This article first appeared in The Edge Malaysia Weekly on May 17, 2021 - May 23, 2021

IT is off to the races for all those involved in the oil and gas (O&G) sector — from governments to oil majors and service providers alike — to position themselves for a low-carbon future.

As Malaysia joins the fray with higher advocacy of natural gas, renewable energy (RE) and decarbonisation, New York Stock Exchange-listed Baker Hughes Co sees opportunities in that same changing landscape here.

“It’s about rebalancing the energy mix and making the current ecosystem cleaner through technologies like carbon capture. Asia is also a big play for industrial asset management, where we can increase our presence through our expertise in turbomachinery, as well as equipment monitoring and diagnostics,” Baker Hughes senior vice-president for Asia-Pacific Maria Sferruzza tells The Edge in an exclusive interview.

Opportunities in LNG machinery

Baker Hughes operates across four key segments, namely oilfield services, oilfield equipment, turbomachinery and process solutions (TPS), and digital solutions, which cover control, sensor and inspection capabilities that cut across the three aforementioned segments.

The group is a global leader in the gas space, particularly in the provision of turbomachinery for liquefied natural gas (LNG) facilities. It was also involved in Floating LNG 1 and 2 for Petroliam Nasional Bhd (Petronas).

“Knowing that the carbon neutrality concept is here to stay, one of the things we are paying high attention to is how to support the operators in decarbonising LNG,” says Sferruzza.

For existing installations, Baker Hughes is studying the opportunity of feeding power to LNG plants from RE sources on top of the traditional gas turbine system. “From the technology perspective, the application of aero-derivative gas turbines is also playing a big role in terms of increasing efficiency and reducing emissions,” she says.

To be sure, TPS is Baker Hughes’ only segment that grew year on year in 2020. Its advantage lies in the enablement of remote monitoring and diagnostics for critical machinery. There are more than 1,400 assets being monitored remotely globally, including 60 assets in Malaysia.

Digital interventions at our doorstep

It is worth noting that Kuala Lumpur houses one of Baker Hughes’ three digital remote monitoring centres, after Florence in Italy and Houston in Texas, the US.

“In Malaysia, our monitoring and diagnostics centres cover both turbomachinery and upstream [drilling and completion],” says Sferruzza.

“The logistics challenge we faced last year prompted us to move 70% of our global drilling operations remotely. And we executed in Malaysia for the first time as well, specifically in Greater D-18 [oil recovery project offshore Sarawak].”

The collaboration with Petronas on the 23-year project stems from one that started in the early 2000s, which leveraged Baker Hughes’ reservoir evaluation capabilities to analyse the D-18 field.

The two major players, together with Baker Hughes’ artificial intelligence (AI) associate C3 AI, have another ongoing digital collaboration to improve the reliability of Petronas’ energy assets in critical operations.

“The cooperation with Petronas has two aspects, particularly how we optimise operations and democratise the use of analytics,” says Sferruzza.

AI solutions are implemented first in the gas turbine and control value reliability applications, and the parties are in advanced stages of planning for a full-scale deployment, she adds. “The last step is to scale up [the project] at the enterprise level, deploying the approach across the value chain from upstream to downstream. We are also having similar conversations with other players in Asia.”

Maximise oilfield utilisation, then diversify

In the traditional O&G play, Baker Hughes is optimistic about Petronas’ offer of 13 exploration blocks and six discoveries under the Malaysia Bid Round 2021 launched in March.

“For sure, we see opportunity both in exploration wells as much as extension of life of depleting fields, with our huge presence here under the oilfield services segment,” says Sferruzza.

She also underlines several other technologies that would be “meaningful” in the region in the coming years, including hydrogen recovery, full shallow-water subsea solution for marginal fields and a drone-based methane leakage monitoring system.

Interestingly, Malaysia’s O&G fields present another unique opportunity due to its depletion levels, which is “not a common situation”, even in Asia, says Sferruzza. In line with the push for decarbonisation, the depleting fields allow storage of carbon dioxide. Further, utilisation of the gas is “very likely” as part of the enhanced oil recovery mechanism for late life assets such as the ones here, she adds.

Elsewhere, Baker Hughes has diversified into RE, including the wind turbine space through vibration monitoring and control systems technologies.

To stay relevant in a changing energy mix and low-carbon environment, the efforts of Baker Hughes — a technology company with more than 3,000 patents awarded in 2020 alone — is a testament to the agility of O&G companies in transforming with the times.

It is a necessary move for an O&G services giant whose share price is trading at lows last seen in the late 1990s, and whose major shareholder General Electric will exit in the next three years, after completing a buyout just four years ago.

“In the last six to eight years, the industry has had no capabilities to predict when the O&G cycle would start and end. The financials around the O&G market are going to be different, and that is why they say it is not business as usual. We are building on our competencies to make sure we support the operators in their journey to productivity and efficiency,” says Sferruzza.

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