As the oil and gas industry faces persistent pressure to cut down emissions, service companies are seeing opportunities offered by the energy transition. The oilfield service (OFS) providers are reshaping their technology stack and service portfolios to achieve operational and cost efficiency, reduce carbon intensity, and actively scale up clean energy development and deployment schemes in various capacities. These steps are not only triggered by their own sustainability goals but are also driven by the demand that the market, specifically the E&P companies, is moving toward a more sustainable, less carbon-intensive future. The pace of the transition and the technologically complex challenges ahead have brought changes at existing services companies and opened avenues for new players to join the game.
In this article, we explore the different themes of energy transition that service companies participate in to help build a more sustainable and secure energy future:
- Emission Management
- CCUS
- New Energy Investment
- Technology Development
Emission Management
The oil and gas industry is heavily dependent on service providers, and the service companies have a fair contribution to emissions too. Service providers are reshaping their strategies toward emission management and are committed to helping customers reduce their carbon footprints. Remote drilling and automation, optimizing rotating equipment and flaring, and methane monitoring and analytics are some of the segments where service providers are well equipped with their technology stacks. Direct and indirect emission sources by oil and gas companies are defined by three scopes: Scope 1, 2, and 3. This section dives into how service companies are planning their management in these scopes.
Schlumberger has formed a Transition Technologies portfolio to address the baseline issue of focusing on the Scope 1, 2, and 3 emissions. The aim is to address fugitive emissions, flaring, electrification of well construction, and full-field development solutions. The company has a breakdown of its Net-Zero 2050 goal in several short-term milestones to be achieved in 2025 and 2030, where it plans to reduce Scope 1 and 2 emissions by 30% and 50%, respectively (Schlumberger). The company has also launched Celsius Energy in the heating and cooling business with its innovative solution to reduce associated CO2 emissions from buildings by almost 90% (Schlumberger).
Baker Hughes is investing in a low-carbon technology portfolio and prioritizing its net-zero strategies across the company. It has developed a roadmap with nine key building blocks necessary to achieve net-zero Scope 1 and 2 carbon emissions by 2050, which includes sustainable supply-chain framework and continued investment in research and development of low-carbon technology. The company stated that it has already achieved 15% reduction in Scope 1 and 2 over the past year and that it intends to expand accountability with Scope 3 emissions across the value chain. Avitas, a Baker Hughes venture, uses the LUMEN Sky Drone solution to detect and quantify methane leaks. This cost-effective method was tested by Shell through 500 test flights since 2018, contributing to meeting Shell’s goals of maintaining methane emissions intensity below 0.2% by 2025 (Baker Hughes).
In a letter to the Science-Based Targets initiative (SBTi), a collaboration between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature, Halliburton said that it is committed to a 40% reduction in combined Scope 1 and 2 emissions by 2035 and is working with suppliers to track and reduce Scope 3 greenhouse gas emissions. Through the Sustainability Labels initiative, Halliburton is coordinating with its customers to further identify emissions-reduction opportunities. The company reduced its real estate footprint by 22% (since 2020), lowering its energy use and emissions load. Halliburton is also investing heavily in research and development efforts to increase its efficiency in reducing emissions. As an example, its new tier-4 dual fuel-pumping units enable operators to use field gas that they may have otherwise flared. Use of flare gas paired with tier 4-compliant engines results in improved emissions profiles for both Halliburton and the operator (Halliburton). Another notable example is the launch of electric-fracturing (known as e-frac) fleets that eliminate direct carbon emissions and produce less noise, odor, and fumes. The company has successfully deployed the industry’s first grid-powered electric project to power the pumps directly from the grid, resulting in a low emissions profile for a fracturing site (Halliburton).
Reduction in greenhouse gas emissions is not achievable without the full support of the value chain, i.e., suppliers, customers, governments, and global financial institutions. To move from targets to action, a comprehensive approach is necessary and it must include strategy, financing, scale, and alignment through radical collaboration. Net-zero emissions is the new talk of the town. The pathways to achieve this goal need more details to realize the multibillion-dollar projects in the future.
CCUS
With E&P companies aggressively announcing their net carbon-emission targets, the big question remains as to how these targets can be achieved. It is estimated that CO2 abatement may reach 0.5 Gt per year by 2030 (today’s annual emissions are around 41 Gtpa) (McKinsey 2020). One potential way forward is believed to be carbon capture, utilization, and storage (CCUS). The petroleum industry is already seen to be a great fit for CCUS. Services companies have, for decades, made tremendous technological progress in understanding and dealing with complex subsurface rock and fluid interactions.
Such a market edge allows them to further explore and develop expertise when it comes to assisting E&P and other companies toward successful CCUS projects. The role of these service providers exists in the entire chain of CO2 storage projects, from providing solutions for prospect identification to modeling, to appraisal, and then further into the maturation phase of development, injection, and monitoring. OFS giants such asSchlumberger and Baker Hughes are making available a portfolio of services to cater to the lifecycle of CCUS. In 2020, Baker Hughes acquired Compact Carbon Capture (3C), a pioneering technology development company specializing in carbon-capture solutions (Baker Hughes).
PGS and CGG are working together to develop multiclient data collaboration for CO2 storage to establish a partnership for analyzing and gaining vital value from existing seismic data to facilitate screening and evaluation of carbon storage sites (PGS). Similarly, TGS in collaboration with Magseis Fairfield will utilize high-resolution 3D seismic acquisition at a carbon storage area to demonstrate technology for detailed imaging of the full section, from the seabed to the target storage reservoir (TGS).
OFS companies are increasingly stepping out of their comfort zone and investing in technologies to capture and utilize CO2 in ways other than storing it underground. Recently, Schlumberger collaborated with Chevron, Microsoft, and Clean Energy Systems to develop Bioenergy withCarbon Capture and Sequestration (BECCS), a project to produce carbon-negative power in Mendota, California. This collaboration aims to convert agricultural waste biomass into a renewable synthesis gas to generate electricity and capture roughly 99% of the carbon from the BECCS process to permanently store the same into nearby deep geologic formations. The project aims to remove approximately 300,000 tons of CO2 annually (Schlumberger). Similarly, Baker Hughes recently invested in bio-methanation technology company Electrochaea which plans to combine its post-combustion carbon-capture technology with Electrochaea’s biomethanation technology to develop and commercialize an integrated carbon capture and utilization solution (Source).
These examples are only a glimpse of the concerted effort undertaken by some of the numerous OFS companies toward successful CCUS implementation. The CCUS space is gaining momentum at a great pace allowing opportunities for these companies to capture the market. Nonetheless, many new players have sprung up to capitalize on the situation. How the future unfolds will be interesting, to say the least.
New Energy Investment
Future generations depend greatly on oil and gas companies to ensure the longevity of a clean atmosphere and diverse ecosystems. To meet the goal, it is not surprising for the companies to transition toward cleaner and greener energy sources such as renewables. Many of the supermajors—BP, Shell, Chevron, Total, Eni and Exxon—
have pumped billions into clean energy projects. For existing service companies and investors to lead in the renewables race, it is imperative that they form a consortium with new energy players to support their traditionally petroleum clients. The service providers are using their technical expertise to help customers develop renewable and alternative energy sources such as geothermal, wind, and CCUS.
The tables below provide an overview of some of the many initiatives undertaken by services companies to explore the area of new energy investments. It is by no means a comprehensive list but is aimed to provide an insight into the emerging trends. The activities listed are not limited to the OFS giants; new players have emerged to capitalize on opportunities.
Solar
| Halliburton | Solar power installation in California (Bakersfield), India (Taloja), Malaysia (Johor), and Singapore to circumvent carbon emissions of 3700 metric tons per year (Source) |
| Baker Hughes | Uses on-site solar power at multiple sites in the US, Italy and other few locations (Source) |
| Global players | Five major solar panel companies: LONGi Solar, JinkoSolar, JA Solar, Trina Solar, and Canadian Solar. Majority of the players are Chinese with East Asia being the global solar manufacturing hub (Source) |
Wind
| Baker Hughes | Using 100% wind power in 20+ facilities in UK since 2014. Announced an agreement with a European energy company Fortum in 2021 to power facilities and operations in Russia (Source) |
| Global players | Top players are Vestas, GE Renewable Energy, Chinese supplier Goldwind, Envision, and Siemens Gamesa. Vestas remains in the lead for the fifth year in a row with an 82-GW capacity across 76 countries (Source) |
Electric
| Schlumberger | Launched NeoLith Energy which has developed a sustainable direct lithium extraction (DLE) process with reduced groundwater footprint and environmental impact. Partnered with Panasonic Energy to work on its pilot plant in Clayton Valley, Nevada (US) (Source). Also, collaborated with EnerVenue to invest in the nickel-hydrogen battery technology (Source) |
| Global players | Top three battery makers—CATL, LG, and Panasonic—combine for nearly 70% of the EV market. The top 10 EV battery manufacturers are all headquartered in Asian countries, concentrated in China, Japan, and South Korea (Source) |
Geothermal
| Schlumberger | Worked in the successful installation and operation of nearly 8,000 MW of geothermal power and enabled more than $14 billion in geothermal project financing (Source). Also launched GeoFrame Energy with Thermal Energy Partners and presently working on a 10-MW geothermal power project in the island of Nevis (Caribbean) (Source) |
| Baker Hughes | 40 years of geothermal experience in supplying equipment, products, and services on over 1800 geothermal wells in 25 countries (Baker Hughes). They are associated with deepest (4659 m) and hottest geothermal directional drilling in Iceland where the highest measured temperature was 426°C at 4560 m (Source) |
| Eavor Technologies | Canadian geothermal startup. Uses a patented closed-loop system, which does not require any fracturing; thus excludes the risk of GHG emissions and earthquake risk. Received $40 million investment by the venture arms of BP and Chevron (Source) |
Hydrogen
| Schlumberger | Launched Genvia with the French Alternative Energies and Atomic Energy Commission (CEA) aiming to accelerate the development and the first industrial deployment of the CEA high-temperature reversible solid-oxide electrolyser technology (Source) |
| Baker Hughes | Built the first turbine in the world to run on 100% hydrogen for the Fusina Hydrogen Power Project in Italy. Their High Pressure Ratio Compressors are capable of providing significant improvements in overall green H2 plant footprint, reliability, availability, and weight (Source). Recently, with Snam, Europe’s largest gas network operator, successfully completed the testing for the operation of the world's first "hybrid" hydrogen turbine designed for a natural gas transportation infrastructure (Source) |
Technology Development
The multibillion-dollar oil and gas industry has been ironically slow to invest in cutting-edge production technologies. High market prices and a steady influx of capital allowed them to stay complacent in their operational efficiencies. The capital that was once plentiful has seen a rapid decline for almost a decade and E&P companies now need to figure out a “new way” of doing business.
While this enormous shift may seem challenging, OFS companies—from existing industry giants to new players—all enter the digital age by selling products and services embedded with AI algorithms, advanced robotics, automation, and big data analytics, thereby helping E&P companies unlock their existing field potential and realize greater returns on project investments.
There are four areas with the greatest potential for digital impact across the value chain:
Data-Driven Decision—Assisted by AI
In the current environment, technology innovation is being pushed through integration and collaboration. Schlumberger, for instance, is focused on enterprise-wide deployment of AI and digital solutions enabled by its cloud-based DELFIcognitive E&P environment across global operations. Halliburton, the American multinational with its digital DecisionSpace 365 cloud application, is integrating microservices, machine learning, and AI, enabling operators to plan, design, and deliver safe, cost-effective, and productive wells. BHC3.ai, launched as a joint venture between Baker Hughes and AI specialist C3, is building enterprise-scale AI applications and accelerating digital transformation for the oil and gas industry. While these service companies dive deep into AI, operators collaborate and discover powerful analytical solutions to lower their cost of ownership.
Intelligent Automation
Automation has slowly been making its way into the oil and gas sector and steadily debunking the idea of an unsafe workplace environment in its presence. Schlumberger for instance is looking to create impact at scale by bringing in autonomous directional drilling solutions built upon four distinct verticals: intelligent planning, intelligent execution, surface automation, and downhole automation. It also recently collaborated with NOV to combine Schlumberger surface and downhole drilling automation solutions with NOV’s rig automation platform to deliver superior well construction performance for its customers.
Halliburton with its real-time viewer HalVue and Automated Sperry Drilling LOGIX, is introducing an advanced, cross-functional way of operating across software, hardware, AI, machine learning, and downhole sensors to improve operations through remote execution and drilling.
Baker Hughes, known for deploying drilling solutions for years, is focusing on automated advancements like the i-Trak Drilling Automation Service Solution which provides a holistic approach to well construction and closes the loop between surface and downhole data. Baker Hughes first deployed the system for Equinor in October 2019 on an offshore development well in the Norwegian sector of the North Sea; Equinor now uses the system on eight of its North Sea rigs. These automation frameworks enhance the company’s ability to become digital and automates the petroleum industry from wells to wheels.
Internet of Things
Internet of Things (IoT) connects oil equipment to the web and cloud data centers and lets engineers aggregate data across their entire fleet of devices. This allows oil and gas companies to identify faulty equipment and helps field engineers predict and react quickly. This network of physical objects connected to the internet is proliferating and becoming a focus for numerous oil and gas organizations.
Schlumberger, the technology major, is offering dynamic intelligence to the field with edge computing and IoT solutions through Agora edge, the IoT startup venture that uses best practices to increase operational performance and reliability. As a step forward in the journey, Halliburton has made Decision Space 365 available on Azure, enabling real-time data streaming from IoT edge devices in oil fields and the ability to apply deep-learning models to optimize drilling and production. By partnering with Capgemini, BHGE implemented an industrial internet solution that gathers data from all manufacturing devices and machines to provide operators and engineers with the ability to adjust production at a moment’s notice.
Blockchain
While harvesting precious raw material is the core operation of oil and gas companies, a safe and transparent means of transaction is equally important. Blockchain technology provides the platform to make energy products a digital asset and solve these issues, thereby eliminating misallocations and allowing a verifiable process with infinite scaling potential. A specific example is that of fueling an oil tanker and automatically charging the cost to the supplier with no human interaction. Perhaps the most pertinent benefit of blockchain technology to the oil and gas industry is related to the use of smart contracts—encoding an immutable record of operations to automate contracts and also pay vendors.
One such partnership is between Emirates National Oil Company and BlockChain Gemini, who together are developing solutions using IBM’s Hyperledger and Amazon Cloud web services. Schlumberger is also using blockchain technology and market mechanisms to unlock investment in carbon reduction, ensuring that each ton of CO2 reduction is properly accounted for and not duplicated. While companies have been optimistic about their new ventures, only careful analysis of evolving trends will reveal if blockchain technology will be transformative or transient.
Startups
The shift to a low-carbon future is turning the economy inside out. The oil and gas policies have a crucial role to play but it is the business that will thrive in the energy transition. Adoption of new and radical digital solutions is a prime focus for the upstream oil and gas industry. The government and environmental institutes increasingly rely on “green” startup firms when it comes to reconciling the shift to renewables with economic success.
- Oil and Natural Gas Corporation, an Indian multinational oil and gas company owned by the government, announced a $15 millionfund to invest in startups. It also recently invested in Tachyus, a Silicon Valley-based startup that operates data-driven services to help producers determine how to cut costs. Tachyus has raised $20.2 million in funding, including a $13 million investment from Founders Fund.
- Hiber, an industrial Internet-of-Things startup, signed an agreement with Shell to provide well-integrity monitoring solutions globally.
- Data Gumbo, transforming the blockchain landscape within the oil and gas industry, received equity funding with Saudi Aramco Energy Ventures and Equinor Technology Ventures to close in its series-B funding round of $4 million, led by newinvestor L37.
- UiPath, an American global software company for robotic process automation founded in Romania, allows customers such as Chevron to configure computer software—a “robot”—to emulate the actions of a human interacting with one or more digital systems.
- Resoptima is combining physics and data-driven reservoir modeling to enable E&P companies to make more informed decisions under uncertainty.
- On the drilling and completions end, Corva is providing analytics and data-driven insights for optimal decision making.
While there are countless startups entering the energy landscape, it is crucial for oil and gas companies to attend to these creative innovators who are working to meet radical change initiatives at a faster pace.
Conclusion
Technology is playing a tremendous role in this journey and as always, the services sector is stepping up for the solutions. However, with this new trajectory, there are new challenges. As operations become more digital, there are increased concerns relating to data security and management. With automation, the question of reskilling and training of the staff remains. Not all the transitional technologies are economically viable. Sufficient effort is required to make the economics of new technologies suited for implementation, and global policies can have a huge impact on how the journey continues.
The article has tried to present the activity undertaken by the services sector to cater to the needs of a sustainable future. We mapped the role of E&P companies in this journey in thefirst part of this two-part series. An important take away from these two articles is that the future is being carved aggressively; it will be interesting to watch how it evolves in a few years’ time.