One of the more exciting moments at the recent ARC Forum arose when ABB’s Jon Olson was publicly asked what he thought about the recent purchase of Invensys by Schneider Electric. Olson’s reply, to the effect that “It would be good for ABB to have a worthy competitor in the market,” seemed at the time to be just a platitude, but was recently given much more weight in a talk with Aveva’s Jack Stout.
The ongoing economic recovery and recent bonanza in petrochemicals, driven by advances in extraction including shale oil and gas, is powering huge capital investments in process facilities such as polymer plants, gas handling and transportation infrastructure, and floating production, offloading and storage (FPSO) vessels. Where the typical “large” project for the past 10 years has been in the $50 – 100 million range, these new projects often cost $2 billion to as much as $20 billion. Stout says the profitability of these huge projects depends a great deal on how fast they can be brought into production: the first producers will be best able to take advantage of low-cost feedstocks and high product prices before competition raises costs and lowers margins.