X

Register to download the report. Already a member?

Download PDF

Click Here for $250 / 6 months

Click Here for $450 / year

Interview

with James T, General Manager, Reilly, Atlas Copco Mafi-Trench Company LLC

01.08.2012 / Energyboardroom

Through its acquisition of Mafi-Trench in 2007, Atlas Copco has increasingly been targeting the global geothermal sector with a new portfolio of products. What is the full range of your offering for geothermal clients?

The original product that Mafi-Trench was founded on was an expander-compressor used in the natural gas industry, which allows the gas passing through it to reduce in temperature and pressure. The expander results in a rotating shaft which is then connected to a compressor. The lower temperature and pressure initiates the splitting process of the gas to remove unwanted components, therefore assisting in the refining process of gas. What we then discovered is that instead of connecting a compressor to the rotating shaft one could instead connect a generator to the shaft in order to produce electricity. Very early on we expanded our product offering beyond the expander-compressor combination and began selling expander-generators that include a gearbox to slow down the speed of the expander. The expanders can also be used to drive a hydro-break or a pump, and our product line covers all of these functions – essentially our expanders can be used to drive pretty much anything.

Besides the refining of natural gas, these expanders are also extremely useful in the petrochemical industry that harnesses the reduction in temperature within the expander to convert one chemical compound into another. One example of this is in the production of ethylene and we have served major ethylene producers, such as Dow Chemicals, for their patented ethylene production. The final application for such expanders is in the geothermal sector, which began using our expanders for power generation as early as 1981. An organic Rankine-cycle power plant will typically run butane or pentane through the expander that will then turn the generator for the production of electricity. Our first project was in the US, but since then the development of geothermal has been volatile in that country, mostly due to regulatory issues. This is why we are now looking to target geothermal markets outside of the US where we see great potential for the implementation of our expander products.

Mafi-Trench’s acquisition by Atlas Copco in 2007 has supported our R&D and customization of expanders for the geothermal sector. Whereas in the oil and gas sector most companies already have unique specifications for the kind of expanders that they use, geothermal companies do not have such limitations and are mostly looking for the most reliable and safe products at the best price.

Given that Atlas Copco is now looking to expand its presence in the geothermal sector outside of the US, how are you positioning the company and your products in the Indonesian market that holds 40% of world’s geothermal capacity?

Atlas Copco has the advantage of having been around since 1873, which means that the company today is a true global player that has a well-established brand all around the world. We have been present in Indonesia through our customer center for the last 30 years, which means that we already have a solid local presence and knowledge of this market. As the customer center expands it will evolve from only processing order into offering services to support the equipment in the region. So far our most popular products in this market have been the compressors, and therefore we do not have the service personnel required for the geothermal sector. As soon as our geothermal products start picking up in Indonesia, then our aim is to hire and train service personnel that will cater specifically to our geothermal clients. Until we build those local human resources we will be servicing our clients by flying in personnel from our centers of excellence around the world, such as Germany or the US. Today we see that Indonesia and the Philippines are making a great commitment to the future of their geothermal sectors, so Atlas Copco is now here to become a part of that. The product we are offering is a plant solution rather than simply selling single expanders. We have realized that customers prefer to have a partner that plays a more important role in the engineering of the plant, and while we cannot become complete experts in geothermal power plants, we will be looking to work through Indonesian partners who already have the necessary expertise. Furthermore, we are very financially stable and are greatly committed to sustainable development, which is why this project in Indonesia has become a priority for us.

What are the key objectives that Atlas Copco is looking to achieve in Indonesia over the coming years?

On global basis, Atlas Copco today is a $9 billion company and we are looking to double this to $18 billion within the next few years. Certainly this kind of growth won’t be achieved entirely through the geothermal sector, but it can definitely be a great contributor to the company. This is illustrated by the Mafi-Trench’s growth over the past year, which has doubled simply because of our increased role in the shale gas and geothermal sectors in the US. I could easily see this double again with contributions from markets like Indonesia and the Philippines. While we sometimes worry about our business in the US dying off, we predict that the geothermal sector in this part of the world will continue to grow. Mafi-Trench already relies on international sales for 75% of its business, so we are used to international sales and are more than happy to follow this trend.

Beyond the geothermal sector, Atlas Copco’s turbo-expanders can also generate electricity from the waste heat of a customer’s equipment. What is the potential of employing this technology here in Indonesia considering this country’s vast industrial base?

This technology is still at its infancy for Atlas Copco, but we are currently supporting 3 waste-heat projects. The technical aspects of the technology are similar to what occurs in geothermal, where you have a fluid that is heated until it evaporates and produces enough hot gas to generate electricity. Good examples of industrial sites where this can employed are cement and steel plants that will generate significant amounts of heat from their industrial processes, which can then be harnessed to produce hot gas that can be run through an expander to generate electricity. We are only beginning to exploit this opportunity and are focusing on larger sized projects. Nevertheless our core focus at the moment is on geothermal projects, and over time as our name becomes widely recognized in this region, then we will be able to create a better offering and partnership with customers looking to exploit waste heat. I foresee that one day this will become the third branch for my company, particularly in those markets that do not have geothermal energy, but for now we are only at the initial stages.

Considering that Atlas Copco is relatively new in the geothermal industry, what differentiates your products from other equipment providers that have greater experience with geothermal power plants?

We are currently focused on binary organic Rankine-cycle power plants where we have the most expertise. However, our products can also be applied to any hybrid power plant that includes some kind of residual heat for conversion to electricity, and we are hoping that those kinds of clients will also be interested in our products. Ultimately, Atlas Copco offers first-in-class experience, reliability and technology, and while some of our competitors might have been involved in the geothermal sector longer than us, they have lost their technological edge over time. I have no doubt that we possess some of the best engineers in the world for this kind of technology and I am willing to bet on their expertise over that of any other company in the world.

A key factor in this business is that every project is unique and requires custom-made products, and therefore experience plays a major role in the quality of the service we provide our customers. Considering that my chief engineer has 27 years of experience, I am confident that we can offer the best products out there and the most efficient after-sales service. My job now is to make sure that our potential clients perceive these advantages and trust us for their geothermal projects. The good thing is they have all the reasons to trust us since we are such a financially sound company and have been around for over a century. As a matter of fact it was our clients that kept asking us to enter this market because they were not satisfied with the products and services that our competitors were offering.

You certainly have the right tools and ambition to succeed in this market. Specifically, what are the objectives that you have set out for Atlas Copco in Indonesia for the coming years?

If we take into account the estimates that geothermal is set to grow 800% over the next few years in Indonesia, then I would like to see Atlas Copco growth by that same amount in this market. Our geothermal products are starting from nearly zero today, so 800% growth for us is achievable, yet ambitious. If we manage to participate in 3-4 projects within the next year, then this would be a great start for us which we could then replicate over the next years. Assuming that Indonesia will build 100 geothermal power plants in the coming years, and that 10% of those are in need of Rankine-cycle plants, then I would be more than happy if we could take that initial 10% as our market share.

Even though we are newcomers, we have an impressive offering and we are certain that our products can provide some of the best solutions for geothermal clients. Our offering is different from others and is back by decades of experience, so our aim is now to make this known within the Indonesian market. Our motto is: First in Mind, First in Choice ®, this is what we are looking to achieve for the geothermal sector in this country.

LATEST ISSUE

DOWNLOAD

Most Read