October 2012, Vol. 239 No. 10

Features

Merger Indicative Of Natural Gas Meeting Electric

In recent years the increased number of opportunities in the North American oil and gas industry has led to a spate of merger and acquisition activity as companies from around the world seek out suitable partners with skill sets necessary to compete in this challenging but profitable environment.

This has affected not just operators but service providers as well. Now, with the gradual integration of the electric generation and natural gas industries, high-tech companies are also anxiously looking to work together to meet future demand.

Such was the case when Schneider Electric, the enormous French-based integrated energy management company with 130,000 employees involved in operations in more than 100 countries, bought Telvent, a Spanish-based provider of IT software and solutions for oil and gas companies, among others. Telvent’s products are widely used in automation and SCADA activities by energy companies. Prior to the merger it operated in about 20 countries with more than 6,000 employees.

Schneider Electric said Telvent “will integrate a high value-added software platform that presents a good fit with its own range of field device control and operation management software for the smart grid and efficient infrastructures.”

In essence, the new business model means more and different customers for both and an even wider geographical spread.

To learn more about the strategy behind the merger P&GJ interviewed
Michel Crochon, Executive Vice President of Infrastructure at Schneider Electric SA and Patrick Albos, Vice President Oil & Gas Solutions. For editing purposes, their responses have been combined.

P&GJ: Why was Schneider Electric interested in acquiring Telvent and how do you see the acquisition fitting into your portfolio? How will Schneider Electric ownership add value to Telvent?
Crochon and Albos: Schneider Electric has a long history of acquisitions, capitalizing each time on specific knowledge and design to improve its solutions for targeted market segments. The acquisition of Telvent complements Schneider Electric’s offerings with a whole set of management software that brings customers more visibility in the complex and fast- moving industries.

We now have the complete real-time software suite for global grid management (Advanced DMS, OMS, GIS, MDM). Telvent also is a major contributor to Schneider Electric offer for Smart Cities thanks to its advanced technology in Transportation solutions.

Weather, in which Telvent is the worldwide leader in environmental networks, is a new offer for Schneider Electric..The advanced weather decision support systems are critical for so many decision-makers – among them hundreds of Electric and Gas Utility clients.

With respect to our Oil & Gas segment Schneider Electric and Telvent together can supply the most complete end-to-end integrated pipeline and energy management solution on the market that enables pipeline companies to operate with safety, reliability and efficiency.

P&GJ: How will customers benefit and what can they expect in future Telvent offerings as a result of the acquisition?
Crochon and Albos: Telvent customers will benefit from additional offerings for energy management and enhancements in the areas of cyber-security, scalability, ease of use and upgrade through the life-cycle of their systems. As more and more companies consider concentrating their trust in one solution they will select a well-respected blue-chip company as their partner.

P&GJ: Is the acquisition of Telvent indicative of Schneider Electric’s growing interest in natural gas and the ongoing integration of the gas and electric generation industries?
Crochon and Albos: Yes. Schneider Electric has growing interest in the natural gas industry as well as strong historical presence in utilities.
We do foresee that our technologies around real-time systems and advanced operational applications can help the natural gas industry to address their challenges and to better serve their electrical generation customers.

Schneider Electric and Telvent already were present separately in this field. Together we now offer solutions for the whole natural gas value chain from gas producers, pipeline companies and LNG plants to natural gas utilities.

P&GJ: In the past, has Schneider Electric had direct involvement in the pipeline industry and do you foresee future investments in natural gas and pipeline-related businesses?
Crochon and Albos: Yes. Schneider Electric has a history as a provider of automation and electrical distribution equipment. Through our recent investments we have enlarged our portfolio and solutions and can now provide a complete offering for pipeline operation, energy management, security and process automation to pipeline companies worldwide.

P&GJ: What changes will be seen in Telvent? Will it continue to operate as a stand-alone company under the SE banner? Will Telvent’s name be changed?
Crochon and Albos: We closed the acquisition of Telvent in September 2011. For 2012 we have decided to keep Telvent as a stand-alone organization.

We put our priority in:

– connecting the leaders of the two companies to create new business opportunities.
– preparing the future roadmap to bring added value to our customers, and
– understanding in detail the different cultures.

We will be ready at the end of this year for a new phase. Obviously, we put the customer at the center of everything we do.

P&GJ: Telvent has earned strong presence in pipeline SCADA while SE has multiple SCADA platforms. So, how do you see leveraging the knowledge?
Crochon and Albos: Indeed, Telvent brings knowledge with advanced features for different segments. We have started a program to benefit from their platform, to leverage best practices, processes and tools through our software development and R&D teams. At the same time we commit to bringing support to our existing customers and installed base through the lifecycle of the systems.

P&GJ: In what other ways do you expect to see Telvent and SE complement each other’s technologies, especially relating to oil and gas solutions?
Crochon and Albos: Combining the expertise and offerings from Telvent and Schneider Electric we can deliver critical infrastructure performance (oil and gas fields, pipelines, distribution) and energy efficiency. For example, in pipelines we can address the requirements from the control room with SCADA and advanced applications, energy management, pipeline automation (station terminals, block-valves) as well as adapted electrical distribution equipment.

P&GJ: How will the Schneider Electric Energy Management combine with Telvent’s Pipeline Management Systems?
Crochon and Albos: Through our Struxureware software architecture program we are incorporating and expanding the energy management functionality within the pipeline management. By combining/having a totally integrated offering, customers will benefit from the opportunity to improve the energy efficiency in their pipeline operations.

With our Ecostruxure architecture we also have an integrated platform from the sensor level up to the enterprise applications integrating our hardware, software into a complete solution.

P&GJ: How will the acquisition affect both companies, as usually during these activities there tends to be an increase in attrition in the acquired company?
Crochon and Albos: We have experienced an extensive growth through acquisitions over the past few years. We now have a real expertise in ensuring smooth transition to newly acquired companies within Schneider Electric – addressing retention, integration as well as minimizing attrition, while maximizing the acquisition value.

P&GJ: How will both companies benefit geographically from the new combination?
Crochon and Albos: Both companies have very complementary and strong geographical presence: North America, Latin America and China for Telvent, while Asia-Pacific – especially China, Russia/CIS and Middle East are strong holds for Schneider Electric.

P&GJ: To date, how has SE transformed itself, particularly involving its software capabilities, as a result of the acquisition?
Crochon and Albos: Schneider Electric has doubled the amount of employees in the areas of software with the acquisition of Telvent and others in the past few years. Our offering has extended from real-time information systems for critical infrastructure, to hosted solutions, SaaS (Software as a Service), Cloud and IT-outsourcing services. Schneider Electric is also a pioneer in using and deploying these solutions internally throughout the Group in order to realize the same benefits we promote to our customers.

P&GJ: What is your vision of energy management and how Telvent can enable this?
Crochon and Albos: As a global leader in energy management systems, we believe in integrated systems which include all critical infrastructures. Today, thanks to our expertise in energy management, customers can achieve up to 30% energy savings.

Telvent is a key enabler for Schneider Electric to offer a complete end-to-end solution. Where previously operators would have needed to go to several vendors Schneider Electric and Telvent can provide the end-to-end solution in one, becoming through this expertise not just a technology, but a sustainability partner.