Oil-field services speed adoption of clean energy tech

 Sergio Chapa Sep. 3, 2020 houstonchronicle.com

The largest oil-field services companies in the world are accelerating adoption of clean energy technology and renewables as the coronavirus pandemic continues to take its toll on their crude oil and natural gas businesses.

But the companies are carving out their own niches as they strive to grow these new ventures and make them profitable.

Houston oil-field services company Halliburton recently opened a 7,000-square-foot clean-energy technology lab at its northside headquarters. Halliburton Labs will house promising startups that will receive access to the company’s facilities, network and expertise in exchange for a minority stake in their companies.

There are several energy innovation labs and co-working spaces in Houston, but Halliburton Labs will fill a gap in the “startup ecosystem” and shorten the time it takes for the nascent companies to make the leap to being a profitable venture, Executive Director Scott Gale said.

“The way I look at Halliburton Labs is as a graduate program and very complementary to the incumbent programs in the Houston area,” Gale said. “There is a real need for startup support at industrial scale.”

Halliburton Labs’ first participant is Nanotech, a Houston company that specializes in developing spray-on, fireproof and energy-saving insulation. Nanotech co-founder Mike Francis said he and others at the startup were working out of his garage and raising money for a lab when Gale approached them about becoming the first tenant.

Before they can be sold on the market, Nanotech’s products need 100 certifications. Halliburton Labs can do 95 of the certification tests on site and can arrange for the remaining five, Francis said. If successful, the company would be able to use its products on everything from offshore oil platforms to pipelines to brewery tanks.

“If we were going to go to an outside lab, the tests would take months,” Francis said. “We’re cutting down the speed to market because we’re cutting months to weeks.”

Halliburton Labs plans to open the application process in September and select its first group of companies in January and then every four months. Lab memberships will last a year. The approach will not immediately financially benefit Halliburton, but Gale said the company’s low-cost approach saves money for tenants and pays dividends later.

“The clean-energy evolution is a long game,” Gale said. “You can already feel the changes coming in the industry but this is something that is going to take time and many hundreds of innovations to evolve.”

Houston’s Baker Hughes, a Halliburton rival, made clean energy a priority when CEO Lorenzo Simonelli announced early last year that it would achieve net-zero carbon emissions by 2050.

Since that time, the company entered into a deal to power all of its Texas facilities with renewables, expanded the deployment of electric fracking equipment and introduced the NovaLT12 turbine, which uses natural gas and hydrogen, which produces water vapor when burned.

Allyson Book came aboard as the company’s vice president of energy transition in December. Book’s team provides strategy across the company’s four businesses but she said her inbox is open to ideas from anybody inside the company.

“We don’t have a clean energy lab, we have a clean energy company,” Book said. “Everyone is an energy transition team leader.”

COVID required the company and others to quickly employ remote work technology and helped accelerate wider use of digital tools. As the pandemic changed energy market conditions, Book said, it helped cleaner sources of power compete with coal. Both factors, she said, are speeding the energy transition.

“A year ago, nobody would have ever thought that any of our industries would work from home,” Book said. “ We’ve shown that it can happen. And as a result, people are commuting less, facilities require less power to operate, and companies are restructuring to streamline costs and reduce their operational footprint and the energy sources they use long term.”

In a February decision, Schlumberger, the largest oil-field services company, tapped Executive Vice President of Technology Ashok Belani to become executive vice president of Schlumberger New Energy. CEO Olivier Le Peuch announced four months later that the company is developing two cleaner methods to produce hydrogen as a fuel source.

Most industrial hydrogen is made by breaking down natural gas into carbon and hydrogen atoms, which produce carbon dioxide as a byproduct. Schlumberger plans to add carbon capture and storage technology to the production process, which would help eliminate pollution.

The company’s GenviaTM technology uses power from renewables to create an electric current that breaks down water molecules into hydrogen and oxygen atoms.

Houston and Paris-based oil-field services company TechnipFMC plans to eventually power all of its underwater equipment with renewable energy, which would greatly reduce emissions from offshore oil and gas operations. Its subsidiary Genesis started offering more advisory services focused on the energy transition, which includes offshore wind power and hydrogen production.

Vikas Mittal, a business professor and oil field service company expert at Rice University, is hopeful but skeptical about the ability of the clean energy initiatives to successfully deliver profits.

The professor believes there might be some “herd mentality” psychology at play. Previous examples, he said, include when everybody in the oil and gas industry got into the unprofitable shale business or other trends where numerous companies appointed a chief safety officer or a chief sustainability officer.

“Copycatting is not being strategic,” Mittal said. “A strategic choice is one that creates fundamental value for the customer, one that creates structural change throughout the company.”

To embrace the energy transition, Mittal said the energy industry must rethink their business models the way Walmart did. The Arkansas-based retailer, he said, went from a clunky rollout of its curbside delivery service five years ago to becoming a digital commerce giant whose stores double as “fulfillment centers” that serve as a showroom and inventory warehouse or a pickup and return center.

“It’s a fundamental reimagining of a company while managing the decline of its legacy businesses — and that’s a non-trivial task,” Mittal said.