Oil & Gas industry outlook improves

At its Annual Meeting in Florence, Italy, which brings together more than 1,000 senior oil and gas leaders and government leaders for a two-day event, 

Lorenzo Simonelli, Chairman and CEO pf 

Baker Hughes, a GE company (BHGE), offered a positive outlook on the oil and gas market. 

“We began 2017 with a bearish outlook, but as we enter 2018 it looks a lot brighter,” he said. “People are optimistic, and they are starting to spend again.”

In the downturn, the industry dramatically adjusted cost structures, he said. Simonelli also outlined several mega-trends impacting the industry. The growing need to keep pace with digital revolution has seen the industrial world adopt many of the technologies in use in the consumer world. The result is business processes moving at a pace we have never seen before.

In turn, this has generated a raft of new players coming onto the scene. Google and others are now looking to play a part in the energy sector. For some, this is a threat, for others an opportunity.

Another trend is the environmental challenge. The industry is viewed traditionally as a dirty and a generator of pollution. In a low-carbon regulatory environment, oil and gas needed to change. For BHGE, and others in the sector, this means moving to cleaner energy sources such as natural gas and alternative production methods.

A further trend is lower spend than has been seen in the past.

“It’s no longer the oil price that matters, it is the need to reduce CAPEX and OPEX,” said Simonelli. “There is a strong drive toward efficiency so we can remain competitive. We cannot go back to the way things were before the oil price crash.” 

He views the recent merger of Baker Hughes and GE Oil & Gas as a way to meet those goals and respond to those trends. This, he said, is enabling the company to increase asset utilization, and lower the total cost of ownership, the cost of doing business, and productivity all by 50%.

In addition, the company is accelerating the usage of 3D printed parts implemented within its NovaLT gas turbine series. Interestingly, the company is selling more of these models into the power industry than into oil & gas. Initially conceived for the mechanical drive market. GE is seeing sales for power generation due to the unit’s light, small footprint for areas needing power in the 5-16 MW range.