Over the last few years, Baker Hughes has invested heavily in technology R&D and the infrastructure to support the search for innovative technologies. At the same time, 2009 saw the service company change the way it endeavors to provide technology solutions to its clients. Jennifer Pallanich talks to Baker Hughes' president of products and technology Derek Mathieson about the company's restructuring and current technology trends and challenges in the industry.
The reorganization, from a product line approach to a geomarket organization, Mathieson says, was aimed at better aligning the service company's offerings to client needs. It's important to 'understand the challenge in that area from a reservoir standpoint, which is how our clients look at it,' he says. As such, Baker Hughes is now geared more toward 'solution spaces than product lines... it's a big change for us,' he says. 'There's been a fundamental shift in thinking on the point of arrival. A year ago, we were seeing seven different views of the world.'
Those seven views stemmed from the company's seven major product lines: Atlas, Baker Oil Tools, Baker Petrolite, Centrilift, Drilling Fluids, Hughes Christensen, and Inteq. Now, the company is arranged into nine geographic regions with product lines combined into the three business segments of drilling & evaluation, completions & production, and fluids & chemicals.
With a 'blended portfolio,' the company has stepped out from its well-known product lines and is now focusing on solutions for deepwater and shale gas, among others, that didn't exist at the beginning of 2009, he says. One example of this, he says, is the success the company had this year with field trials of the first steerable drilling liner system on an offshore application in Norway. This solution combines technology from the company's drilling and completion system product lines to reduce the number of trips in the well construction process.
Initially brought from his role as CEO at WellDynamics into Baker Hughes in December 2008 as the chief technology and marketing officer, in May 2009 his title became president of products and technology and he was put in charge of the product line re-organization. Speaking about the restructuring on the last day of his first year with the service company, he said, 'It's been a big shift. Schlumberger and Halliburton went through this as well. We're just trying to do it quicker.'
The re-organization hasn't been without its issues, he notes. 'It takes a long time, when you're steering a big ship, to really turn the corner.' Managing the change came down to communication, alignment and time, he says. Mathieson and his team are working on a strategic marketing plan and each geomarket, ie sub-region group, will have its own strategy.
'A lot of next year's going to be about execution,' he says.
Another chief focus for the company in 2010 will be bringing BJ Services back into the Baker Hughes fold, following the August 2009 announcement of Baker Hughes' intention to purchase BJ, which it initially spun off in 1990. '2010's going to be the start of the integration process,' Mathieson says.
The $5.5-billion acquisition is a sound one for Baker Hughes: the purchase brings several BJ competencies to Baker Hughes, including pressure pumping, coiled tubing, deepwater sand control – 'sand control is getting more and more complex,' Mathieson says – and cementing.
'Cementing is an area that we haven't really played in,' he adds.
Over the last two years, the service company has also been beefing up its geosciences chops to form its Reservoir Technology & Consulting Group, with the purchases of Gaffney Cline & Associates, GeoMechanics International, EPIC Consulting and RDS.
'By mid-2009, we were up to 350 people that were true geosciences reservoir staff,' Mathieson says.
Also last year, the service company opened up its $42 million Center for Technology Innovation in Houston. The center specializes in research to prototype stages of completion and production technologies meant to withstand extreme HPHT conditions with test facilities up to 700°F and 40,000psi, handle demands of deepwater, and optimize production. The CTI, Mathieson says, allows Baker Hughes to reduce development cycle times by having everything, including manufacturing, under one roof.
In September of last year, Baker Hughes spent $40 million to expand its Celle Innovation Center in Celle, Germany. This center, which dates back to the late 1950s, is dedicated to research, engineering and testing of drilling systems, telemetry and LWD tools. The latest expansion, which supports joint technology developments with operators and local universities, includes R&D;testing capabilities for drilling and production technology for the geothermal industry.
Over the summer, Baker Hughes also signaled its intention to focus on meeting regional needs by signing agreements with Petrobras and Saudi Aramco to jointly invest in region-specific R&D;projects at new Baker Hughes technology centers.
'These technology centers are going to have all of our product lines represented,' Mathieson says.
In Rio de Janeiro, where over the next four years Baker Hughes is planning to invest $28.7 million and Petrobras $16.4 million, the center will focus on pre-salt reservoir challenges, such as reservoir characterization, drilling optimization, well completion and production. The focus will be on deepwater well construction and assessment cost reductions and on production and reservoir recovery factor optimization.
The approach, Mathieson says, will be reservoir-driven development, which he believes will have an impact on the next generation of tools. 'Reservoir-driven technology is something we're seeing more and more.'
Brazil's pre-salt region, best known for its Tupi discovery that holds estimated recoverables of 5-8 billion boe, presents drilling and completion challenges with its HPHT environment and the need for specialized drilling fluids and whiledrilling technologies. 'You really need some very good LWD/MWD capability when you're drilling in this area,' Mathieson says.
Infrastructure is expected to be in place by this year or early next at the Rio Technology Center, Mathieson says, but programs are already ongoing with Baker Hughes sponsoring some university research programs and working with Petrobras on new projects and technologies.
The Dhahran center, to be located in the KFUPM Techno-Valley, will see Baker Hughes and Saudi Aramco researchers collaborating to develop new drilling, completion and production technologies targeting tight gas accumulations, reservoir optimization, drilling efficiency technologies and production and recovery optimization.
'Sensor development is a big piece of the R&D horizon for the region,' Mathieson says, noting one focus is on microgravity sensors for seeking changes in densities in a reservoir to identify oil, gas and water. While the technology exists, he says, it is currently surfacedeployed; the challenge is in placing the sensors in a wellbore.
In addition to the capital funds set aside for the infrastructure for the various technology centers, historically Baker Hughes has invested around 3.5% of revenues into R&D, increasing to over 4% of revenues in 2009.
The company has earmarked similar figures for 2010.
Some of that research funding will go for HPHT technologies. The drive to meet HPHT demands will likely continue to be a trend, Mathieson says. 'Temperaturewise, we're trying to get tools above the 200°C level' across the whole portfolio, he says. '200°C is the bar everyone's trying to reach.'
As always, technologies that reduce costs are also being looked at, such as single trip multizone completions for deepwater applications. Reliability also continues to be a focus. 'Higher reliability and simplification typically go hand in hand,' he says.
Nanotechnology is also getting its fair share of attention. 'A lot of hidden progress that you see is in the chemical world,' Mathieson says. These often help in the avoidance of asphaltene, scale, and such, as hydrocarbons are transported long distances. OE