as we built out, and China right now is our second biggest market. The US remains the biggest. The fastest growing is probably India; it goes back and forth, but right now I would say it is. The plans for energy in India have never been more vibrant. Both India and China have had, you know, as you know, a big focus on coal.  They have a domestic low cost supply. From their view, it’s almost free, so they use that coal, but they’ve gotten in trouble. They’ve had pollution issues, they’ve had other issues with coal. They’ve put in subcritical power stations. They didn’t put in critical or supercritical, which means that there’s even more pollution, and now they’ve had to step back in both cases and say, “What’s a better mix?” And what we’re seeing is a bigger push on gas. In China, it’s pipeline gas from the Caspian Sea, Indochina; or its coal to gas, which they’re turning out to be the world leader in that process, and how that works, as well as LNG. And they’ve been able to participate in the LNG market in a significant way, and as we see the China plans, that’s going to expand dramatically as they get the internal distribution network built out. There’s a huge amount of hardware needed to build this out. They don’t have anything close to what we have in the United States, but they know where the big centers are, they know what they need to do.

Ed: India, much the same. As you know, the most polluted city on the planet last year was New Delhi, and that was coal based issues, and they have to back away from it, they know that. And right now, there’s a plan to put pipelines to connect the top one hundred cities in India. They funded it at the government level, they’re going to put that in place, and then they have to bring in the LNG. They have gas fields available for about half, but half is going to have to come in in terms of import into India. Last year at CERAWeek you probably remember the Indian government and the US announced US export of LNG to India, which is a big deal, a breakthrough way of thinking about energy in our part of the world. But that first set of contracts is with India, and they’re building the LNG terminals to be able to receive that and then distribute it. Right now, gas in India is seven percent of the mix. In three years it will be fifteen, in ten years it will be thirty, and it’s going in that direction.

Russ: You said in India it was government funded, and you know, China has their unique government too. Do you find yourself working mostly through government entities, or private enterprise?

Ed: It’s a combination.  Much of the energy investment is coming through the government; government and partnership. Now, I just was at a meeting with India where they said the role of government is government, not business, but on the other side, they own the oil companies and the gas companies or a percentage of each, so they have a big voice in terms of where the money is spent and how it’s spent.  And the issues are so immediate and critical that I think it’s appropriate for the government to not just wait, but to help accelerate.

Russ: Ok, so I take it from all of this, Emerson’s future looks pretty bright now. Particularly, on the global world market.

Ed: What we have seen, just like everybody else in this industry, the last two years globally have been kind of a calm period. What we did is we decided to use that down period to restructure our company to become a focused automation business.

Russ: To be ready for it, wow.

Ed: And be ready for the upturn. So, we changed the fundamental structure, sold a bunch of businesses, so we could invest more in automation that supports this set of industries.  So, we did that during the downturn, but we do see it getting better, and what we see on the project side, very robust set of projects at the feed stage, the very front end, much different than last year. So, we expect a good 2018, 2019, and 2020 for the industry as China, India, but also the US invests; builds out. And we expect a very vibrant Texas, and we see it today and we expect that to continue.

Russ: Well, Ed I really appreciate you sharing your perspective with us today.

Ed: It’s a pleasure, thank you.

Russ: You bet. And that wraps up my discussion with Ed Monser, the President of Emerson.  And this is The EnergyMakers Show.