UPSTREAM: What impact will the energy transition have on the operations of oil and gas companies over the next five years and beyond?

SIMONELLI: As we look ahead to 2022, we see continued signs of global economic recovery that should drive further demand growth for oil and natural gas.

Although we do not expect the same oil and gas order levels as in the past years, new opportunities are emerging.

Activity is becoming increasingly concentrated in low-cost basins and upstream spending for larger operators is being reallocated to other areas as the energy transition is driving a shift towards low- and zero-carbon fuels.

We believe the energy transition will require operators to increase efficiency through digital transformation and accelerate decarbonisation of their operations, both to achieve their own carbon reduction goals and to navigate the current macro environment.

UPSTREAM: Is natural gas becoming more attractive than oil for companies and, if so, what implications does that have for the business?

SIMONELLI: We believe natural gas should be considered both a transition and a destination fuel, although its use and applicability will vary by region and country.

Natural gas has clear emissions advantages over coal, oil, and other fuel sources.

We must continue to improve the carbon footprint of natural gas to ensure it has a strong role to play in the long-term journey to net-zero emissions.

Fortunately, we have technology available today to increase efficiencies and reduce emissions through emissions monitoring and detection, as well as carbon capture and storage.

There also is an opportunity for us to help customers leverage natural gas infrastructure to introduce gas-hydrogen blends in the coming years.

UPSTREAM: How can large-scale, multi-billion-dollar conventional oil and gas developments, including in deep waters, continue to compete for capital?

SIMONELLI: Technology solutions to improve the cost and profitability profiles of current fields will be critical in the short to medium term.
In addition, we must continually improve the carbon footprint of oil and gas operations to be competitive with lower to zero-carbon fuel sources.

Technologies such as carbon capture, utilisation and storage can certainly help operators avoid emissions, but industry also must deploy more methane monitoring and reduction technologies to meet current environmental standards and expectations from the financial community and other stakeholders to maintain a social licence to operate.

UPSTREAM: The debate around COP26 revealed widespread perceptions that the oil and gas sector is more concerned about preserving the value of fossil fuel assets than engaging in real energy transition.

Such divisions can be seen when the different "colours" of hydrogen are discussed.

What role must oil and gas companies play in the energy transition, and how do they build trust?

SIMONELLI: COP26, as well as the gas shortages and energy crises we are seeing in places like Europe, have highlighted the larger dual challenge that the world is facing: The world needs more energy, but it also needs to reduce emissions from energy at the same time.

This challenge is why oil and gas — as well as broader energy companies — play a crucial role in the energy transition.

Companies like Baker Hughes and our customers can provide reliable, affordable, and accessible energy as we continue to work towards net-zero emissions.

To build trust, we must continue to be transparent about our ESG (environmental, sustainability and governance) goals and performance metrics, as well as rethink the way we invest and focus our time to ensure hydrocarbons are made more efficient, and new energy sources like hydrogen, carbon capture, utilisation and storage, and energy storage receive the resources they need to ultimately scale for the long term.

UPSTREAM: What are your hopes and fears for energy transition?

SIMONELLI: My hope for the energy transition is that we continue to collaborate to move faster.

Rather than operate in siloes, it is far more effective for companies to combine or partner to scale emerging technologies and capabilities, especially with the urgency around climate change.

The wave of collaborations since early 2020 has been encouraging.

Baker Hughes has announced more than a dozen collaborations with other companies in the past two years.

As we turn our attention to meet 2030 and 2050 milestones on our way to net zero, these collaborations will mature and play an important role in moving energy forward and making a tangible difference in reaching our shared emissions reduction goals.