The severe service valve market

^ OMAL mainly uses CNC-machines from an Italian supplier.

The market for severe service valves is growing faster than for general performance valves. This article is an overview of severe service valve categories and reflects on areas where the use of severe service valves is growing particularly strongly.

By Robert McIlvaine

First of all, let’s classify the types of valves that fall under the severe service heading and indicate the percentage of severe service valves to general valves. Figure 1 shows this ratio for major applications (note that the percentage of severe service valves to general valves will differ by industry). Severe service includes applications with excessive abrasion, corrosion, temperature or pressure.
Market forecasts divide valves into four performance segments: general service, severe service, critical service and unique service. All valves classified under critical or unique service which at the same time fulfil a severe service are grouped under severe service.
This allows for aggregation without duplication but does understate the importance of the critical and unique design. This percentage reflects the initial cost, service, and repair parts. These percentages also include IIoT and Remote O&M.

Valve suppliers

The valve supplier has the opportunity to capture much of the service and repair revenue with digital intelligence. The three intelligence functions are guide, control, and measure. The valve supplier has unique knowledge to guide the valve operation and to maximize performance. The metric is total cost of ownership.
Further, valve suppliers can deploy unique sales strategies due to the need for frequent part replacement and service. To clarify this strategy, severe service valve suppliers can benefit from the approach a lawyer would use to argue a case. He would first establish predicate evidence such as the cost of downtime. He then needs to address disputed evidence. The competitor says his valve will provide lower cost. The valve supplier needs to show why the reverse is true. In this way, the revenue to the supplier may typically exceed the initial valve cost over the lifetime of the valve.

Figure 1: Market segmentation by service.

Holistic program

The valve supplier can work with the controls provider to supply a package. It can include a range of measuring instruments. They can affect performance e.g. flow or life e.g. vibration. The valve can be designed to enhance remote operation. Service can be performed remotely with the valve supplier virtually look-ing over the shoulder of the plant maintenance personnel.
There are significant repair part costs associated with severe service valves. Lost production due to valve failures is also significant. With a holistic program the valve supplier can share savings with the customer. The result will be not only higher revenues but higher EBITA %.

Depletion of natural resources

The depletion of natural resources is a key reason why the severe service valve segment is growing faster than others. As surface water supplies diminish there is increasing use of desalination using reverse osmosis membranes. High pressures and corrosion are challenges for the valve suppliers.
As for mining, a typical severe service mar-ket, rich ore bodies are becoming depleted which requires more complex mining processes to upgrade ores. Lithium and other metals needed in the digital world are found in minute quantiles. Beneficiation requires lots of leaching and separation.

Shale oil and gas

The world is also running out of easily extract-able oil and gas. It is poor economic policy for countries to price these products without regard to the limitations of the resource. The price of gold retained in Fort Knox is not related to the cost of transferring it to a buyer. The value stems from the scarcity and future value. There has been the attitude that new oil and gas fields will allow low-cost extraction for generations to come.
Just as the U.S. conventional resources were depleted, hydraulic fracturing created huge new supplies. However, these new supplies require lots of severe service valves. Argentina, China and other countries are making investments in hydraulic fracturing. As a result, the severe service valve expenditure per unit of fossil fuel produced keeps rising. This percentage will likely continue to rise due to depletion of the easy fracking sites. Deeper wells and more challenging shales will likely result in higher severe service valve expenditures.

Synthetic products

A related development is the manufacture of synthetic sands. These products are needed due to the high cost of natural sands. The separation processes in synthetic sand plants add additional severe service valve requirements.
The highest cost for severe service valves occurs with the conversion of solid fuels to oil and gas. In World War II Germany was in a situation similar to today, oil and gas supplies were cut off. Undaunted, Lurgi and other process designers quickly built coal gasification and coal liquefaction plants. This technology was used by South Africa during apartheid and the U.S. devoted billions of dollars to this effort in the early 70s due to the oil embargo. However, when the embargo was lifted the program was halted. Dakota Gasification is one of few surviving assets from this program.

Solid fuel conversion

Headwaters was licensed to use the DOE technology. In turn, Headwaters licensed Chinese companies. Today 25 percent of Chinese plastics are derived from coal. Close to 100 coal gasification and liquefaction plants are in operation in the country. Most liquefaction is indirect but China has had some success with direct liquefaction. The coal slurry is hydrogenated and then the silica, metals and other non-organic material is filtered out. There are lots of severe service valves used in both the direct and indirect liquefaction.
There are two reasons that the solid fuel conversion is likely to grow robustly. The first is that with CO2 sequestration the process becomes carbon neutral. The CO2 separation, CO2 liquefaction and then sequestration require valves capable of withstanding extreme temperatures and pressures. The severe service valve expenditure per unit of fuel is an order of magnitude higher than with conventional oil extraction. The second growth factor is the likely elimination of Russian oil and gas. Europe now realizes that resuming purchases of Russian oil and gas after hostilities stop will only invite a future invasion. Therefore, a likely outcome is one similar to Venezuela where Russian production is greatly reduced.

Energy policies

There is a number of solid fuel related projects in Europe. The largest is the Drax power generation facility. 4000 MW of coal fired capacity has been converted to biomass using wood chips from America. Drax is completing a CO2 capture and then sequestration system which will deposit the CO2 in the North Sea. Drax will be carbon negative. It will take as much CO2 out of the air in the future as it added in the past. Europe is developing projects using food waste, municipal sewage, garbage, plastics and other waste organic materials. Some of these are smaller but nevertheless the amount of severe service valve investment per unit of fuel will be high. The severe service valve market is presently very volatile. Continuous forecast revisions will be necessary to guide the sales program.

1. Industrial Valves: World Market published by McIlvaine Company

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