All systems go
New Siemens oil and gas CEO Thorbjoern Fors says that every fuel source and technology should be in the energy mix as the world economy strives towards carbon neutrality
Thorbjoern Fors became the CEO of the oil & gas division of Siemens Energy on 1 April 2020, just as Petroleum Economist was going to press. Taking the helm of the division starts the latest chapter in his 17-year career in the German industrial giant—and also represents the latest corporate milestone in the establishment of a new independent pure-play energy services company.
Siemens announced last year that Siemens Energy is to be spun off as a publicly listed company by September 2020. It will address almost the entire value chain across the oil and gas, power generation and power transmission segments.
The mechanical engineer has more than 25 years of international experience in business and is an EVP member of the Siemens Energy group management committee. Before he took on his latest role, Fors was the CEO of the service distributed generation and oil & gas business unit, a position he had held since 2017.
How is the spin-off of Siemens Energy progressing behind the scenes?
Fors: We are splitting Siemens into an industrial business and a new energy business, which will be a separate company. We call it ‘the split’ because of the significance of activities being spun-off. The plan is to establish a separate entity and take it to the stock market by September.
Siemens Energy will bring together everything related to power, from distributed generation to transmission activities such as transformers, with our entire oil and gas business. Siemens’ majority stake of Siemens Gamesa, the renewable and wind power manufacturer in Spain, will also be transferred into Siemens Energy.
Over the last few months we have actively pursued separation activities, across products and services for every country. That is almost complete, so we are going into the listing phase. It is not an IPO, it is a spin off, so all Siemens’ shareholders get an equal portion of shares in Siemens Energy. Siemens will stay as an anchor shareholder after the spin-off, with the exact level still to be communicated.
I am excited about establishing a pureplay energy company and bringing this to the market. There are not many companies that cover the entire energy chain, from upstream to midstream and downstream, power generation and transmission. Many peers that cover this chain are part of a conglomerate and we are pure-play.
Where do you expect the greatest synergies from covering the energy chain?
Fors: Given the market dynamics around us, it is more important than ever to be focused on creating value. There are lots of interlinks we can leverage in this new formation. Many of our products are useful across oil and gas, in power and process industries, industrial power, distributed generation and so on.
We have a very strong regional presence around the globe, with representation in virtually every country. More oil and gas companies are diversifying downstream or even further out into electricity. The diversification in our customer base talks for us being a fullchain pure energy play. We will see more and more vertically-integrated companies, absolutely. The world is increasingly focused on emissions.
How will you approach this within the new business?
Fors: First of all, by bringing in renewables. One of the critical aspects for decarbonising oil and gas facilities is using new fuels for electrification, including hydrogen. By bringing all our energy capabilities together we can build a very strong value proposition around decarbonisation. We work very closely with our customers on their transitions, so we transform ourselves at the same time.
How will management of the new company be structured? What plans do you have for oil and gas?
Fors: Led by the designated CEO, Christian Bruch, Siemens Energy will have an executive board consisting of a CFO and two other board members. Four executive vice-presidents will lead the oil & gas, power generation, power transmission, and new energy businesses, along with a CEO and CFO for Siemens Gamesa Renewable Energy.
I have the pleasure of taking on the oil and gas business. It is a very dynamic market that brings lots of opportunities. Decarbonisation is one of them. We are working closely with customers and developing answers with them. Being a pure energy player, we not only have conventional power and electrification, but also renewables. We will find ways of leveraging that.
How do you intend to participate in the decarbonisation trend?
Fors: There are multiple levels of decarbonisation. The quickest is to upgrade existing brownfield assets to make them more efficient and reduce their emissions. That is a very important area and has a very quick turnaround for activities.
Deep decarbonisation means technologies that eliminate emissions. We strongly believe in hydrogen as a fuel to bring us to a carbon-neutral world. For example, Brazilian oil and gas company Braskem wanted to reduce its downstream carbon footprint and we developed a way of mixing blue hydrogen into natural gas to fuel gas turbines. As it is 60pc hydrogen and 40pc natural gas it has a significant positive impact. Some new fuels require new technology in gas turbines—the characteristics of hydrogen are very different from natural gas.
The enabler is additive manufacturing. Traditional manufacturing limits flexibility and functionality. 3D printing of high-end metals allows a very free way of designing components, allowing you to print layer by layer just a few microns each time. We have introduced upgraded systems that reduce emissions significantly.
How much does additive manufacturing impact the cost of implementing technology?
Fors: The key aspect is the efficiency it brings. If you use less fuel, there are savings for the environment but also for your bottom line. It can also add flexibility to operational performance. There can be significant load swings in developing countries that do not have a stable grid or transmission lines. We have the technology to manage that—we design our assets, turbines and compressors to meet the unique requirements of any location. 3D printing/additive manufacturing is a great enabler for us, to go from one-size-fits-all to tailor-made designs.
How deeply is additive manufacturing embedded in Siemens?
Fors: We use it in three areas. Firstly, in R&D to pilot the next generation of systems and components. Designing and developing a gas turbine blade traditionally took 16-24 months before you had a blade to test. If you know it would take six months to develop a revised version, it builds conservatism into the process and into your engineers. Additive manufacturing means we can print in a few days and test a few days later.
And, we can do five or more designs at the same time. If a design does not work out, you just redesign it and print a new one the next week.
“The early adopters are
investing significant amounts
to take Hydrogen from a fuel
that is viable in unique settings
to a global proposition”
Secondly, for repair and servicing of existing assets. Components that have been in an energy asset for a long time need to go back to the repair shop. Traditionally, we had long timeframes for remanufacturing or repairing components but with additive manufacturing we can just clean them, then remodel them or print new functionality onto them.
Thirdly, in manufacturing we have switched from traditional supply chains to 3D printing for many components. We have printing facilities with not only engineering and R&D competence but also production and manufacturing competence. Our main centres are in the Swedish town of Finspong—where I am based—Berlin, the UK and Orlando.
Which other areas of digitalisation are you most excited about?
Fors: In the short-to-medium term, it is very much about data. Data is a gold mine, creating a quantum leap in performance for existing assets. Connectivity is key to a lot of different technologies, including AI. Fantastic customer value can be derived over a short period. And, with more assets being connected, cybersecurity becomes very important.
Thousands of sensors pick up activity throughout our customers’ assets and send to our competence centres that analyse it in real-time and continuously improve performance, emissions and other aspects. These gains are very attainable for our customers and for specific use cases it is very tangible.
How about connectivity in terms of grids and distributed generation?
Fors: There are about 850mn people globally without electricity. If mankind is to fix this, we need solutions for developing countries that answer their unique situations. To wait for a universal solution would probably mean we wait far too long. We need tailor-made solutions.
Whether for a small community or industrial complex, distributed generation will play a vital role. Many countries do not have the transmission lines, grids or networks to invest in traditional centralised power. And, there may be security, geographical or other aspects that put limitations on systems that were once-upon-a-time designed for Europe or the US. Gas turbines, steam turbines, generators, compressors and so on will have a very important role.
Will distributed generation remain the preferred option even as countries develop? Is it a stepping stone or the end goal?
Fors: I doubt there is a universal answer, the sources of energy will be different. Solar, wind and natural gas are going into more and more parts of the world. There could be significant centralised power in certain places, but growth is primarily in small and mid-size distributed generation.
Efficiency has improved for small and mid-size assets and the gap versus large centralised power has significantly reduced. Baseload operation can be one of the limiting factors of large-scale centralised power but the flexibility of smaller assets means you can optimise for local needs. Distributed generation has a very, very acute role to play.
Could distributed generation catch on in developed markets?
Fors: It could. We see an increase in biofuels, hydrogen and other carbon-free fuels so mid-size turbines are very wellplaced. Another aspect is load cycles— supply from wind or solar is unlikely to be at peak levels during optimum demand during the day. Distributed generation complements renewables very well.
Hydrogen is a very small part of the global energy mix. How do you see that developing?
Fors: We have a very strong interest in all aspects of hydrogen. We create our own electrolysers and the technology for producing green hydrogen. We also have technologies for midstream transportation and downstream refining—and use hydrogen in our power plants and generation assets.
We see a lot of activity for both blue and green hydrogen. We see a lot of interest in blending-in hydrogen to existing fuels. That creates the need for technologies that allow you to use blended fuels. It is very promising. We can build a system where renewables generate electricity for an electrolyser that is used to produce green hydrogen, to store energy for when you need it.
The costs need to come down for that to really take off. But it is just a matter of time. It is viable in certain applications already. I would not say there needs to be a technological breakthrough—it is more about scaling-up. The early adopters are investing significant amounts to take this from a fuel that is viable in unique settings to a global proposition. When scale comes, prices and costs will go down.
How do you view the potential of CCS? To what extent could it mitigate emissions from oil and gas?
Fors: We are working very closely with our customers to provide solutions. We can provide pockets of services or take on a system-wide integration. It will be one of the answers. There are promising activities, for example in Norway but also in many other countries.
We work in many of them, but also closely monitor developments. Again, there is probably not one universal answer but it will be a key technology for the future. There is such significant interest from authorities and private players that CCS will continue to develop. As we scale up, costs will come down. Scale really matters.
You seem very positive about technology. Are there any that you do not think are worthwhile and will never achieve meaningful scale?
Fors: I am old enough to say ‘never say never’. One needs to look at the unique requirements of a location and the available enabling technologies to understand whether it makes sense. It could very well be that something that does not add value in one country or application could be the perfect solution elsewhere. If we quickly scale up and commercialise what we have on our drawing board, or in limited operation, we would have gone a very long way on this journey.
Do you consider gas to be a bridge fuel or destination fuel?
Fors: We work with major institutes around the world and most are heading in the same direction—that gas will play a vital role. I would not call it a bridge fuel—technologies can bring it further and I believe that gas will be around for the foreseeable future.