Joint Venture Targets Lucrative Digital Oilfield Market

Rockwell Automation and Schlumberger are partnering to create Sensia, a fully integrated automation provider that combines Rockwell’s integration control and information systems with Schlumberger’s oil and gas expertise.

Source: Schlumberger
Source: Schlumberger

As Rockwell Automation brings what it calls the Connected Enterprise to bear on a wide variety of industries—providing increased productivity through better visibility of data already ever-present in control processes—the automation supplier is setting its sights on oil and gas, the largest vertical market in automation. Rockwell is teaming up with Schlumberger, a major service provider to the oil and gas industry, to create a fully integrated system provider—combining measurement systems, domain expertise and automation—for the digital oilfield.

The new joint venture, called Sensia, will combine measurement systems, domain expertise and automation from the two companies to help oil and gas producers drive efficiency gains. Regardless of where the price of oil stands, and regardless of whether brownfield or greenfield, conventional or unconventional wells, the new company will be well positioned to help companies be more productive, said Blake Moret, chairman and CEO of Rockwell Automation. But the trend of putting more wells on a single wellpad makes the industry an even better fit for Rockwell’s control technology, he added.

Speaking this week at the Citi Global Industrials Conference in Miami, Moret detailed the opportunities the two companies see in the oil and gas market. “The focus is on safely saving our customers time and money, plain and simple,” he said. “It’s in a market that’s projected to grow double digits. When you look at the digital oilfield today, it’s already sizeable. And there’s been a lot written about how increasingly operators are finding the benefits of applying this kind of technology.”

Schlumberger’s business today is mostly upstream and mostly onshore. But there is plenty of opportunity in those areas to help customers take advantage of digital capabilities. A typical oilfield today is marked by remote, disparate assets that are not connected, and with applications that are still surprisingly manual.

“In oil and gas, and particularly upstream oil and gas, there’s still a tremendous amount of manual operations. And when you do have smart devices, it’s really quite a diverse mixture of data streams coming from a variety of different devices from different manufacturers,” Moret said. “Our opportunity is to bring that data together with the domain expertise to know where to look for the insights that are going to allow these operators to be more efficient.”

Rockwell Automation is going after markets with its Connected Enterprise in a number of ways—through organic development, partnerships and inorganic investments. Since Moret took over the top spot at Rockwell almost three years ago, the company has been clear about where its priorities lie for inorganic investment: information solutions and connected services, process expertise, and expanded market access in Europe and Asia. The partnership with PTC that Rockwell Automation announced last June falls within the first category, enabling the convergence of the two companies’ offerings into FactoryTalk InnovationSuite, Industrial Internet of Things (IIoT) software that is seeing early successes in a variety of industries, including automotive, food and mining.

The biggest benefit of the newest relationship is the process expertise that Schlumberger brings to the table. With Schlumberger on board, Sensia will also have common sales that are less concentrated in North America than Rockwell’s current business.

Rockwell made a similar play for process expertise when it bought system integrator Maverick Technologies in late 2016, and has seen good growth in the chemical sector as a direct result of that, Moret said.

Sensia will specifically provide Rockwell a deeper foray into the oil and gas market. “Schlumberger’s contributing a hundred petroleum engineers to this joint venture, so I think we have the domain expertise covered,” Moret said, also referencing the importance of combining the technology and the expertise. “Rockwell’s primary contribution to this joint venture is our solutions delivery expertise and our project management.”

The partnership will further drive optimization of upstream oilfield assets, said Paal Kibsgaard, chairman and CEO of Schlumberger, in a statement. “This joint venture is the next step in our vision to offer our customers smart, connected devices with rich diagnostic capabilities, coupled with measurement, automation and analytics that improve oilfield operations, facilitate business decisions and reduce total cost of ownership throughout the life of a field,” he said.

Under the terms of the agreement, Sensia will operate as an independent entity, with Rockwell Automation owning 53 percent and Schlumberger owning 47 percent of the joint venture. Sensia is expected to generate annual revenue of $400 million and will employ about 1,000 people to serve customers in more than 80 countries. Global headquarters will be in Houston, where Allan Rentcome, currently director of global technology for Rockwell’s Systems and Solutions Business, will serve as CEO.

The transaction includes a $250 million payment from Rockwell to Schlumberger at closing, which will be funded by cash on hand. Subject to regulatory approvals and other customary conditions, Sensia is expected to begin serving customers this coming summer.

 

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