The American oil and gas industry is in the midst of a paradigm change, driven by the explosive growth in production from unconventional oil and gas shale resources. Where a decade ago, it was unimaginable to talk about the United States exporting energy resources, today the U.S. is on the cusp of becoming the world’s largest producer of oil and gas.
In response to this dramatic market shift, Curtiss-Wright is launching new initiatives to provide enhanced value to the upstream customer as we build on our established profile in the oil and gas industry. Historically most of our revenues were generated in the downstream sector, where we improve the useful life and performance of operating refineries through our extensive portfolio of technologies. However, the refining industry is not growing, and in some cases is in decline, leading us to refocus our efforts in the growing upstream part of the energy market, which also offers higher margins.
Our goal is to provide a broad range of leading technology products for critical wellhead applications to ensure the efficient, safe and environmentally friendly extraction of unconventional energy resources. We are investing internally to develop new capabilities while pursuing exceptional acquisitions with established products that lend themselves to our evolving energy strategy.
One of our most important investments was the acquisition of Cimarron Energy, a leading manufacturer of highly customized and engineered energy production, processing and environmental solutions, which has proven to be very rewarding. With a track record of strong organic growth over the last five years, Cimarron designs, develops and manufactures energy production and processing equipment that links the wellhead with hydrocarbon transportation from the well site. Underscoring the strength of the market, approximately 42,000 new wells were drilled in North America alone in 2013. Cimarron is particularly well aligned to penetrate the rapidly growing shale extraction market, with a range of products focused on solving the environmental aspects of hydraulic fracturing or “fracking”.
Underscoring the success of our new initiatives, including acquisitions and organic growth, our upstream product mix was approximately 35% of total oil and gas revenues in 2013 compared to only a limited exposure in 2012.
We are also working diligently to improve operating margins in our established downstream market, including implementing aggressive lean strategies at two of our Oklahoma facilities, which have achieved 25% throughput gains thus far. In Houston, where two large facilities were underutilized, we have experienced a jump in productivity as we shifted new Cimarron production into these plants.
Cimarron’s wide range of environmental solutions include Emission Control Devices (ECDs) designed to destroy environmentally harmful emissions created during the energy production process.
An important partner for the nuclear industry since the 1950s, Curtiss-Wright has a strong industry profile, currently providing products and services to every U.S. and Canadian nuclear plant and the majority of nuclear plants worldwide.
Given the high financial and regulatory hurdles for new nuclear plant construction, major utilities are investing significant capital to extend the life and enhance the safety of their existing plants. Curtiss-Wright is an important supplier behind this effort, supporting many of the 432 nuclear reactors already operating in 31 countries that provide roughly 11% of the world’s power. Driven in part by high profile incidents such as Fukushima and a steady drumbeat of industry consolidation, nuclear plants are looking to a diminishing number of suppliers, including Curtiss-Wright, to provide the innovation and technology mandated by regulators and by plant operators.These changing market dynamics have provided steady opportunities for Curtiss-Wright. While others have left the market, in turn stranding customers with an abandoned supply chain – including millions of obsolete parts and a lack of subject matter experts – we’ve tapped into this opportunity by building a powerful and versatile infrastructure to solve these problems for plants throughout the world. Achieving success in this market is really synonymous with our ability to address specific market drivers – especially such key factors as obsolescence, safety and reliability.
In direct response to the event at Fukushima and the regulatory changes which followed, our subject matter experts developed new cutting edge technologies like spent fuel pool level indication, hardened hydrogen vents, and FLEX valve packages to improve the safety of nuclear power plants.
We have also saved utilities millions of dollars by providing replacement instrumentation and control modules with the exact fit, form and function of the original equipment, thereby improving reliability and avoiding expensive plant modifications. With the nuclear market driven by change, we are regularly exploring new opportunities as global utilities invest to meet demands for new energy while maintaining the industry’s highest safety standards. We look to be at the leading edge of new developments through targeted investments and our disciplined strategic focus.
An exciting addition to our portfolio of products was the recent acquisition of Ovalpath, through which we are now marketing a proprietary software platform used in mobile-device based applications that significantly reduces the amount of time and effort needed to efficiently operate a nuclear power plant. These platform solutions deliver real-time information to plant employees, aiding them in making safe, accurate and timely decisions.
Looking ahead, operating reactors will continue to be a strong and sustainable growth platform as we deliver solutions to enhance the safety, reliability and performance of existing reactors by using our proven technology, vast experience and expertise to successfully partner with leading nuclear power generation companies.
Beyond technology and expertise, one of the most important strengths we have at Curtiss-Wright is our steadfast tradition of continually adapting to the advanced technology needs of our long-standing customers. It is the only part of our Company that has never changed.
Curtiss-Wright’s Electro-Hydraulic Operator (EHO) was successfully tested on a critical isolation gate valve during a high flow QME-1 testing. The critical isolation gate valve supplied for steam service requires both tremendous power and precise speed to work properly. The operator and valve had to successfully overcome more than 160 tons of thrust while the gate of the valve traveled 26” within 2 and 5 seconds.
