How is Baker Hughes strategizing for the green energy transition?
We are an energy technology company that provides capabilities across the energy value chain, and our revenues are associated with the oil and gas sector, where we provide extraction services and equipment, as well as digital software and hardware tech to reduce emissions within production. Looking at where the green transition is headed with greenhouse gas emissions needing to be reduced, our portfolio also extends into the industrial segment: metal and cement companies, the mining industry, etc. We are the world leader in liquefaction and are in favor of using natural gas since it has the lowest emissions from a fossil fuel perspective. Our goal is to help advance the energy transition through carbon capture storage, clean integrated power solutions, and the hydrogen energy mix.
How is technology making the oil and gas sector more sustainable?
Deploying technology to reduce the level of emissions within operations is the core of our work. With the help of technology we have developed, we can lower emissions in many different ways.
For example, we offer a solution called Flare.IQ, which uses sensors and advanced analytics to drastically lower the amount of flaring, and our integrated compressors allow for low to no-emission and no leak valves.
There is also a digital side to technology in this space, growing through optimization and efficiency software, which draws on algorithms for artificial intelligence to reduce non-productive time and lower emissions. Across our portfolio, we can go from capturing CO2 all the way to storing it given our knowledge in compression, capture and storage through drilling.
We are also placing our bets on hydrogen - a clean fuel source that is definitely going to become a future part of the energy mix. Making green hydrogen a main actor requires a solid ecosystem where there is a way to use electrolyze as a production means. We are constantly working on the best ways to exploit this resource, and the best example of our equipment being put to work is on the Neom project in Saudi Arabia.
Are clients eager to adopt new and innovative technologies?
When it comes to carbon capture, utilization and storage (CCUS), there are a number of industrial clusters around the world that capture the CO2 from an industrial area and then transport it to where it will be stored in offshore or onshore reservoirs that have been depleted. When possible, we try to work with governments regarding laboratories and technology incentives, but most importantly, we need to create a web of partnerships. There is an increasing opportunity to develop a business model that could help industrial clusters with their waste management from the perspective of CO2.
Everybody understands the importance of “going green”, but it comes down to an alignment of policies, regulations and investments. At Baker Hughes, we are focused on bringing together all the stakeholders to incentivize the development of new technologies. The overall landscape is looking good, with the Inflation Reduction Act being a major step towards driving the energy transition; alongside some countries in Europe placing a tax on carbon.
Everybody talks about localizing supply chains, is Baker Hughes also a follower of this trend?
Our belief is that we must play both globally and locally, and always remain competitive. Assessing the situation from a customer perspective and choosing to go with the best outcome is a central point of our business model. We are not totally dismissing the idea of localizing our supply chain, but this decision will be made only when and if it makes sense, from a financial standpoint.
If you could modify, change or add a regulation, what would it be and why?
Getting alignment between the different standards and boards and external reporting is essential for the deployment of investment, so a regulation regarding the homogeneity of ESG reports would be wonderful. Also, we are craving for a clear way to define and work through Scope 3 emissions.
Which would be some of the milestones you would like to achieve in the next five years?
We generally like to expand where there are market opportunities. In August, we opened a new chemicals facility in Singapore, since the need for chemicals in the Eastern hemisphere is continually increasing. The demand for oil and gas in the Middle East is also a strong driver for us at the moment, and we feel like there is an overall opportunity from an addressable market, within CCUS and hydrogen, of $60 billion-$70 billion by 2030. By that time, we aim to be capturing 10% of the marketplace within both our business areas.
Do you have a final message for our readership?
We are in a very interesting juncture in energy that we call the energy ‘trilemma’ - the world needs affordable, sustainable, and secure energy; and we must be able to provide these. From the cleaner use of hydrocarbons and the increasing use of gas to LNG, and the development of hydrogen, we are there for our customers to have the outcome that everybody is striving for: net-zero emissions by 2050.
