Schlumberger expects growth in its traditional oil and gas equipment and services business in 2021 as global economies improve from the 2020 slump, but is also looking to play an increasing role in the energy transition sector, executives said Jan. 22.
Absent new setbacks in controlling the pandemic and in the economic recovery, “we see constructive macro drivers developing through the course of the year,” CEO Olivier Le Peuch said on a fourth quarter 2020 earnings call.
The CEO anticipates continued momentum and a strong start to 2021 for the North American land markets as activity builds toward maintenance levels in well construction and completions.
“However, US production will still be visibly below previous production levels as continued capital discipline and the impact of consolidations will cap the spending level,” Le Peuch said. He added the “rate of growth may slow in the second half due to budget exhaustion.”
But while US land market growth slows, the international market recovery will accelerate, Le Peuch said.
“In 2021, we anticipate the international activity to build up from the second quarter and in the second half of the year to exceed [the] second half of 2020 by double digits,” he said.
Schlumberger also remains committed to contributing to the new energy future, as the company prepares to make announcements on those efforts in the coming weeks and months.
“For sure, before the midyear, I think we will come with a much better view for all of you on where we participate” in the energy transition, Le Peuch said.
He said Schlumberger could seek opportunities in “very significant” markets for hydrogen, carbon capture utilization and storage, lithium, geothermal and geo-energy through its New Energy segment.
The CEO said a growing global need over the next 10 years for 70 gigawatts of electrolyzer capacity — systems that use electricity to break water into hydrogen and oxygen to create hydrogen gas — “gives you a sense of what is happening.” Schlumberger’s ambitions include creating and capturing share in that market, he said.
In 2021 and 2022, the company plans to deliver prototypes for use in fuel cell or hydrogen production, and in the following two to three years, it will make a critical decision whether or not to expand into large-scale manufacturing. Le Peuch also sees opportunities for carbon capture and sequestration, and anticipates significant demand growth for lithium oxide for high-density batteries over the ten years.
“So each and every [one] of [these] venture[s] has a unique and fast-growing [total available market],” he said.
Schlumberger established its New Energy business in early 2020, with plans to utilize its ability to deploy technology at scale and use its sub-surface knowledge to develop a strong market position.
Read it from SPGlobal – Photo by Zukiman Mohamad from Pexels
