Deborah Wadsworth

Pressure Group Chemical Industry Market Assessment Debby Wadsworth The Big Picture ⚫ Global Pressure Transmitters Sales Leading Suppliers of Pressure Transmitters 2018 Forecast 2013 Revenues Oil & Gas 1059.7 Million 821.9 Million Chemical 797.2 Million 637.5 Million Electric Power Generation 497.8 Million 399.7 Million Refining Food & Beverage Water & Wastewater Pulp & Paper Mining 372.2 Million 182 Million 129.1 Million 104.5 Million 89.9 Million 293.4 Million 153.2 Million 105.8 Million 93 Million 77.6 Million Metals 81.4 Million 69.8 Million Pharmaceutical & Biotech 71.0 Million 60.4 Million Source: Pressure Transmitter Global Market Research Study ARC 2014 ⚫ Pressure Focus FY15 Rosemount Pressure Transmitter Sales 2014 #1 Petrochemical #2 Refining #3 Metals & Mining #4 Power Emerson Confidential Slide 2 Instrumentation Chemical Natural Gas Production Power (Electric & Gas) Refining O&G - Wholesale $ $ $ $ $ $ 194,958,-,613,-,389,-,106,-,968,-,709,291.69 14.5% 13.0% 8.7% 7.1% 5.6% 5.5% The Chemical Industry ⚫ Forecast & Trends – Total shipments of pressure transmitters in the Chemical industry are forecast to reach $797.2 M in 2018 according to ARC. – The “Basic Chemicals” segment is expected to hold the greatest opportunity from a revenue standpoint (~ $400.00 billion by 2020) according to Frost & Sullivan (F&S) (Basic Chemicals include petrochemicals, fertilizers and polymers.) – The US has one of the largest basic chemicals industries in the world, second only to China. – The improved cost position of US petrochemicals has prompted a flurry of interest in new cracker capacity. – A total of 148 projects were reported in the United States Petrochemicals Report Q2 2015. They include new factories, expansions and process changes to increase capacity and are projected to lead to USD81bn per year in new chemical industry output by 2023. Emerson Confidential Slide 3 The Chemical Industry ⚫ Regional Breakout Petrochemical is forecast to be the Chemical industry leader with the highest potential in North America. Source: Emerson Chemical Industry Report 6/18/2014 Emerson Confidential Slide 4 #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power The Chemical Industry ⚫ Emerson Segment Focus Ethylene, methanol and urea are at the top of Emerson’s list for FY14/FY15 Chemical Industry Phase 1: FY14/FY15 - Ethylene, Methanol, Urea Phase 2: FY15/FY16 - Agrichem, Propylene Phase 3: FY16/FY17 - Polymers Phase 4: FY17/FY18 - Specialty Chemicals Emerson Confidential Slide 5 Recommended Pressure Focus #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Source: Emerson Chemical Industry Report 6/18/2014 The Chemical Industry ⚫ Target Audience – All Segments #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Emerson Confidential Slide 6 The Chemical Industry ⚫ Competitors – All Segments —013 Worldwide Revenues for Pressure Transmitters 2 Industries Emerson #1 Oil & Gas #2 Pulp & Paper #3 Metals Yokogawa #1 Chemical #2 Refining #3 Power ABB #1 Power #2 Oil & Gas #3 Chemical Honeywell #1 Refining #2 Oil & Gas #3 Pulp & Paper E&H #1 Food & Bev #2 Water & WW #3 Mining Siemens #1 Water & WW #2 Pharm & Bio #3 Chemical Source: Pressure Transmitter Global Market Research Study ARC 2014 Yokogawa’s has been focused upon the Chemical industry for years and is gaining ground. Their market share has grown from 11% back in 2000, to 34.5% in 2013. Emerson Confidential Slide 7 #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Source: Pressure Transmitter Global Market Research Study ARC 2014 The Chemical Industry ⚫ Yokogawa - A Multi-Channel Approach eBook, Case Histories, PR/Scholarship Awards, PR/Business Announcements, Application Notes, White Papers (Chemical Processing Magazine), Training Partner Programs & Certifications, Trade Articles (Chemical Processing Magazine) #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Emerson Confidential Slide 8 Urea Segment − Urea is expected to become a $96 billion global market by 2019. − There are several places within the process where pressure transmitters can help alleviate problems like crystallization, erosion and corrosion. − Emerson is already focusing upon the segment which may provide opportunities for marketing in partnership as well as leverage brand equity. The 3051S would bring reliability to a process despite the volatile environment A study published by the State of New York Department of Health reported 107 serious ammonia spills that occurred in New York State between 1993 through 1998. Most of the releases occurred in food/beverage processing (29%) or at chemical/metal/equipment manufacturing facilities (27%). Equipment failure caused 58% of the releases. Emerson Confidential Slide 9 #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Urea Segment ⚫ Basic Facts − For use in industry, urea is produced from synthetic ammonia and carbon dioxide by chemical plants. − There are many uses for Urea including agricultural, pharmaceutical and production of chemical compounds such as plastics, adhesives, and potassium cyanate. It is the world's most commonly used nitrogen fertilizer. − Urea plants are complicated, delicate operations, with many interacting variables and interdependent loops. − Product costs are high and when equipment failures are too frequent, or operator performance is inconsistent, the effect on capacity and profits can be quick and dramatic. #1 Petrochemicals − The urea process is easily influenced by ambient conditions, and it #2 Refineries involves highly interacting variables, high pressures, exothermic #3 Metals & Mining reactions, and corrosive conditions. #4 Power Emerson Confidential Slide 10 Urea Segment ⚫ Demand Forecast – Demand for urea is growing worldwide at an average annual growth rate of 3.5% according to the International Fertilizer Association (IFA) – Urea will reach 200.5 millions tons in 2018 according to the Food and Agriculture Organization of the United Nations ⚫ Industry Players – SKW Pieteritz in Germany has developed a pressure transmitter specifically for the high pressure synthesis section in urea plants – Vega has several pressure transmitters for the Chemical industry. The VEGABAR product line includes a product for column pressure measurement in the distillation tower Emerson Confidential Slide 11 #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Urea Production ⚫ Production – The IFA estimates around 220 fertilizer projects worldwide are planned between- at a total capital cost of +$150 billion – Close to 60 new urea plants are planned to come on stream by 2018 in East Asia, Africa and North America. − US Companies including CF Industries (US largest) and Black & Veatch have announced plans to expand their urea production capacity. − Falling price for natural gas #1 Petrochemicals have contributed to expansion #2 Refineries and increased urea/ammonia #3 Metals & Mining #4 Power production profit margins. Emerson Confidential Slide 12 Urea Process ⚫ The urea plant consists of six main areas 1. Ammonia Pumping - liquid ammonia is pumped from the multi-stage pump which maintain the reaction pressure in the vertical stainless steel vessel 2. Carbon Dioxide Compression - plant directly boost the carbon dioxide from the compression section 3. Urea Synthesis Tower - catalyst bed is placed in the inner side of the autoclave structure and 180- 200 atm pressure and a temperature about 180-200 deg centigrade is maintained 4. Distillation Tower and Flash Drum - high pressure slurry is flashed to 1 atm pressure and distilled to remove excess ammonia and decomposed ammonia carbamated salts are removed and recycled - Level Opportunity 5. Vacuum Evaporator - solution is fed to vacuum evaporator for concentrating the slurry 6. Prilling Tower - dryer where the molten slurry is passed from top of the tower into a bucket which rotates and sprinkles the slurry and air is passed from the bottom to remove moisture as the urea forms into granules during it journey to the bottom of the tower Emerson Confidential Slide 13 #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Urea Process ⚫ Synthesis Tower The temperature and pressure of the synthesis reaction are closely linked since the ammonium carbamate first forming must be maintained at least at its saturation pressure in order to prevent its immediate decomposition. SKW Pieteritz in Germany has developed a reliable pressure transmitter for the high pressure synthesis section working with LESER. It is designed to measure the pressure in high pressure gaseous or liquid carbamate lines and address several challenges that are encountered: crystallization, erosion and corrosion risks. The pressure transmitter is part of LESER’s Innovative Overpressure Protection System. They claim it increases safety and reliability. Pressure transmitters are also used to: 1. Measure the level in the urea reactor (2 transmitters) 2. Measure the pressure of the urea synthesis #1 Petrochemicals section close to the safety valves 3. Measure the pressure of the Support Loaded System#2 Refineries #3 Metals & Mining Safety Valve #4 Power 4. Provide an instrumentation safeguard Emerson Confidential Slide 14 Urea Process ⚫ ⚫ Challenge: Lost Production Panes: “Environmental conditions cause us too much process variability.” “We often need more process insight.” “Our process control strategy cannot adequately handle abnormal conditions.” ⚫ Related Data ─ According to a study of 27 urea plants by Indian Journal of Fertilizer from-, the average production lost over that period was equivalent to 34,238 metric tons per plant, or a total of 2.6 million metric tons. ─ Plant related problems was the leading cause for shutdowns, forced downtime and loss of production. Of those, 62.7% were due to internal factors with mechanical failures seeing the highest year-to-year increase (8.8 DDPY). ─ Increase was also noticed in the downtime in instrumentation due to problems such as malfunctioning of transmitters, false alarms, etc. #1 Petrochemicals #2 Refineries #3 Metals & Mining #4 Power Emerson Confidential Slide 15 Messaging ⚫ Competitors & - Synthesis Tower SKW Stickstoffwerke Piesteritz GmbH was founded in 1993 and offers a wide variety of specialized agrochemical and industrial chemical products, “making us Germany’s largest urea and ammonia producer. In the field of industrial chemicals, we are a reliable supplier of basic chemicals, such as ammonia, urea and nitric acid.” http://www.ureaknowhow.com/ukh2/services/687-reliable-pressure-measurement-in-hp-urea-synthesis.html SKW LOGISTICS Fast Worldwide Delivery Our production facility is located in central Europe and features excellent transport connections so we can deliver our products safely and quickly worldwide. RESEARCH A leader in quality, efficiency and environmental stewardship At SKWP, we conduct intensive research since we are always improving our products. The environmental impact of our products is just as important to us as efficiency and quality. AGRICULTURAL CHEMISTRY Fertiliser for Adequate Supply As one of Europe's largest manufacturers of nitrogen fertilisers, we deliver first-class products and in-depth knowledge about the use of fertilizer INDUSTRIAL CHECMICALS Specialising in the Highest Quality SKW Piesteritz produces and delivers pure, high quality industrial chemicals, following the highest safety standards. Note: Spelling is shown as currently on SKW’s web site Emerson Confidential Slide 16 Messaging ⚫ Messaging Research by Sean – Hot Buttons – Differentiators – Decision Changer – Information Channels – Commonalities ⚫ Messaging Development by Margaret Emerson Confidential Slide 17 Emerson Brand Value & Difference: Rosemount Brand Value & Difference: #1 Petrochemicals TBD #2 Refineries #3 Metals & Mining #4 Power3051S Value & Difference: TBD Next Steps ⚫ After a decision is made by the Pressure Group to proceed, IM will move forward with the following – Complete Urea Messaging Research – Sean Hot Buttons, Differentiators, Decision Changers, Information Channels, Commonalities, etc. – Further Urea Measurement Point Identification Research – Debby – Create Urea Marcom & Campaign Plan – Margaret Communication objectives, messaging, campaign strategy, tactical plan, calendar/schedule, investment, results tracking – Understand Urea & Ammonia Plants Relationship & Explore Potential Segment Emerson Confidential Slide 18