Speaking at his company’s annual meeting in Florence, Italy, GE Oil & Gas President and CEO Daniel Heintzelman said, “We know that there is going to be growing demand for oil and gas assets. Growth in this industry means there is going to be significant capex spend, and that capex spend is getting more intensive as many of these projects are more difficult.”

The increasing level of complexity and difficulty of these upstream developments also means, however, that there is an increasing opportunity for companies to improve their performance through more innovative use of technology.

Heintzelman highlighted several areas where GE is focusing on doing exactly that.

Industrial Internet

One of Heintzelman’s main points in the opening plenary session in Florence was highlighting the opportunities being created by what GE termed the “industrial Internet.” To use the company’s own words, the industrial Internet is “the connection of sensors and machines to networks and software that can understand and make sense of the data through analytics and prognostics. Big data, the lifeblood of the industrial Internet, will enable new insights and improve reliability and safety.”

This convergence of machines and intelligent data on a global scale using the power of advanced computing, analytics, low-cost sensing, and new levels of connectivity permitted by the Internet is no new thing. Whether it is called digital oilfield technologies or intelligent energy solutions, it has been evolving rapidly for more than a decade now.

But Heintzelman said, “As an equipment provider and designer we think that this intersection of smarter machines, machines that have more data capability or more ability to monitor and observe over their life cycle, combined with the speed of communications and the computational powers, is presenting a real opportunity to bring productivity to customers in many ways across numerous industries.”

GE’s belief, he said, is that it can have a “really big impact” on the productivity of its customers.

Capex efficiency

The benefit, for example, can come from a capex efficiency perspective. Oil and gas upstream spending was estimated at US $600 billion in 2012, according to GE. Going forward, the company estimates spending rates could increase at perhaps 8% per year. If only 1% of reductions in capex can be achieved by industrial Internet technologies, in addition to what is already being deployed, this translates into more than $6 billion per year in savings – or $90 billion over a 15-year period. That is quite a benefit.

Heintzelman went on to highlight some business areas that are growing faster than others, including subsea globally and unconventionals in North America. These are areas that helped GE achieve revenues of more than $15 billion in 2012.

“When you look at the collection of our businesses that we’ve been able to assemble and the technologies that we are investing in, we’ve picked a few things that we think are important themes for the future that we’re focusing on, and I think the shale gas revolution is the first. This is a very positive development, and we’re working on technologies across the spectrum here, from technologies that would be helpful in the exploration and production side all the way through to the demand side. So we are working, for example, on a series of technologies that will help to bring natural gas – CNG [compressed natural gas] and LNG – to new spaces, for instance transportation.”

The subsea space, he added, was growing fast, and GE has technologies that it is bringing into this space as well. “I mentioned the so-called industrial Internet and this topic of big data,” said Heintzelman. “We’ve been surveying much of our equipment for years and years and continue to find ways to make the equipment perform better based upon this set of activities. So that leads to enhanced oil recovery.”

Technology transfer

On the technology side Heintzelman went on to stress the importance within GE of having a connection across the fundamental sciences, giving the company the capability to develop technologies for a range of industries. The company has a number of research facilities around the world and spends about 6% of its revenues on R&D.

“We reach into these centers from time to time based upon our needs and some of the challenges we identify working with our customers,” Heintzelman said. “And I can tell you that it’s extremely helpful because we take technologies that are originally developed for the aviation industry or for the health care industry, for example, and we have found ways to apply them into this space. So this is a precious asset for us and something that we work with regularly to take advantage of.”

Much of GE’s technology and research spending, like several of its peers, is being invested in the booming offshore market of Brazil.

This is perhaps not surprising. According to Joao Geraldo Ferreira, president and CEO of GE Oil & Gas’s Latin American division, over the last 30 years the company has installed more than 1,200 wellhead systems and 180 subsea christmas trees there, and recently it signed a $1.1 billion tree agreement with Petrobras.

Brazil expansion

As a result GE is expanding its capacity with plans to spend $32 million to triple the size of its drilling and subsea unit, $200 million to expand its subsea flexible pipe and riser site, and $30 million to increase its manufacturing capacity for offshore and subsea production systems.

It also is planning a $170 million investment in premises including a 13,000-sq-m (140,000-sq-ft) facility with state-of-the-art laboratories, offices, conference facilities, and a global learning center (it has four other such centers around the world). This will be complete by late 2013 and will carry out research for the oil and gas, renewables, mining, rail, and aviation industries. The facility also will employ 250 people, including 130 researchers.

Heintzelman described GE as a technology developer, and the company’s spending plans back up his words. It is aiming to nearly double its technology-oriented spending during the three-year period between 2013 and 2015 to $1.9 billion compared to $1.1 billion spent between 2010 and 2012.