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GE Executive is No Stranger to Highly Regulated Industries

04 May 2011

More stringent demands from USenergy regulators aren't much of a worry for GE, but rather a welcome development, a top executive says.

The push for tougher equipment oversight and better offshore drilling data in the wake of the Deepwater Horizon accident is in line with demands the company already faces, said Claudi Santiago, president and CEO of GE Oil & Gas.

GE works in heavily regulated industries such as aviation and nuclear power, where the standard is highly engineered equipment that goes through rigorous testing, Santiago said Wednesday in an interview on the floor of the Offshore Technology Conference at Reliant Center.

"All of this ties in well with our desire to bring this aviation mind-set to all our oil and gas businesses," he said.

The company's OTC booth has seen a good deal of traffic this week as GE representatives promoted new technology to monitor blowout preventers and other seafloor drilling and production equipment, including systems that provide data even after the equipment is disconnected from the surface, as occurred during the Macondo well blowout.

Houston presence grows

From just a handful of Houston employees a decade ago, GE Oil & Gas has expanded its business here exponentially via a rapid string of acquisitions.

The company now has some 4,500 workers in Houston, due to its acquisitions of Hydril, Vetco Gray and, most recently, its $2.8 billion deal for the Wood Group's well support division.

As GE expanded, Santiago made nearly 100 trips to the Houston area. But he said his frequent visits are no indicator that the industrial giant might move its energy headquarters from Florence, Italy, to the Energy Capital.

"To me, the notion of having one headquarters for a business like this is old news, old-fashioned," he said.

Varied locations

GE Oil & Gas has three primary areas of expertise that are geographically headquartered in different locations.

The subsea equipment and services business is based in Aberdeen, Scotland; the rotary equipment and compressor business is in Italy; and the surface drilling and enhanced oil recovery business (including the technology to tap into natural gas shales) is in Houston.

"We have the right teams running these three very big businesses, so we think the formula is working," Santiago said.

The Houston business, however, still could be set to grow. The acquisition of Wood Group's electric submersible pumps business, for example, will let GE help improve the recovery rate of oil in previously tapped fields.

"On average, customers only unlock about one-third of a total reservoir," Santiago said. "If we can help them improve their reserves by even just 3 percent, that would be like making available to them all the reserves currently available in Iraq."

Offshore West Africa and Brazil are the places Santiago mentions most when talking about the expansion of the subsea business, and Brazil gets an extra nod as the home of a planned research center for GE Oil & Gas. But the company isn't stingy about sharing its R&D with any of the business units, so the Houston-based operations will likely benefit, he said.