Recent Innovative Achievements of the Baker Hughes Company - Case Study Example

ETHICS A2 Name Institution Date Executive Summary Baker Hughes is one of the leading suppliers of innovative products, services, systems and technology across the world in the oil and gas industry. The company helps its customers in finding, evaluating, drilling, producing, processing and transporting hydrocarbon resources. The company operates in over 80 countries across the world. The company believes that research and development is the key drive towards innovation. It therefore engages in advanced research initiatives like smart materials and nanotechnology so as to ensure high efficiencies in production and cost savings for its clients. This report highlights the drive towards innovation as demonstrated by Baker Hughes. It shows some of the products developed by Baker Hughes through its innovativeness. While the challenges faced by the company during operation have been the driving force to innovation, the company believes that research and development is the main force through which innovation can be attained. Therefore, future innovative actions should follow the path of research and development for new products to be designed and developed. Recent Innovative Achievements of the Company Baker Hughes has always been at the forefront of innovation in offering oil and gas services. This has been demonstrated by the numerous number of research and innovation centers boasted by the company. For instance, there are fifteen technology centers, known as centers for excellence, across the world. Through these centers, the company has been able to develop many innovative products and services that are used in improving the efficiency of operation and accelerating the services provided across the world. Use of innovative technology has enabled the company’s operation in Ghana to grow strongly and helped in expanding critical markets in the deepwater sector. In Nigeria, Baker Hughes deploys the latest technologies for reservoir evaluation and this has led to outstanding results, as stated by Craighead in Seeking Alpha (2014). Having faced the challenge of winter weather in Russia and the North Sea, use of innovative technologies has enabled the performance in Africa to hit outstanding excellence. Baker Hughes has its focus on enhancing the quality of its services, so as to provide the best value in the most challenging projects in the world. The push for continuous use of technology was highlighted by the high performances in North America. This was a result of strong demand to use new technologies in every operation. This includes solutions that are highly customized for ultra deep water market along with brand new production technologies and completions that are tailored to production of onshore shale. One of the innovations used is the shadow plug, which is a completion product used to incorporate nano technology so as to reduce cost and time taken in completing an unconventional well. In the United States and Canada, shadow plug performs so well and has even attracted customers to order the product on stipulated specifications so that they can secure access to the groundbreaking technology as they strive to enhance efficiency of their operations. The demand for this product has been high as it gains interest in the international field. Use of innovation has not only been implemented in production but also in the daily operation and monitoring of the company. For instance, the company uses RoqScan technology in its operations. This was done through a strengthened alliance with CGG. The service is used in evaluating the capabilities of the company’s reservoirs so that customers are able to optimize production from plays of shale. In industrial services, Baker Hughes has developed a complementary pipeline service. This is added to the critical technology of inspection and in expanding the company’s international footprint in the midstream market that is rapidly growing. Recently, the company acquired a Software Technology Company. This was aimed at strengthening its capabilities in real time and remote monitoring data management. While adding this new capability, the company’s aim was to stay in line with the strategy of continuous innovation and integration of new services and products that support the long term growth of profits. Having been faced with the challenges of development, Baker Hughes developed a customized pumping solution that would be used in deepwater applications. This was an innovative platform for reservoir modeling that was done in partnership with Shell. To create additional value in the industry, complex reservoirs should be modeled with high quality. Therefore, Baker Hughes installed an electrical submersible pumping system. This would boost production at several wells. By and large, use of technological innovation is driven by the company’s desire to develop fit-for purpose solutions to all its clients. An innovative product: shadow plug The shadow plug is a permanent and large bore frac plug that flows through the well and is designed to remain down the hole after completion of the fracturing operations. Compared to the traditional composite plugs, shadow plugs are more efficient. This is because they do not require use of twisting tubing (coiled tubing) operations from the crucial well path. In addition, they have the benefit of lower health, safety and environmental risks along with reduced costs. This product has a huge flow through inner diameter and uses IN-Tallic fracture balls that are disintegrating. This allows flow of production with the plugs still in place upon completion of fracturing operations. The fracture balls are composed of a controlled electrolytic material that is made of a nanostructure. The balls hold off pressure during fracturing and will disintegrate inside the well when exposed to the produced fluids. This leaves a huge inner diameter that enables maximum production. In addition, production from the well can be started immediately after completion of fracturing operations. The initial entry point to the reservoir is created using an Alpha sleeve, a valve actuated by pressure, and not the perforating gun that is used on twisted tubing. The plugs remain in the well and this implies that they can be set to operate beyond milling tools that are conveyed by coiled tubing. This makes provision for operators to make fractures in long lateral sections as well as to maximize access to the reservoir. In certain remote locations, it may be tricky to procure equipment for intervention. However, the shadow plug is ideal for such operations and developments. In addition, these plugs are ideal for use in extended wellbores because they stay inside the well. It is possible to set shadow plugs in horizontal sections that are deeper than the coiled tubing can reach. This makes provision for maximum stage count and more of the pay zone can be accessed. The shadow plug is used in many applications. These include unconventional gas and oil wells, horizontal wellbores, extended reach wellbores as well as plug and perf completions that are staged. In a trial of the shadow plug so as to compare its performance with the traditional composite plugs, the two wells were shown to produce the same amount in volume. However, the shadow plug reduced the time used in completion of the wells by two days. This registered a cost saving of almost $ 150,000 for every well. Innovation of the shadow plug has the advantage of increased return on investment. In addition, the plug is safe for use and increase the efficiency of operation. In cases where milling is required, the plug has an anti-rotation feature that maximizes the efficiency of removal. With this plug, there is no need for post fracture intervention. Baker Hughes has registered increased demand of this product in Canada and United States. While the product is still in its early product life cycle, it is in high demand owing to the great benefits that have already been demonstrated. This implies that the product still has room for further development and further benefits. Aspects of Diffusion and Entrepreneurship Associated With the Innovation The impact of entrepreneurship on diffusion of knowledge and subsequently, the innovativeness of the company is the reason for the success of the innovative products at Baker Hughes. Through the entrepreneurship of the company, the business venture of providing quality services to clients was identified. In addition, it was not only identified but it was also seen as the link to attaining a competitive advantage over their competitors. Baker Hughes identified the need to offer services that are fit for their purposes. This was seen as the key to attaining a competitive advantage because it would provide services that suit the needs of customers. In addition, the company has realized that with the changing environment, it is vital to keep innovating so as to fit in both the economic and the physical environment. Therefore, the company continues to use these entrepreneurship skills to continuously develop innovative products. The knowledge used in innovation is diffused across multicultural borders through the research and technology centers that are placed across international borders. The centers are placed in various countries. In addition, the company operates in many countries across the world and this enhances the cross cultural policies of the company. This enables the company to device products that suit various cultures and environments depending on their needs (Varassi, 2012). How an engineer with senior status functions as an innovator in the company environment The role of an engineer in the innovation process involves implementation of an end to end process that will ensure value is extracted. According to Engineers Australia (2012), one of the engineer’s roles is to create and generate new activities, processes, products and services. This is evident in the way Baker Hughes engineers have developed new products for use during their operations. The products developed are used for improving existing functions and processes, as evidenced in the shadow plug product. It is the role of the engineer to come up with innovative solutions to the challenges faced by the company. Therefore, the engineer develops solutions that improve the processes of operation and their efficiency. In addition, the engineer recommends useful partnerships with companies that provide more innovative solutions. This has been seen in the way Baker Hughes has partnered with many other companies so as to get innovative solutions to their challenges. Some of the partnerships the company has include Shell and CGG. Circumstances that hindered and/or facilitated innovation in the company The challenges faced by the company have been the reason for their constant drive towards innovation. With the complex environment under which the company operates, there has been the constant need to change ways of operation and devise new ways that will suit the new environment. The activities conducted by the company are diverse and complex, requiring optimization of oil and gas reservoirs in countries and across the continents. This has created the need to design, develop and to provide new products and services so that the company can continue leading the industry in key areas. In addition, there has been a strong demand for new technology. This new technology ranges from new IT technology to new engineering technologies. A combination of these new technologies has challenged the company to adopt them and incorporate the technologies in their operations. For instance, IT technology has been used in improving the monitoring and evaluation of processes at the company (Baker Hughes, 2014). Diagrammatic model for development of the shadow plug Challenges faced, Recommendations and Lessons Learnt The main challenge faced was that of the highly technical terms used in the oil and gas industry. This required an orientation to be done before we could go ahead with our research in the company. In addition, a visit to some of the oil sites exposed us to highly extreme conditions. This required some time before we could acclimatize. Following the research, we observed that entrepreneurship is a missing link in most companies that strive to embrace innovation. Therefore, entrepreneurship should be enhanced through teaching in schools so that engineers get the skills that will help them identify gaps and opportunities for improvement and through innovation; they can pursue solutions that will yield the best results for the company and its clients. References Baker Hughes, (2014). Baker Hughes Introduces SHADOW Series Frac Plug. Retrieved on April 19, 2014 from http://www.bakerhughes.com/news-and-media/press-center/product- announcements/baker-hughes-introduces-shadow-feries-frac-plug-new. Engineers Australia, (2012). Innovation in Engineering. Australia: Engineers Australia Innovation Taskforce Seeking Alpha, (2014). Baker Hughes' CEO Discusses Q1 2014 Results - Earnings Call Transcript. Retrieved on April 18, 2014 from: http://seekingalpha.com/article/2147473-baker-hughes-ceo-discusses-q1-2014-results- earnings-call-transcript. Varassi, J. (2012). Fundamental R&D Provides the Springboard to Innovation. Retrieved on April 19, 2014 from: https://www.asme.org/engineering-topics/articles/fossil- power/fundamental-rd-provides-springboard-to-innovation. Appendix 1: letter of cooperation The Chief Executive Officer, Baker Hughes Inc 2929 Allen Parkway, Suite 2100 Houston, Texas 77019-2118 USA. Dear Sir, RE: Request for Cooperation My school has been doing research work on companies that are a driving force in engineering innovation. Your organization has been identified as the leading supplier of innovative solutions in the oil and gas industry. This has greatly impressed us and for that reason, we would like to seek your cooperation as we research on how your company has been able to promote innovativeness of your engineers and the organization at large. The aim of this cooperation is to help us understand how to promote innovativeness in the industry. Your positive response to our application will be highly appreciated as we look forward to establishing a long term relationship between your company and our school. Kind regards, Appendix 2: letter of gratitude The Chief Executive Officer, Baker Hughes Inc 2929 Allen Parkway, Suite 2100 Houston, Texas 77019-2118 USA. Dear Sir, RE: Gratitude Following successful completion of our research on innovation through your company, we would like to express our sincere gratitude to you. We asked for your cooperation because we had no doubt in your company’s efforts towards innovation. This was proven right by the manner in which your company was willing to share with us their knowledge and their experience in this subject. We are glad that our time was well utilized and we look forward to having more learning sessions with your company. Kind regards, Appendix 3: Interview questions What is the main drive behind your company’s innovative products? Why do you have so many research centers across the world? Do you send your employees to the research centers immediately after selection? Technology innovation has been used in other industries other than oil and gas. Why did you consider it as a drive for the oil and gas industry? Why do you think cooperating with other companies promotes innovation rather than exposing your company’s secrets to success? Do you think you have done enough in innovation so as to stop and watch your products grow? Read More

Having faced the challenge of winter weather in Russia and the North Sea, use of innovative technologies has enabled the performance in Africa to hit outstanding excellence. Baker Hughes has its focus on enhancing the quality of its services, so as to provide the best value in the most challenging projects in the world. The push for continuous use of technology was highlighted by the high performances in North America. This was a result of strong demand to use new technologies in every operation.

This includes solutions that are highly customized for ultra deep water market along with brand new production technologies and completions that are tailored to production of onshore shale. One of the innovations used is the shadow plug, which is a completion product used to incorporate nano technology so as to reduce cost and time taken in completing an unconventional well. In the United States and Canada, shadow plug performs so well and has even attracted customers to order the product on stipulated specifications so that they can secure access to the groundbreaking technology as they strive to enhance efficiency of their operations.

The demand for this product has been high as it gains interest in the international field. Use of innovation has not only been implemented in production but also in the daily operation and monitoring of the company. For instance, the company uses RoqScan technology in its operations. This was done through a strengthened alliance with CGG. The service is used in evaluating the capabilities of the company’s reservoirs so that customers are able to optimize production from plays of shale. In industrial services, Baker Hughes has developed a complementary pipeline service.

This is added to the critical technology of inspection and in expanding the company’s international footprint in the midstream market that is rapidly growing. Recently, the company acquired a Software Technology Company. This was aimed at strengthening its capabilities in real time and remote monitoring data management. While adding this new capability, the company’s aim was to stay in line with the strategy of continuous innovation and integration of new services and products that support the long term growth of profits.

Having been faced with the challenges of development, Baker Hughes developed a customized pumping solution that would be used in deepwater applications. This was an innovative platform for reservoir modeling that was done in partnership with Shell. To create additional value in the industry, complex reservoirs should be modeled with high quality. Therefore, Baker Hughes installed an electrical submersible pumping system. This would boost production at several wells. By and large, use of technological innovation is driven by the company’s desire to develop fit-for purpose solutions to all its clients.

An innovative product: shadow plug The shadow plug is a permanent and large bore frac plug that flows through the well and is designed to remain down the hole after completion of the fracturing operations. Compared to the traditional composite plugs, shadow plugs are more efficient. This is because they do not require use of twisting tubing (coiled tubing) operations from the crucial well path. In addition, they have the benefit of lower health, safety and environmental risks along with reduced costs.

This product has a huge flow through inner diameter and uses IN-Tallic fracture balls that are disintegrating. This allows flow of production with the plugs still in place upon completion of fracturing operations. The fracture balls are composed of a controlled electrolytic material that is made of a nanostructure. The balls hold off pressure during fracturing and will disintegrate inside the well when exposed to the produced fluids. This leaves a huge inner diameter that enables maximum production.

In addition, production from the well can be started immediately after completion of fracturing operations. The initial entry point to the reservoir is created using an Alpha sleeve, a valve actuated by pressure, and not the perforating gun that is used on twisted tubing.

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