Baker Hughes and Shell unite to speed up global energy transition

Oilfield services provider Baker Hughes and oil major Shell have joined forces to speed up the energy transition and reach net-zero carbon emission goals, in a push to decarbonise the energy and industrial sectors.

Baker Hughes reported on Wednesday that a broad strategic collaboration agreement was signed with Shell. The two companies aim to accelerate the global energy transition by helping each other achieve their respective commitments for net-zero carbon emissions and advancing decarbonising solutions for the energy and industrial sectors.

Lorenzo Simonelli, Baker Hughes chairman and CEO, commented: “Our agreement with Shell is another example of how we are collaborating in new ways to meet net-zero targets for our company and for our customers. The urgency around the energy transition to meet Paris Agreement goals requires collaboration to accelerate actionable steps to reduce emissions in various ways.”

The signed memorandum of understanding (MoU) intends to build on the existing relationship between Shell and Baker Hughes in several areas. Based on the terms of the agreement, Shell will initially provide selected Baker Hughes U.S. sites with power and renewable energy credits and the companies will negotiate renewable power for Baker Hughes’ sites in Europe and Singapore.

In addition, Shell and Baker Hughes also agreed to broader collaboration to identify other opportunities to advance each other’s transition to net-zero carbon emissions by 2050. This includes, but is not limited to, Baker Hughes providing low-carbon technology solutions for Shell’s LNG fleet.

The agreement will allow the firms to further explore potential opportunities to co-invest and participate in new models to decarbonise energy and industrial sectors.

Harry Brekelmans, projects & technology director at Shell, stated: “Shell and Baker Hughes both have clear ambitions to decarbonise and have already made progress through technical innovations. I’m proud of the work that has been done so far, and with this new agreement, we are taking it one step further. It will enable us – and our partners – to push the boundaries of what can be achieved and move even closer toward our net-zero targets.”

Shell’s end of the bargain for certain Baker Hughes sites

The first step in this collaboration entails the finalization of Shell’s power and renewable energy credits supply for certain Baker Hughes U.S. facilities over a two-year period. Baker Hughes’ global renewable electricity consumption was 22 per cent in 2021. This agreement is expected to increase it by 2 per cent to 24 per cent on an annual basis.

The two companies will also negotiate a supply of up to 100 GWh of renewable power for Baker Hughes facilities in Europe. Additionally, Shell and Baker Hughes plan to explore the development of an on-site solar solution for Baker Hughes’ chemical blending plant in Singapore.

It is worth reminding that Baker Hughes announced the release of its 2020 Report on Corporate Responsibility in July this year, outlining its corporate strategy for a sustainable energy future.

Solutions to achieve net-zero targets

The two companies will work together to explore additional opportunities to help Baker Hughes accelerate its transition to net-zero carbon equivalent emissions. This includes Shell providing low-carbon transportation and fuel solutions for Baker Hughes.

Shell will also evaluate opportunities for Baker Hughes to provide low-carbon solutions for Shell’s LNG fleet through technology upgrades and compressor re-bundles. Baker Hughes will assist in the development of digital solutions, which would expedite decarbonisation across Shell’s global assets and operations.

Shell recently set a new target to reduce its Scope 1 and 2 emissions. This is another strategic goal on the firm’s path to becoming a net-zero emissions energy business by 2050. Therefore, this announcement complements its existing climate change goals.

Research into new cooperation models

Aside from advancing each other’s emissions reductions, Shell and Baker Hughes intend to team up to explore opportunities and offer solutions for hard-to-abate industries globally.

The two firms have already achieved several results through their long-standing relationship. Specifically, Baker Hughes was the first supplier to participate in Shell’s Supplier Energy Transition Hub – a key collaboration and co-learning platform – allowing suppliers to define and estimate their emissions reduction ambitions while learning from other industry experiences.

Baker Hughes helped Shell develop and bring to market solutions to hasten decarbonisation across its assets and the wider industry through the Open AI Energy Initiative (OAI).

Shell and Baker Hughes also introduced VitalyX, which is a digital lubrication oil monitoring system. It uses the latest digital technologies to ensure the uptime, performance, and optimization of customers’ marine fleet.