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Moderator
Sam Samdani
Knowledge Expert
McKinsey & Company
February 5, 2015 • Penn Club
www.cmeacs.org
Farren Isaacs
Assistant Professor of
Molecular, Cellular and
Developmental Biology and
Systems Biology at Yale
University
February 5, 2015 • Penn Club
www.cmeacs.org
Chris Krampitz
Innovation and strategy at
Underwriters Laboratories (UL)
Digital Manufacturing
Technologies division
Mishele Lesser
Program Director
The Multicultural Matrix
February 5, 2015 • Penn Club
www.cmeacs.org
Miguel Mireles
Business Development
Chemicals and Materials Grace
Matthews
Annual Leadership Awards™ Sponsors support CM&E STEM Programs
Charles Tremblay –
International Flavors &
Fragrances Creative Center
Director, NOAM Consumer
Fragrances, Global Home Care
Center of Excellence Director
March 5, 2015 • Penn Club
www.cmeacs.org
Framing the discussion on
four disruptive technologies
Overview presentation by G. Sam Samdani
February 5th, 2015
Any use of this material without specific permission of McKinsey & Company is strictly prohibited
McKinsey & Company | 5
Top technology trend “lists” everywhere
▪ By 2029, 11 petabytes of storage will be available for $100
▪ In the next 10 years, we will see a 20-time increase in home networking speeds.
▪ By 2013, wireless network traffic will reach 400 petabytes a month.
▪ By the end of 2010, there will be a billion transistors per human—each costing one ten-millionth of a cent.
▪ The Internet will evolve to perform instantaneous communication, regardless of distance.
▪ The first commercial quantum computer will be available by mid-2020.
▪ By 2020, a $1,000 personal computer will have the raw processing power of a human brain.
▪ By 2030, it will take a village of human brains to match a $1,000 computer.
▪ By 2050 (assuming a global population of 9 billion), $1,000 worth of computing power will equal the processing power of all human brains on earth.
▪ Today, we know 5 percent of what we will know in 50 years. In other words, in 50 years, 95 percent of what we will know will have been discovered
in the past 50 years.
▪ The world’s data will increase sixfold in each of the next two years, while corporate data will grow fiftyfold.
▪ By 2015, Google will index approximately 775 billion pages of content.
▪ By 2015, we will create the equivalent of 92.5 million Libraries of Congress in one year.
▪ By 2020 worldwide, the average person will maintain 130 terabytes of personal data (today it is ~128 gigabytes).
▪ By 2015, movie downloads and peer-to-peer file sharing will explode to 100 exabytes, equivalent to 5 million Libraries of Congress.
▪ By 2015, video calling will be pervasive, generating 400 exabytes of data—the equivalent of 20 million Libraries of Congress.
▪ By 2015, the phone, web, email, photos, and music will explode to generate 50 exabytes of data.
▪ Within two years, information on the Internet will double every 11 hours.
▪ By 2010, 35 billion devices will be connected to the Internet (nearly six devices per person on the planet).
▪ By 2020, there will be more devices than people online.
▪ With IPv6, there will be enough addresses for every star in the known universe to have 4.8 trillion addresses.
▪ By 2020, universal language translation will be commonplace in every device.
▪ In the next five years, any surface will become a display.
▪ By 2025, teleportation at the particle level will begin to occur.
▪ By 2030, artificial implants for the brain will take place.
Top 25 Technology Predictions
▪ Media tablets and beyond
▪ Mobile-centric applications and interfaces
▪ Contextual and social user experience
▪ Internet of Things
▪ App stores and marketplaces
▪ Next-generation analytics
▪ Big data
▪ In-memory computing
▪ Extreme low-energy servers
▪ Cloud computing
10 Disruptive Technologies for
Business Information
Management
▪ Big data revolution and energy-efficient computing
▪ Satellites and commercial applications of space
▪ Robotics and autonomous systems
▪ Life sciences, genomics and synthetic biology
▪ Regenerative medicine
▪ Agri-science
▪ Advanced materials and nano-technology
▪ Energy and its storage
Eight great technologies
▪ Gesture based interfaces: Controlling
computers without touching them
▪ Augmented reality: Fusing the real and the
virtual
▪ Compressed air batteries: The world’s most
cost-effective energy storage
▪ Autonomous electric vehicles: The end of cars
as we know them
▪ Ultra-cheap web devices: Five billion people
with internet access
The five most disruptive
technologies of 2012
▪ OnLine Electric Vehicles (OLEV)
▪ 3D printing and remote manufacturing
▪ Self-healing materials
▪ Energy-efficient water purification
▪ Carbon dioxide (CO2) conversion and use
▪ Enhanced nutrition to drive health at the molecular
level
▪ Remote sensing
▪ Precise drug delivery through nanoscale
engineering
▪ Organic electronics and photovoltaics
▪ Fourth-generation reactors and nuclear-waste
recycling
The top 10 emerging
technologies for 2013
▪ The Internet of Things
▪ Not just Big Data, but a zettaflood
▪ Wisdom of the cloud
▪ The next ‘Net’
▪ The world gets smaller
▪ The power of power
▪ Tea. Earl Grey. Hot (3D printing)
▪ Another family tree (Advanced robotics and virtual
‘avatars’)
▪ Yes, there's a cure for that (Medical technologies)
▪ Humans or Borg? (Augmented homo sapiens)
10 technologies that will
change the world in the next
10 years
▪ Electric clothes
▪ Adaptive cruise control
▪ Better bikes
▪ Predictive medical analysis in cars
▪ Planes made of carbon fiber
▪ Subway entertainment
▪ Better looking movies
▪ Teeth with sensors
▪ Smart disinfectants
▪ Gourmet frozen food
Innovations that will change
tomorrow
▪ Fighting the Power
▪ The Intelligent Home
▪ The Interface of You
▪ You’re the Doctor
▪ Technology that Knows You Better than You Know
Yourself
The Five Most Disruptive
Technologies at CES 2013
▪ Robots taking our jobs
▪ The Internet of machines
▪ Flatter organisations
▪ 3D printing
▪ Nano-technology
▪ Mobile apps redefining service industries
▪ The fight for control of the mobile
payments system
▪ Reinventing entertainment
▪ The fall and rise of social media
▪ Newspapers cease to exist
▪ Data rights become an issue
The top twenty business trends in 2020
▪ The DIY economy continues to rise
▪ A new education revolution
▪ Reskilling the workforce
▪ Older workers re-entering the
workforce
▪ Dealing with a society at retirement
age
▪ China moving up the value chain
▪ Rising incomes in South Asia and
Africa
▪ The great deleveraging
▪ Taming the Big Data tsunami
▪ Robotic moon base
▪ High speed rail link connecting China and Europe
▪ Autonomous and flying cars
▪ Biofuels competitive with fossil fuels
▪ Devices controlled by microchips implanted in humans
▪ Ultra-thin OLED screens
▪ Commercial space travel to the moon and asteroids
▪ $1,000 computer with the processing power of the human
brain
▪ Ubiquitous, mobile universal translation
▪ Augmented reality
▪ Synthetic brain
12 reasons 2020 will be an
awesome year
▪ Virtual Avatars
▪ Intelligence in Anything
▪ The Cloud to Become the Norm
▪ Connecting the Cloud With the Crowd
▪ Virtual Hospitals Thanks to Bio-Connectivity
▪ Ultra-Intelligent Electronic Agents
▪ New Image and Video Analysis Algorithms and
Tools
▪ Improved Call Sound Quality
▪ Digital Jewelry, e.g. Augmented Reality devices
9 Bold Predictions for the
Digital World of 2020
▪ Deep learning
▪ Temporary social media
▪ Prenatal DNA screening
▪ Additive manufacturing
▪ Baxter: The Blue Collared Robot
▪ Memory Implants
▪ Smart Watches
▪ Ultra-Efficient Solar Power
▪ Big Data from Cheap Phones
▪ Supergrids
10 breakthrough
technologies 2013
McKinsey & Company | 6
Which disruptive
technologies
would you
put on your list?
McKinsey & Company | 7
The McKinsey Global Institute has reviewed the economically disruptive
technologies to produce not a prediction, but a careful selection
Collect candidate
technologies
Screen list based on
potential for
economic disruption
(by 2025)
Develop detailed
perspective on final
technologies
▪ Initial list built up,
through various
sources:
– Media
– Academic
intelligence
– Business
intelligence
▪ Reviewed by
external experts
(technologists and
economists) +
McKinsey experts
▪ Technology breakthrough
or rapid advancement
(cost/performance/capability)
▪ Scope of impact (people,
companies, sectors, etc.)
▪ Scale of economics at
stake (cost, capital spend,
GDP, etc.)
▪ Disruptive potential (e.g. to
value chains, industry
structures, profit pools)
▪ Nature and size of
potential economic
impact / disruption
▪ Implications for
major stakeholder
groups
– Companies
– Employees
– Entrepreneurs
– Consumers
– Governments
– Society
SOURCE: McKinsey Global Institute analysis;
http://www.mckinsey.com/insights/business_technology/disruptive_technologies
McKinsey & Company | 8
MGI’s disruptive dozen
SOURCE: McKinsey Global Institute analysis
Renewable energy
Generation of electricity from renewable
sources with reduced harmful climate impact
5
Energy storage
Devices or systems that store energy for
later use, including batteries
6
Mobile Internet
Increasingly inexpensive and capable mobile
computing devices and Internet connectivity
7
Automation of knowledge work
Intelligent software systems that can perform
knowledge work tasks involving unstructured
commands and subtle judgments
8
The Internet of Things
Networks of low-cost sensors and actuators
for data collection, monitoring, decision
making, and process optimization
9
Cloud technology
Use of computer hardware and software
resources delivered over a network or the
Internet, often as a service
10
Advanced robotics
Increasingly capable robots with enhanced
senses, dexterity, and intelligence used to
automate tasks or augment humans
11
Autonomous and
near-autonomous vehicles
Vehicles that can navigate and operate with
reduced or no human intervention
12
Today’s focus
Not discussed
today
Impacts
chemicals/
materials
directly
Other technologies might be considered as disruptive as well, e.g.,
printed electronics, quantum computing, advanced water purification,
carbon capture & sequestration (but did not make it on the final list)
3D printing
Additive manufacturing techniques to create
objects by printing layers of material based
on digital models
3
Advanced materials
Materials designed to have superior
characteristics (e.g., strength, weight,
conductivity) or functionality
2
Advanced oil and gas exploration and
recovery
Exploration and recovery techniques that
make extraction of unconventional oil and
gas economical
1
Next-generation genomics
Fast, low-cost gene sequencing, advanced
big data analytics, and synthetic biology
(“writing” DNA)
4
McKinsey & Company | 9
The correlation between hype about a technology and its potential
economic impact is not clear
SOURCE: Factiva; McKinsey Global Institute analysis
100
1,000
10,000
100,000
100 1,000 10,000
Media attention
Number of relevant articles in major general interest and business publications over 1 year (log scale)
Potential economic impact across sized applications
$ billion (log scale)
Mobile
Internet
Automation of
knowledge work
The Internet of Things
Cloud technology
Advanced
robotics
Autonomous and
near-autonomous
vehicles
Next-
generation
genomics
Energy
storage
3D printing
Advanced
materials
Advanced oil and
gas exploration
and recovery
Renewable
energy
NOTE: Estimates of potential economic impact are for only some applications and is not a comprehensive estimate of total potential impact. Estimates
include consumer surplus and cannot be related to potential company revenue, market size, or GDP impact. We do not size possible surplus shifts
among companies and industries, or between companies and consumers. These estimates are not risk- or probability-adjusted.
McKinsey & Company | 10
Estimated potential economic impact
of technologies from sized applications
in 2025, including consumer surplus
SOURCE: McKinsey Global Institute analysis
Range of sized potential
economic impacts
Impact from other
potential applications
(not sized)Low High
X–Y
$ trillion, annual
Renewable energy 0.2–0.3
Advanced oil and gas
exploration and recovery
0.1–0.5
Advanced materials 0.2–0.5
3D printing 0.2–0.6
Energy storage 0.1–0.6
Next-generation
genomics
0.7–1.6
Autonomous and near-
autonomous vehicles
0.2–1.9
Advanced robotics 1.7–4.5
Cloud technology 1.7–6.2
Internet of Things 2.7–6.2
Automation of
knowledge work
5.2–6.7
Mobile Internet 3.7–10.8
Notes on sizing
▪ These estimates of economic impact are
not comprehensive and include
potential direct impact of sized
applications only.
▪ These estimates do not represent GDP
or market size (revenue), but rather
economic potential, including
consumer surplus.
▪ Relative sizes of technology categories
shown here cannot be considered a
“ranking” because our sizing is not
comprehensive.
▪ We do not quantify the split or
transfer of surplus among or across
companies or consumers. Such
transfers would depend on future
competitive dynamics and business
models.
▪ These estimates are not directly
additive due to partially overlapping
applications and/or value drivers across
technologies.
▪ These estimates are not fully risk- or
probability-adjusted.
McKinsey & Company | 11
Each selected technology can also be assessed across three dimensions
for potential impact on chemicals and advanced materials
SOURCE: McKinsey team analysis
Market growth
▪ Potential to grow at an accelerated pace to a multiple
of the current market size under certain circumstances
▪ But often “binary” outcome: “explosive market growth
in double digit percentage points” or – if fails or delayed
– “attractive growth slightly above GDP”
I
Technology
landscape
▪ Potential to require new chemical/materials
technologies and solutions in order to succeed or more
massively penetrate
▪ Potential to replace current technologies completely
II
Business
models/value
chain
▪ Potential for new business models to extract more
value or shift value from other value-chain steps
▪ Potential to make current value chain steps obsolete
III
Description
McKinsey & Company | 12
Digitally enabled technologies tend to follow an exponential growth
trajectory (a la Moore’s law), making the linear view misleading
SOURCE: Ray Kurzweil, developer of the concept of “The Law of Accelerating Returns” (aka the S-curve) in
digital/disruptive technology evolution
Why it’s important to appreciate exponentiality
▪ Confusing linear with exponential perspective is the
most frequent mistake that prognosticators make in
considering future trends
▪ Most people tend to hold a linear view of the future;
that’s why we tend to:
– Overestimate what can be achieved in the short term
(because we tend to leave out necessary details)
– Underestimate what can be achieved in the long term
(because exponential growth is ignored)
▪ Case in point: Most biochemists in 1990 were skeptical of
the goal of transcribing the entire human genome in a
mere fifteen years
– These scientists had just spent an entire year
transcribing a mere one ten-thousandth of the
genome
– Even with reasonable anticipated advances, it seemed
natural to them that it would take a century, if not
longer, before the entire genome could be sequenced
McKinsey & Company | 13
Over the past 200 years, the world has experienced unprecedented
acceleration in economic growth fueled by several disruptive technologies
100
1,000
10,000
1600500 1800 18501750 1900 20001950150100 170016501550200 250
Estimated global GDP per capita
$
1450
Efficient
steam
engine
1769
Mass-
produced
steel
1855
Internal
combustion
engine
Internet
Today
Technology
advancements
First
steam
engine
1698 1860 1970s
Printing
press
First Industrial
Revolution
1760s to 1840s
Second
Industrial
Revolution
1860s to 1920s
SOURCE: Angus Maddison, “Statistics on World Population, GDP and Per Capita GDP, 1–2008 AD,” the Maddison
Project database; McKinsey Global Institute analysis
Thanks to the exponential growth trajectory [of
many disruptive technologies], we won’t
experience merely 100 years of progress in the
21st century; it will be more like 20,000 years
of progress (at year 2000 rate).
- Ray Kurzweil, Director of Engineering, Google
McKinsey & Company | 14
How disruptive are the four technologies we’ve picked in terms of their
capacity for driving growth, technology and value chain disruption?
Low Medium High
High
Medium
Low
Graphene/
CNT
Next
generation
genomics
3D printing
Capacity to
disrupt –
technology
landscape
II
Capacity to disrupt – Business models/
value chain
III
Potential market
impact –
demand
growth/shift in
chemicals and
advanced
materials
I
ONE TEAM’S INITIAL
POINT OF VIEW
Advanced oil &
gas exploration
and recovery
McKinsey & Company | 15
Introducing our distinguished panel
• Farren Isaacs is assistant professor of Molecular, Cellular and Developmental Biology
and Systems Biology at Yale University. His research is focused on finding ways to
construct new genetic codes and reprogrammable cells that serve as factories for
chemical, drug and biofuel production. As a research fellow in genetics at Harvard, he
invented enabling technologies for genome engineering. He received a B.S.E in
Bioengineering from the University of Pennsylvania and Ph.D. in Biomedical Engineering-
Bioinformatics at Boston University.
• Chris Krampitz has over 20 years of experience innovating manufacturing and materials
sciences. He leads innovation and strategy at Underwriter Laboratories (UL) Digital
Manufacturing Technologies division. He was a research engineer and technology
advisor in the oil & gas and manufacturing industries. Chris earned an MBA/PhD from The
University of Chicago Booth School of Business. He holds a B.S. in Chemical Engineering
from Texas A&M University.
• Miguel Mireles develops business in chemicals and materials at Grace Matthews on
select buy and sellside engagements. Mireles was a VP and Head of Business
Development at Xolve, a venture company that disperses graphene and other
nanocarbons into thermoplastics and thermosets for a variety of automotive, industrial
and consumer applications. He worked in fundraising and IP strategy. He holds a B.S. in
Chemical Engineering (Texas Tech University), an M.B.A. (University of
WisconsinMadison), and a Juris Doctorate (U. of Wisconsin Law School).
• Mishele Lesser was mightily inspired by the completion of the Human Genome Project in
2003 and has been an information designer and visual learning specialist exploring
human evolution, genomics, culture, and identity ever since. As The Multicultural
Matrix program director, for 15 years, she has pioneered STEAM (science, technology,
engineering, art and mathematics) programs in 50 schools in GA, MA and NY. Lesser
holds an MFA from Pratt Institute (NY), an MA from Savannah College of Art and Design
(GA), and a BA from Hampshire College (Amherst, MA).
McKinsey & Company | 16
What are the commonly held beliefs that happen to be contrary to the
reality or promise of disruptive technology X today?
SOURCE: Ray Kurzweil, The Singularity is Near: When Humans Transcend Biology (2005)
McKinsey & Company | 17
What are the three things disruptive technology X could do to render certain
existing products/services obsolete or redundant?
McKinsey & Company | 18
Do you see any clear winners, e.g., companies or business models,
emerging with disruptive technology X today?
McKinsey & Company | 19
What are some of the ways combinations of several disruptive
technologies could create something truly exciting?
McKinsey & Company | 20
What are the biggest barriers to adoption you hear about when talking to
potential users/customers of disruptive technology X?
Competitive
economics
Environmental
regulations
Public trust
McKinsey & Company | 21
Price of natural gas has been somewhat more stable than that for crude oil
in recent months and years
SOURCE: CMAI/IHS Chemical; team analysis
0
20
40
60
80
100
120
Jun-
2014
May-
2014
Apr-
2014
Mar-
2014
Feb-
2014
Jan-
2014
Dec-
2014
Nov-
2014
Oct-
2014
Sep-
2014
Aug-
2014
Jul-
2014
Jan-
2015
Monthly crude oil price, WTI (NYMEX)
USD/barrel
0
1
2
3
4
5
6
Aug-
2014
Nov-
2014
Oct-
2014
Jul-
2014
Mar-
2014
Apr-
2014
Feb-
2014
Jan-
2014
Jun-
2014
May-
2014
Sep-
2014
Dec-
2014
Jan-
2015
Monthly US natural gas price, contract burner tip
USD/million BTU
0
20
40
60
80
100
2005 201020092008 2012 2014 201520132011 2016F20072006
Annual average crude oil price, WTI (NYMEX)
USD/barrel
0
2
4
6
8
10
2011 20132005 2016F20152010 20142012200920072006 2008
Annual avg US natural gas price, contract burner tip
USD/million BTU
McKinsey & Company | 22
There are primarily three market scenarios for balancing global demand
and supply for crude oil
SOURCE: McKinsey Energy Insights Global Liquids Supply Model
What do you have to believe for these
prices to stay?
Sustained
price range
Spare capacity
MMbbl/d
Loosening $60-80/
barrel
▪ OPEC will be unwilling or unable to maintain a
cut in production
▪ Technology will push down breakeven costs for
new production (e.g., oil sands, ultra-deepwater)
▪ Weak global economy drives soft demand
9 – 14
Balanced
$90-
110/
barrel
▪ OPEC continues managing pricing through
supply (most of the spare capacity still in the
hands of Saudi Arabia)
▪ Demand has adjusted expectations to these
“high” oil prices
4 – 6
Tightening
$120-
140/
barrel
▪ Additional production (or alternative sources) will
not be able to ramp up quickly
▪ Demand destruction is not significant or longer
term
0 – 1
Price ranges provided are for sustained levels; market volatility may
result in oil prices moving outside the indicated range for short periods
McKinsey & Company | 23
While starting in North America, the boom of unconventionals and new
conventionals will continue to create new opportunities in other regions
SOURCE: McKinsey oil and gas practice; Expert interviews
1 Flags based on most advanced basins in China (Sichuan basin) and Australia (Cooper basin). Other basins are still at the land acquisition stage
2 Measured as global value of fracturing chemical formulations 2012 3 Measured as share of EOR projects 2012
Country evolution on unconventional s-curve (Case example: fracturing)
USD/ Acre
‘Land acquisition’ ‘Commercial pilot’ ‘Development’‘De-risking’
US
Canada
1
UK
Argentina - rest
Australia
China
Poland
Ukraine
Mexico
1
Algeria
Brazil
Indonesia
Russia
Argentina-
Neuquén basin
Colombia
Chile
France
Romania
Venezuela
Currently, most disruptions
happen in North America, e.g.,
▪ ~95% of global fracturing
activity2
▪ ~67% of global EOR activity3
…but within the next decade
further strong penetration in
other regions is expected
McKinsey & Company | 24
4.9
6.5
0.2
-0.2
10.3
CAGR,
2011-20
Percent
SOURCE: Rystad Ucube 2011, McKinsey
Conventional
gas
Conventional
oil
Deepwater
oil
Unconventional
oil
Unconventional
gas
2020
155.7
71.7
46.5
11.4
45.8
6.5
5.2
8.9
7.3
16.79
4.8
13.6
2011
138.9
12.5
72.7
4.9
Key growth countries
▪ US, Canada, China
▪ US, Canada
▪ US, Nigeria, Brazil, Angola
Overall outlook on unconventional fossil fuel production is positive but
does not show ‘disruptive explosion’ in terms of growth rates
Global fossil fuel production
Mboe/d
McKinsey & Company | 25
There are several approaches to separating the hype from reality for the
shale gas and oil revolution
Well typeA
Well life
cycle
B
Value
chain
step
C
Oil
Gas
Conventional Unconventional
Drilling &
cementing
Stimulation
Production
1-6 months
1-6 months
2-30+ years
Chemi-
cals
Formu-
lation
Oilfield
services
(OFSE)
Oilfield
opera-
tors
RegionD
Drilling chem.Fracturing chem.
Asia/Pac.
9MEA
19
Europe
& CIS
17
LATAM
12
US & CA
43
RoW
5
US &
CA
95
▪ Yes, shale gas and “shale oil” (light tight oil=LTO)
are the most important disruptions …
▪ … but we cover all other sources as well; and – if
you didn’t know – there is also EOR1 and offshore
▪ Yes, this is relevant for major players in basic and
specialty chemicals …
▪ … but also for formulators, OFSEs and oilfield
operators
▪ Yes, of course we look deeply into fracturing and
fracking chemicals …
▪ … but we also cover the rest of stimulation as well
as drilling & cementing, and production
▪ Yes, currently fracking is a US story …
▪ … but over the next 5-10 years it will become
commercial in other regions; also, drilling &
cementing, and production are already highly
relevant in other regions today
1 Enhanced oil recovery
McKinsey & Company | 26
The well life cycle of drilling & cementing, stimulation and production are
most relevant for chemicals – strongest disruption in stimulation & EOR
SOURCE: IHS Chemical
1-6 months
2-30+ years
Well life-
cycle time
Months to
years
▪ Newly
fractured well
count
▪ Frac stages
▪ Production
well count
▪ Oil and gas
production
Key players
1 Includes continuous water treatment and EOR activities 2 OFSE = Oilfield service & equipment company
3 Unconventionals often require more drilling efforts & number of rigs is higher
Key driver of
consumption
1-6 months
1-6 months
Oil field
operators
OFSEs2
OFSEs2
Oil field
operators
OFSEs2
Global O&G field chemicalsMost relevant for chemicals
Production1
Exploration
Field
abandon-
ment
Drilling &
cementing
Stimulation
• Acidizing
• Fracturing
Market size
2014, USD bn
CAGR
2014-19
Included in drilling and
cementing
18.1
33.4
6.0
57.5
3.3%
4.0%
3.5%
▪ Rig count
▪ Abandoned
well count
3.4%
North America
= 5.5%
Included in production
▪ Rig count
McKinsey & Company | 27
What are the three questions about disruptive technology X that no
one is asking but should?
McKinsey & Company | 28
Now with the benefit of the panel discussion, how disruptive
do you think are the four technologies?
Low Medium High
High
Medium
Low
Graphene1
Advanced oil &
gas exploration
and recovery
Next
generation
genomics
3D
printing
Capacity to
disrupt –
technology
landscape
II
Capacity to disrupt – Business models/
value chain
III
Potential
market impact –
demand
growth/shift in
chemicals and
advanced
materials
I
FOR DISCUSSION
Potential
reassessment
after panel
discussion
1 Positive, disruptive market outlook not considered likely for CNTs
McKinsey & Company | 29
Thank you!
Dr. G. Sam Samdani
Phone +1-973-549-6605
MGI
report
Sam_Samdani@mckinsey.com
http://www.mckinsey.com/insights/business_technology/disruptive_technologies
E-mail
February 5, 2015 • Penn Club
Panel discussion. From left: Sam Samdani, Miguel Mireles, Chris
Krampitz and Farren Isaacs
www.cmeacs.org
February 5, 2015 • Penn Club
The elegant Tarnopol Room of the New York Penn Club, a historic
clubhouse landmark at the core of New York City.
www.cmeacs.org
February 5, 2015 • Penn Club
CM&E STEM Supporters from Elsevier’s Segment Marketing. From
left: Christina Valimaki, Director, and Ijeoma Mbamalu, Sr. Manager.
www.cmeacs.org
Anahit Stepanyan
B.S. Student
Chemistry
NYU
Est. Graduation Year
2016
Anna Powers
Ph.D. Student
Chemistry
NYU
Est. Graduation Year
2015
Debra Rooker
Ph.D. Student,
Chemistry
NYU
Est. Graduation Year
2017
Allegra Mondillo
B.S. Student
Chemistry
NYU
Est. Graduation Year
2015
www.cmeacs.org
Pamela Penawou
Chemistry Freshman
NYU
Welcome Pamela. She is
CM&E’s new Student Volunteer.
Xiao Zhong
Ph.D. Student Chemistry, NYU
Graduation Year 2015
Congratulations to Xiao for
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Four Disruptive Technologies Shaping the Future

  • 1. Moderator Sam Samdani Knowledge Expert McKinsey & Company February 5, 2015 • Penn Club www.cmeacs.org Farren Isaacs Assistant Professor of Molecular, Cellular and Developmental Biology and Systems Biology at Yale University
  • 2. February 5, 2015 • Penn Club www.cmeacs.org Chris Krampitz Innovation and strategy at Underwriters Laboratories (UL) Digital Manufacturing Technologies division Mishele Lesser Program Director The Multicultural Matrix
  • 3. February 5, 2015 • Penn Club www.cmeacs.org Miguel Mireles Business Development Chemicals and Materials Grace Matthews Annual Leadership Awards™ Sponsors support CM&E STEM Programs
  • 4. Charles Tremblay – International Flavors & Fragrances Creative Center Director, NOAM Consumer Fragrances, Global Home Care Center of Excellence Director March 5, 2015 • Penn Club www.cmeacs.org
  • 5. Framing the discussion on four disruptive technologies Overview presentation by G. Sam Samdani February 5th, 2015 Any use of this material without specific permission of McKinsey & Company is strictly prohibited
  • 6. McKinsey & Company | 5 Top technology trend “lists” everywhere ▪ By 2029, 11 petabytes of storage will be available for $100 ▪ In the next 10 years, we will see a 20-time increase in home networking speeds. ▪ By 2013, wireless network traffic will reach 400 petabytes a month. ▪ By the end of 2010, there will be a billion transistors per human—each costing one ten-millionth of a cent. ▪ The Internet will evolve to perform instantaneous communication, regardless of distance. ▪ The first commercial quantum computer will be available by mid-2020. ▪ By 2020, a $1,000 personal computer will have the raw processing power of a human brain. ▪ By 2030, it will take a village of human brains to match a $1,000 computer. ▪ By 2050 (assuming a global population of 9 billion), $1,000 worth of computing power will equal the processing power of all human brains on earth. ▪ Today, we know 5 percent of what we will know in 50 years. In other words, in 50 years, 95 percent of what we will know will have been discovered in the past 50 years. ▪ The world’s data will increase sixfold in each of the next two years, while corporate data will grow fiftyfold. ▪ By 2015, Google will index approximately 775 billion pages of content. ▪ By 2015, we will create the equivalent of 92.5 million Libraries of Congress in one year. ▪ By 2020 worldwide, the average person will maintain 130 terabytes of personal data (today it is ~128 gigabytes). ▪ By 2015, movie downloads and peer-to-peer file sharing will explode to 100 exabytes, equivalent to 5 million Libraries of Congress. ▪ By 2015, video calling will be pervasive, generating 400 exabytes of data—the equivalent of 20 million Libraries of Congress. ▪ By 2015, the phone, web, email, photos, and music will explode to generate 50 exabytes of data. ▪ Within two years, information on the Internet will double every 11 hours. ▪ By 2010, 35 billion devices will be connected to the Internet (nearly six devices per person on the planet). ▪ By 2020, there will be more devices than people online. ▪ With IPv6, there will be enough addresses for every star in the known universe to have 4.8 trillion addresses. ▪ By 2020, universal language translation will be commonplace in every device. ▪ In the next five years, any surface will become a display. ▪ By 2025, teleportation at the particle level will begin to occur. ▪ By 2030, artificial implants for the brain will take place. Top 25 Technology Predictions ▪ Media tablets and beyond ▪ Mobile-centric applications and interfaces ▪ Contextual and social user experience ▪ Internet of Things ▪ App stores and marketplaces ▪ Next-generation analytics ▪ Big data ▪ In-memory computing ▪ Extreme low-energy servers ▪ Cloud computing 10 Disruptive Technologies for Business Information Management ▪ Big data revolution and energy-efficient computing ▪ Satellites and commercial applications of space ▪ Robotics and autonomous systems ▪ Life sciences, genomics and synthetic biology ▪ Regenerative medicine ▪ Agri-science ▪ Advanced materials and nano-technology ▪ Energy and its storage Eight great technologies ▪ Gesture based interfaces: Controlling computers without touching them ▪ Augmented reality: Fusing the real and the virtual ▪ Compressed air batteries: The world’s most cost-effective energy storage ▪ Autonomous electric vehicles: The end of cars as we know them ▪ Ultra-cheap web devices: Five billion people with internet access The five most disruptive technologies of 2012 ▪ OnLine Electric Vehicles (OLEV) ▪ 3D printing and remote manufacturing ▪ Self-healing materials ▪ Energy-efficient water purification ▪ Carbon dioxide (CO2) conversion and use ▪ Enhanced nutrition to drive health at the molecular level ▪ Remote sensing ▪ Precise drug delivery through nanoscale engineering ▪ Organic electronics and photovoltaics ▪ Fourth-generation reactors and nuclear-waste recycling The top 10 emerging technologies for 2013 ▪ The Internet of Things ▪ Not just Big Data, but a zettaflood ▪ Wisdom of the cloud ▪ The next ‘Net’ ▪ The world gets smaller ▪ The power of power ▪ Tea. Earl Grey. Hot (3D printing) ▪ Another family tree (Advanced robotics and virtual ‘avatars’) ▪ Yes, there's a cure for that (Medical technologies) ▪ Humans or Borg? (Augmented homo sapiens) 10 technologies that will change the world in the next 10 years ▪ Electric clothes ▪ Adaptive cruise control ▪ Better bikes ▪ Predictive medical analysis in cars ▪ Planes made of carbon fiber ▪ Subway entertainment ▪ Better looking movies ▪ Teeth with sensors ▪ Smart disinfectants ▪ Gourmet frozen food Innovations that will change tomorrow ▪ Fighting the Power ▪ The Intelligent Home ▪ The Interface of You ▪ You’re the Doctor ▪ Technology that Knows You Better than You Know Yourself The Five Most Disruptive Technologies at CES 2013 ▪ Robots taking our jobs ▪ The Internet of machines ▪ Flatter organisations ▪ 3D printing ▪ Nano-technology ▪ Mobile apps redefining service industries ▪ The fight for control of the mobile payments system ▪ Reinventing entertainment ▪ The fall and rise of social media ▪ Newspapers cease to exist ▪ Data rights become an issue The top twenty business trends in 2020 ▪ The DIY economy continues to rise ▪ A new education revolution ▪ Reskilling the workforce ▪ Older workers re-entering the workforce ▪ Dealing with a society at retirement age ▪ China moving up the value chain ▪ Rising incomes in South Asia and Africa ▪ The great deleveraging ▪ Taming the Big Data tsunami ▪ Robotic moon base ▪ High speed rail link connecting China and Europe ▪ Autonomous and flying cars ▪ Biofuels competitive with fossil fuels ▪ Devices controlled by microchips implanted in humans ▪ Ultra-thin OLED screens ▪ Commercial space travel to the moon and asteroids ▪ $1,000 computer with the processing power of the human brain ▪ Ubiquitous, mobile universal translation ▪ Augmented reality ▪ Synthetic brain 12 reasons 2020 will be an awesome year ▪ Virtual Avatars ▪ Intelligence in Anything ▪ The Cloud to Become the Norm ▪ Connecting the Cloud With the Crowd ▪ Virtual Hospitals Thanks to Bio-Connectivity ▪ Ultra-Intelligent Electronic Agents ▪ New Image and Video Analysis Algorithms and Tools ▪ Improved Call Sound Quality ▪ Digital Jewelry, e.g. Augmented Reality devices 9 Bold Predictions for the Digital World of 2020 ▪ Deep learning ▪ Temporary social media ▪ Prenatal DNA screening ▪ Additive manufacturing ▪ Baxter: The Blue Collared Robot ▪ Memory Implants ▪ Smart Watches ▪ Ultra-Efficient Solar Power ▪ Big Data from Cheap Phones ▪ Supergrids 10 breakthrough technologies 2013
  • 7. McKinsey & Company | 6 Which disruptive technologies would you put on your list?
  • 8. McKinsey & Company | 7 The McKinsey Global Institute has reviewed the economically disruptive technologies to produce not a prediction, but a careful selection Collect candidate technologies Screen list based on potential for economic disruption (by 2025) Develop detailed perspective on final technologies ▪ Initial list built up, through various sources: – Media – Academic intelligence – Business intelligence ▪ Reviewed by external experts (technologists and economists) + McKinsey experts ▪ Technology breakthrough or rapid advancement (cost/performance/capability) ▪ Scope of impact (people, companies, sectors, etc.) ▪ Scale of economics at stake (cost, capital spend, GDP, etc.) ▪ Disruptive potential (e.g. to value chains, industry structures, profit pools) ▪ Nature and size of potential economic impact / disruption ▪ Implications for major stakeholder groups – Companies – Employees – Entrepreneurs – Consumers – Governments – Society SOURCE: McKinsey Global Institute analysis; http://www.mckinsey.com/insights/business_technology/disruptive_technologies
  • 9. McKinsey & Company | 8 MGI’s disruptive dozen SOURCE: McKinsey Global Institute analysis Renewable energy Generation of electricity from renewable sources with reduced harmful climate impact 5 Energy storage Devices or systems that store energy for later use, including batteries 6 Mobile Internet Increasingly inexpensive and capable mobile computing devices and Internet connectivity 7 Automation of knowledge work Intelligent software systems that can perform knowledge work tasks involving unstructured commands and subtle judgments 8 The Internet of Things Networks of low-cost sensors and actuators for data collection, monitoring, decision making, and process optimization 9 Cloud technology Use of computer hardware and software resources delivered over a network or the Internet, often as a service 10 Advanced robotics Increasingly capable robots with enhanced senses, dexterity, and intelligence used to automate tasks or augment humans 11 Autonomous and near-autonomous vehicles Vehicles that can navigate and operate with reduced or no human intervention 12 Today’s focus Not discussed today Impacts chemicals/ materials directly Other technologies might be considered as disruptive as well, e.g., printed electronics, quantum computing, advanced water purification, carbon capture & sequestration (but did not make it on the final list) 3D printing Additive manufacturing techniques to create objects by printing layers of material based on digital models 3 Advanced materials Materials designed to have superior characteristics (e.g., strength, weight, conductivity) or functionality 2 Advanced oil and gas exploration and recovery Exploration and recovery techniques that make extraction of unconventional oil and gas economical 1 Next-generation genomics Fast, low-cost gene sequencing, advanced big data analytics, and synthetic biology (“writing” DNA) 4
  • 10. McKinsey & Company | 9 The correlation between hype about a technology and its potential economic impact is not clear SOURCE: Factiva; McKinsey Global Institute analysis 100 1,000 10,000 100,000 100 1,000 10,000 Media attention Number of relevant articles in major general interest and business publications over 1 year (log scale) Potential economic impact across sized applications $ billion (log scale) Mobile Internet Automation of knowledge work The Internet of Things Cloud technology Advanced robotics Autonomous and near-autonomous vehicles Next- generation genomics Energy storage 3D printing Advanced materials Advanced oil and gas exploration and recovery Renewable energy NOTE: Estimates of potential economic impact are for only some applications and is not a comprehensive estimate of total potential impact. Estimates include consumer surplus and cannot be related to potential company revenue, market size, or GDP impact. We do not size possible surplus shifts among companies and industries, or between companies and consumers. These estimates are not risk- or probability-adjusted.
  • 11. McKinsey & Company | 10 Estimated potential economic impact of technologies from sized applications in 2025, including consumer surplus SOURCE: McKinsey Global Institute analysis Range of sized potential economic impacts Impact from other potential applications (not sized)Low High X–Y $ trillion, annual Renewable energy 0.2–0.3 Advanced oil and gas exploration and recovery 0.1–0.5 Advanced materials 0.2–0.5 3D printing 0.2–0.6 Energy storage 0.1–0.6 Next-generation genomics 0.7–1.6 Autonomous and near- autonomous vehicles 0.2–1.9 Advanced robotics 1.7–4.5 Cloud technology 1.7–6.2 Internet of Things 2.7–6.2 Automation of knowledge work 5.2–6.7 Mobile Internet 3.7–10.8 Notes on sizing ▪ These estimates of economic impact are not comprehensive and include potential direct impact of sized applications only. ▪ These estimates do not represent GDP or market size (revenue), but rather economic potential, including consumer surplus. ▪ Relative sizes of technology categories shown here cannot be considered a “ranking” because our sizing is not comprehensive. ▪ We do not quantify the split or transfer of surplus among or across companies or consumers. Such transfers would depend on future competitive dynamics and business models. ▪ These estimates are not directly additive due to partially overlapping applications and/or value drivers across technologies. ▪ These estimates are not fully risk- or probability-adjusted.
  • 12. McKinsey & Company | 11 Each selected technology can also be assessed across three dimensions for potential impact on chemicals and advanced materials SOURCE: McKinsey team analysis Market growth ▪ Potential to grow at an accelerated pace to a multiple of the current market size under certain circumstances ▪ But often “binary” outcome: “explosive market growth in double digit percentage points” or – if fails or delayed – “attractive growth slightly above GDP” I Technology landscape ▪ Potential to require new chemical/materials technologies and solutions in order to succeed or more massively penetrate ▪ Potential to replace current technologies completely II Business models/value chain ▪ Potential for new business models to extract more value or shift value from other value-chain steps ▪ Potential to make current value chain steps obsolete III Description
  • 13. McKinsey & Company | 12 Digitally enabled technologies tend to follow an exponential growth trajectory (a la Moore’s law), making the linear view misleading SOURCE: Ray Kurzweil, developer of the concept of “The Law of Accelerating Returns” (aka the S-curve) in digital/disruptive technology evolution Why it’s important to appreciate exponentiality ▪ Confusing linear with exponential perspective is the most frequent mistake that prognosticators make in considering future trends ▪ Most people tend to hold a linear view of the future; that’s why we tend to: – Overestimate what can be achieved in the short term (because we tend to leave out necessary details) – Underestimate what can be achieved in the long term (because exponential growth is ignored) ▪ Case in point: Most biochemists in 1990 were skeptical of the goal of transcribing the entire human genome in a mere fifteen years – These scientists had just spent an entire year transcribing a mere one ten-thousandth of the genome – Even with reasonable anticipated advances, it seemed natural to them that it would take a century, if not longer, before the entire genome could be sequenced
  • 14. McKinsey & Company | 13 Over the past 200 years, the world has experienced unprecedented acceleration in economic growth fueled by several disruptive technologies 100 1,000 10,000 1600500 1800 18501750 1900 20001950150100 170016501550200 250 Estimated global GDP per capita $ 1450 Efficient steam engine 1769 Mass- produced steel 1855 Internal combustion engine Internet Today Technology advancements First steam engine 1698 1860 1970s Printing press First Industrial Revolution 1760s to 1840s Second Industrial Revolution 1860s to 1920s SOURCE: Angus Maddison, “Statistics on World Population, GDP and Per Capita GDP, 1–2008 AD,” the Maddison Project database; McKinsey Global Institute analysis Thanks to the exponential growth trajectory [of many disruptive technologies], we won’t experience merely 100 years of progress in the 21st century; it will be more like 20,000 years of progress (at year 2000 rate). - Ray Kurzweil, Director of Engineering, Google
  • 15. McKinsey & Company | 14 How disruptive are the four technologies we’ve picked in terms of their capacity for driving growth, technology and value chain disruption? Low Medium High High Medium Low Graphene/ CNT Next generation genomics 3D printing Capacity to disrupt – technology landscape II Capacity to disrupt – Business models/ value chain III Potential market impact – demand growth/shift in chemicals and advanced materials I ONE TEAM’S INITIAL POINT OF VIEW Advanced oil & gas exploration and recovery
  • 16. McKinsey & Company | 15 Introducing our distinguished panel • Farren Isaacs is assistant professor of Molecular, Cellular and Developmental Biology and Systems Biology at Yale University. His research is focused on finding ways to construct new genetic codes and reprogrammable cells that serve as factories for chemical, drug and biofuel production. As a research fellow in genetics at Harvard, he invented enabling technologies for genome engineering. He received a B.S.E in Bioengineering from the University of Pennsylvania and Ph.D. in Biomedical Engineering- Bioinformatics at Boston University. • Chris Krampitz has over 20 years of experience innovating manufacturing and materials sciences. He leads innovation and strategy at Underwriter Laboratories (UL) Digital Manufacturing Technologies division. He was a research engineer and technology advisor in the oil & gas and manufacturing industries. Chris earned an MBA/PhD from The University of Chicago Booth School of Business. He holds a B.S. in Chemical Engineering from Texas A&M University. • Miguel Mireles develops business in chemicals and materials at Grace Matthews on select buy and sellside engagements. Mireles was a VP and Head of Business Development at Xolve, a venture company that disperses graphene and other nanocarbons into thermoplastics and thermosets for a variety of automotive, industrial and consumer applications. He worked in fundraising and IP strategy. He holds a B.S. in Chemical Engineering (Texas Tech University), an M.B.A. (University of WisconsinMadison), and a Juris Doctorate (U. of Wisconsin Law School). • Mishele Lesser was mightily inspired by the completion of the Human Genome Project in 2003 and has been an information designer and visual learning specialist exploring human evolution, genomics, culture, and identity ever since. As The Multicultural Matrix program director, for 15 years, she has pioneered STEAM (science, technology, engineering, art and mathematics) programs in 50 schools in GA, MA and NY. Lesser holds an MFA from Pratt Institute (NY), an MA from Savannah College of Art and Design (GA), and a BA from Hampshire College (Amherst, MA).
  • 17. McKinsey & Company | 16 What are the commonly held beliefs that happen to be contrary to the reality or promise of disruptive technology X today? SOURCE: Ray Kurzweil, The Singularity is Near: When Humans Transcend Biology (2005)
  • 18. McKinsey & Company | 17 What are the three things disruptive technology X could do to render certain existing products/services obsolete or redundant?
  • 19. McKinsey & Company | 18 Do you see any clear winners, e.g., companies or business models, emerging with disruptive technology X today?
  • 20. McKinsey & Company | 19 What are some of the ways combinations of several disruptive technologies could create something truly exciting?
  • 21. McKinsey & Company | 20 What are the biggest barriers to adoption you hear about when talking to potential users/customers of disruptive technology X? Competitive economics Environmental regulations Public trust
  • 22. McKinsey & Company | 21 Price of natural gas has been somewhat more stable than that for crude oil in recent months and years SOURCE: CMAI/IHS Chemical; team analysis 0 20 40 60 80 100 120 Jun- 2014 May- 2014 Apr- 2014 Mar- 2014 Feb- 2014 Jan- 2014 Dec- 2014 Nov- 2014 Oct- 2014 Sep- 2014 Aug- 2014 Jul- 2014 Jan- 2015 Monthly crude oil price, WTI (NYMEX) USD/barrel 0 1 2 3 4 5 6 Aug- 2014 Nov- 2014 Oct- 2014 Jul- 2014 Mar- 2014 Apr- 2014 Feb- 2014 Jan- 2014 Jun- 2014 May- 2014 Sep- 2014 Dec- 2014 Jan- 2015 Monthly US natural gas price, contract burner tip USD/million BTU 0 20 40 60 80 100 2005 201020092008 2012 2014 201520132011 2016F20072006 Annual average crude oil price, WTI (NYMEX) USD/barrel 0 2 4 6 8 10 2011 20132005 2016F20152010 20142012200920072006 2008 Annual avg US natural gas price, contract burner tip USD/million BTU
  • 23. McKinsey & Company | 22 There are primarily three market scenarios for balancing global demand and supply for crude oil SOURCE: McKinsey Energy Insights Global Liquids Supply Model What do you have to believe for these prices to stay? Sustained price range Spare capacity MMbbl/d Loosening $60-80/ barrel ▪ OPEC will be unwilling or unable to maintain a cut in production ▪ Technology will push down breakeven costs for new production (e.g., oil sands, ultra-deepwater) ▪ Weak global economy drives soft demand 9 – 14 Balanced $90- 110/ barrel ▪ OPEC continues managing pricing through supply (most of the spare capacity still in the hands of Saudi Arabia) ▪ Demand has adjusted expectations to these “high” oil prices 4 – 6 Tightening $120- 140/ barrel ▪ Additional production (or alternative sources) will not be able to ramp up quickly ▪ Demand destruction is not significant or longer term 0 – 1 Price ranges provided are for sustained levels; market volatility may result in oil prices moving outside the indicated range for short periods
  • 24. McKinsey & Company | 23 While starting in North America, the boom of unconventionals and new conventionals will continue to create new opportunities in other regions SOURCE: McKinsey oil and gas practice; Expert interviews 1 Flags based on most advanced basins in China (Sichuan basin) and Australia (Cooper basin). Other basins are still at the land acquisition stage 2 Measured as global value of fracturing chemical formulations 2012 3 Measured as share of EOR projects 2012 Country evolution on unconventional s-curve (Case example: fracturing) USD/ Acre ‘Land acquisition’ ‘Commercial pilot’ ‘Development’‘De-risking’ US Canada 1 UK Argentina - rest Australia China Poland Ukraine Mexico 1 Algeria Brazil Indonesia Russia Argentina- Neuquén basin Colombia Chile France Romania Venezuela Currently, most disruptions happen in North America, e.g., ▪ ~95% of global fracturing activity2 ▪ ~67% of global EOR activity3 …but within the next decade further strong penetration in other regions is expected
  • 25. McKinsey & Company | 24 4.9 6.5 0.2 -0.2 10.3 CAGR, 2011-20 Percent SOURCE: Rystad Ucube 2011, McKinsey Conventional gas Conventional oil Deepwater oil Unconventional oil Unconventional gas 2020 155.7 71.7 46.5 11.4 45.8 6.5 5.2 8.9 7.3 16.79 4.8 13.6 2011 138.9 12.5 72.7 4.9 Key growth countries ▪ US, Canada, China ▪ US, Canada ▪ US, Nigeria, Brazil, Angola Overall outlook on unconventional fossil fuel production is positive but does not show ‘disruptive explosion’ in terms of growth rates Global fossil fuel production Mboe/d
  • 26. McKinsey & Company | 25 There are several approaches to separating the hype from reality for the shale gas and oil revolution Well typeA Well life cycle B Value chain step C Oil Gas Conventional Unconventional Drilling & cementing Stimulation Production 1-6 months 1-6 months 2-30+ years Chemi- cals Formu- lation Oilfield services (OFSE) Oilfield opera- tors RegionD Drilling chem.Fracturing chem. Asia/Pac. 9MEA 19 Europe & CIS 17 LATAM 12 US & CA 43 RoW 5 US & CA 95 ▪ Yes, shale gas and “shale oil” (light tight oil=LTO) are the most important disruptions … ▪ … but we cover all other sources as well; and – if you didn’t know – there is also EOR1 and offshore ▪ Yes, this is relevant for major players in basic and specialty chemicals … ▪ … but also for formulators, OFSEs and oilfield operators ▪ Yes, of course we look deeply into fracturing and fracking chemicals … ▪ … but we also cover the rest of stimulation as well as drilling & cementing, and production ▪ Yes, currently fracking is a US story … ▪ … but over the next 5-10 years it will become commercial in other regions; also, drilling & cementing, and production are already highly relevant in other regions today 1 Enhanced oil recovery
  • 27. McKinsey & Company | 26 The well life cycle of drilling & cementing, stimulation and production are most relevant for chemicals – strongest disruption in stimulation & EOR SOURCE: IHS Chemical 1-6 months 2-30+ years Well life- cycle time Months to years ▪ Newly fractured well count ▪ Frac stages ▪ Production well count ▪ Oil and gas production Key players 1 Includes continuous water treatment and EOR activities 2 OFSE = Oilfield service & equipment company 3 Unconventionals often require more drilling efforts & number of rigs is higher Key driver of consumption 1-6 months 1-6 months Oil field operators OFSEs2 OFSEs2 Oil field operators OFSEs2 Global O&G field chemicalsMost relevant for chemicals Production1 Exploration Field abandon- ment Drilling & cementing Stimulation • Acidizing • Fracturing Market size 2014, USD bn CAGR 2014-19 Included in drilling and cementing 18.1 33.4 6.0 57.5 3.3% 4.0% 3.5% ▪ Rig count ▪ Abandoned well count 3.4% North America = 5.5% Included in production ▪ Rig count
  • 28. McKinsey & Company | 27 What are the three questions about disruptive technology X that no one is asking but should?
  • 29. McKinsey & Company | 28 Now with the benefit of the panel discussion, how disruptive do you think are the four technologies? Low Medium High High Medium Low Graphene1 Advanced oil & gas exploration and recovery Next generation genomics 3D printing Capacity to disrupt – technology landscape II Capacity to disrupt – Business models/ value chain III Potential market impact – demand growth/shift in chemicals and advanced materials I FOR DISCUSSION Potential reassessment after panel discussion 1 Positive, disruptive market outlook not considered likely for CNTs
  • 30. McKinsey & Company | 29 Thank you! Dr. G. Sam Samdani Phone +1-973-549-6605 MGI report Sam_Samdani@mckinsey.com http://www.mckinsey.com/insights/business_technology/disruptive_technologies E-mail
  • 31. February 5, 2015 • Penn Club Panel discussion. From left: Sam Samdani, Miguel Mireles, Chris Krampitz and Farren Isaacs www.cmeacs.org
  • 32. February 5, 2015 • Penn Club The elegant Tarnopol Room of the New York Penn Club, a historic clubhouse landmark at the core of New York City. www.cmeacs.org
  • 33. February 5, 2015 • Penn Club CM&E STEM Supporters from Elsevier’s Segment Marketing. From left: Christina Valimaki, Director, and Ijeoma Mbamalu, Sr. Manager. www.cmeacs.org
  • 34. Anahit Stepanyan B.S. Student Chemistry NYU Est. Graduation Year 2016 Anna Powers Ph.D. Student Chemistry NYU Est. Graduation Year 2015 Debra Rooker Ph.D. Student, Chemistry NYU Est. Graduation Year 2017 Allegra Mondillo B.S. Student Chemistry NYU Est. Graduation Year 2015 www.cmeacs.org
  • 35. Pamela Penawou Chemistry Freshman NYU Welcome Pamela. She is CM&E’s new Student Volunteer. Xiao Zhong Ph.D. Student Chemistry, NYU Graduation Year 2015 Congratulations to Xiao for getting a summer internship at Evonik Inc. in Piscataway, NJ. www.cmeacs.org
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