Baker Hughes' CarbonEdge: Transforming Carbon Capture Utilization and Storage

Current State and Advancements in Carbon Capture

The current state of carbon capture technology is marked by strategic acquisitions and significant investments. Companies like SLB and ExxonMobil are expanding their capabilities and infrastructure, with SLB's acquisition of Aker Carbon Capture and ExxonMobil's contracts for CO2 storage highlighting advancements in the sector. Baker Hughes also reports a strong order intake linked to carbon capture initiatives.

"And I think indeed the Aker Carbon Capture acquisition last week was aimed to accelerate and extend our addressable market and create a base for growing into the capture side of the CCS market, which we have identified as one of the key low carbon and new energy business for us." --- (SLB, event transcript, 2024/04/02)

"So we're focused on how we can reduce absolute emissions for society. Our low carbon solutions business is attempting to do that with carbon capture and storage. We've contracted with 3 companies to store and transport 5,000,000 tons per annum of CO2 in hard to carbonize sectors." --- (XOM, event transcript, 2024/05/29)

"And as you look at our order intake also on the new energy front, you can see from last year also that a large portion of our orders was associated with carbon capture, utilization and storage." --- (BKR, earning call, 2024/Q1)

"As you saw in our announcement a few weeks ago, we have entered into an agreement to combine our carbon capture business with Aker Carbon Capture and will own 80% of the combined entity." --- (SLB, earning call, 2024/Q1)

"I would say in Dan's business with the carbon capture and storage, he and his team are building a brand-new business. And so there are very few, I think examples of where the company is not only developing the technology and the infrastructure and logistics system, but also developing the capacity to supply, while developing the demand and developing the market in general, and advocating on, what I’d say, are the initial policies needed to get things kick started." --- (XOM, earning call, 2024/Q2)

Market Demand for Carbon Capture Solutions

The market demand for carbon capture solutions is driven by the ongoing reliance on unabated fossil fuels, particularly in emerging economies where electricity demand is surging. Despite growth in low carbon energy, existing fossil fuel generation remains prevalent, highlighting the necessity for enhanced carbon capture technologies.

"But low carbon energy is not growing is not yet growing sufficiently quickly to keep pace with increases in overall energy demand.As a result, the consumption of unabated fossil fuels, fossil fuels used without capturing and storing their emissions is continuing to increase alongside the growth in low carbon energy." --- (BP, event transcript, 2024/07/10)

"But the rapid growth of electricity demand in many emerging economies means it's far harder to grow low carbon energy sufficiently quickly to both meet the growth in power demand and displace existing fossil fuel generation." --- (BP, event transcript, 2024/07/10)

"Rather, they come from the faster and wider application of known technologies, wind and solar in power markets, electrification, low carbon hydrogen, carbon capture, use and storage." --- (BP, event transcript, 2024/07/10)

"There's a sharp acceleration in low carbon energy led by wind and solar, and the demand for oil begins to decline." --- (BP, event transcript, 2024/07/10)

"In current trajectory, the energy addition phase continues in the 2020s. You can see in the 2020s as a whole, the growth of carbon and low carbon energy increases even more, but still not enough to meet all of the growth in energy demand and unabated fossil fuels shown here in the black bar continues to rise." --- (BP, event transcript, 2024/07/10)

Regulatory Impacts on CCUS Adoption

Regulatory impacts significantly influence CCUS adoption, with increasing market alignment fostering momentum. Specific policies affect technological advancements and permit processes, while climate policies drive energy efficiency and low-carbon energy adoption. Baker Hughes' solutions also simplify regulatory reporting, enhancing operational efficiency in CCUS projects.

"The markets increasing alignment towards the view is spawning stronger momentum, in particular, for CCUS." --- (BKR, earning call, 2024/Q1)

"Implementation of jurisdiction-specific policies and programs can be dependent on, and can affect the pace of, technological advancements, the granting of necessary permits by governing authorities, the availability and acceptability of cost-effective, verifiable carbon credits, the availability of suppliers that can meet our sustainability-related standards, evolving regulatory or other requirements affecting ESG standards or other disclosures, and evolving standards for tracking, reporting, marketing and advertising relating to emissions and emission reductions and removals." --- (CVX, sec filing, 2024/Q2)

"Net 0 assumes a significant tightening in climate policies. It also embodies shifts in societal behavior and preferences, which further supports gains in energy efficiency and the adoption of low carbon energy." --- (BP, event transcript, 2024/07/10)

"This connectivity across the entire CCUS project lifecycle enables customers to identify and manage risk, improve decision-making, enhance operational efficiency, and simplify regulatory reporting." --- (BKR, press release, 2024/09/12)

"Although we do not currently expect that Pillar Two will have a material impact on our results of operations, we are continuing to evaluate the impact of legislative adoption by individual countries." --- (CVX, sec filing, 2024/Q1)

Competitive Landscape in the CCUS Market

The competitive landscape in the CCUS market is characterized by a projected addressable market of $60-70 billion by 2030, with companies like Baker Hughes and ExxonMobil focusing on competitive advantages and diversified investments. Key players are confident in their positioning despite challenging market conditions.

"And actually when we laid out our plan and we looked at the addressable market, our addressable market that we see by 2030 of $60,000,000,000 to $70,000,000,000 of new energy hasn't really changed. And that's made up of CCUS, it's made up of hydrogen, it's made up of" --- (BKR, conference, 2024/06/18)

"Obviously, there's a few more things that we're working on and we'll continue to assess every one of the assets in the portfolio, make sure that they are competitively advantaged. And, you know, frankly, as we look at new investments, we force those investments to compete on an industry-wide basis and make sure that they're advantaged versus the industry and therefore can be a supply product at low cost of supply." --- (XOM, earning call, 2024/Q2)

"The market is much more diversified in Saudi and furthermore in Middle East. So, we are exposed to many aspects of the Saudi activity, both production and recovery, exploration, CCS, as well as, well construction and production equipment, both offshore and onshore." --- (SLB, earning call, 2024/Q2)

"And that's made up of CCUS, it's made up of hydrogen, it's made up of geothermal, it's made up of emissions abatement, emissions management and clean integrated power solutions and all of our equipment and capabilities going into those end markets." --- (BKR, conference, 2024/06/18)

"So I think we feel good about where we're at in a very difficult market. Our view is that those market conditions are going to be with us for a little while here going forward, but we also feel like we're well positioned to be successful there." --- (XOM, earning call, 2024/Q1)

Future Outlook for Carbon Capture Technologies

The future outlook for carbon capture technologies emphasizes the need for innovative advancements and strategic investments. Companies like Baker Hughes and ExxonMobil are focusing on new energy solutions and low-cost direct air capture technologies, while Schlumberger highlights the importance of low-carbon infrastructure, indicating a robust growth trajectory in this sector.

"And I suspect that the technology that will be required for the future lower cost direct air capture, will be different than what we've got today and will require some of the technical capabilities that we have." --- (XOM, earning call, 2024/Q1)

"We also have businesses within our portfolio that are exposed to new energy solutions, specifically focused around reducing carbon emissions of the energy and broader industry, including: hydrogen; geothermal; carbon capture, utilization and storage; energy storage; clean power; and emissions abatement solutions." --- (BKR, sec filing, 2024/Q1)

"And secondly, allowing full digital control of the subsea infrastructure. And last, obviously, having an impact onto the carbon footprint of this infrastructure. So we believe that for recovery, cost and low carbon, we believe that there is a future for our deepwater all-electric bid on the subsurface." --- (SLB, earning call, 2024/Q2)

"economies, supported by accelerating energy efficiency, decarbonized power systems and the widespread application of many of the low carbon technologies that we know about today.Unfortunately, the 1 thing I know for sure is that in 13 years' time, they won't be making any reference to a very youthful looking Spencer Dale, but you can't have everything." --- (BP, event transcript, 2024/07/10)

"And then what I would say are the energy portfolio, but more specifically the molecules that go into energy, that we expect to become feedstocks of the future like they are today for our Carbon Ventures and Proxxima ventures.On the Upstream side, we've got a lot of, obviously growth potential through the back end of this decade." --- (XOM, earning call, 2024/Q2)

Economic Benefits of Carbon Capture Solutions

Carbon capture solutions offer significant economic benefits by enhancing operational efficiency and enabling cost savings, as highlighted by Baker Hughes' CarbonEdge integration. Additionally, contracts for transporting and storing CO2 demonstrate tangible economic activity, while understanding carbon pricing underscores the financial viability of these initiatives despite political challenges.

"We have long believed that it is critical to increase gas within the overall global energy mix to help achieve a lower-carbon economy." --- (BKR, press release, 2024/05/23)

"In our Low Carbon Solutions business, we've contracted to transport and store 5,000,000 tons per annum of CO2 for a major steelmaker, a fertilizer producer and an industrial gas company." --- (XOM, event transcript, 2024/05/29)

"They understand the economics of carbon pricing. It's just the politics of carbon pricing are really brutal." --- (BP, event transcript, 2024/07/10)

"CarbonEdge joins Baker Hughes' digital solutions such as JewelSuite, Leucipa™ and Cordant™, which span the energy and industrial value chains to increase efficiency, enhance operational predictability, and help ensure lower emissions." --- (BKR, press release, 2024/09/12)

"If you look at expanded disclosure requirements that Europe is looking for, or if you look at regulation around reducing carbon footprint and not necessarily implementing regulation that's technology agnostic and focused on just reducing carbon intensity, that all makes Europe a much tougher investment proposition." --- (XOM, earning call, 2024/Q1)