The world’s third-biggest oilfield services provider is looking to expand its offerings for wind and solar energy suppliers, as it begins to contemplate a future world without hydrocarbons.
“This is the start of a tipping point,” Baker Hughes Chief Technology Officer Derek Mathieson told Bloomberg last week. “If we want to stay relevant we have to change not only our message, the brand of who we are, but what we actually do and what we deliver.”
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The comment comes at a time when the company’s share value is down 25% in just a year. But Baker Hughes is doing better than its bigger competitors, Schlumberger Ltd. and Halliburton Co., whose shares are down 40 and 42%, respectively.
“While some of the world’s biggest oil explorers have finally begun to address the issue of climate change and how they’ll adapt, Baker Hughes and its peers—the hired hands of the oilpatch—have until now largely stayed out of the public debate,” Bloomberg reports. But “that may be changing,” with the company now pledging to “eliminate carbon emissions on a net basis” by 2050.
That happened after Baker Hughes “examined forecasts from oil companies and advisory groups on what the energy mix will be in 2040 and realized that by then, non-fossil fuels could account for as much as 45% of all energy demand,” Bloomberg states, citing Mathieson.
“Kind of net, net if you’re in your most extreme case, there’s still a hydrocarbon business that’s a just little bit bigger today than it is today globally by 2040,” he said. “We can’t lose the grassroots momentum on what we’re actually good at, but I do think the whole sector is trying to reinvent itself on what we’re going to be more relevant on the energy stage.”
At least one analyst was dismissive of Mathieson’s future focus. “Baker Hughes shareholders care about cash flow generation now,” James West of Evercore ISI told Bloomberg. “They don’t care about 2050.” But Mathieson maintained that “my head is in this energy innovation space rather than just being oil and gas services.”