Baker Hughes 2007 Annual Report Download - page 88

2007 Form 10-K 5
Oilfield Chemicals. Baker Petrolite provides oilfield chemi-
cal programs for drilling, well stimulation, production, pipeline
transportation and maintenance programs. Its products provide
measurable increases in productivity, decreases in operating
and maintenance cost and solutions to environmental prob-
lems. Examples of specialty oilfield chemical programs include
emulsion breakers and chemicals which inhibit the formation
of paraffin, scale, hydrates and other well performance issues
or problems.
Hydrate inhibitors – Natural gas hydrates are solid ice-like
crystals that form in production flowlines and tubing and cause
shutdowns and the need for system maintenance. Subsea wells
and flowlines, particularly in deepwater environments, are
especially susceptible to hydrates.
Paraffin inhibitors – The liquid hydrocarbons produced
from many oil and natural gas reservoirs become unstable
soon after leaving the formation. Changing conditions, includ-
ing decreases in temperature and pressure, can cause certain
hydrocarbons in the produced fluids to crystallize and deposit
on the walls of the well’s tubing, flow lines and surface equip-
ment. These deposits are commonly referred to as paraffin.
Baker Petrolite offers solvents that remove the deposits, as
well as inhibitors that prevent new deposits from forming.
Scale inhibitors – Unlike paraffin deposits that originate
from organic material in the produced hydrocarbons, scale
deposits come from mineral-based contaminants in water
that are produced from the formation as the water undergoes
changes in temperature or pressure. Similar to paraffin, scale
deposits can clog the production system. Treatments prevent
and remove deposits in production systems.
Corrosion inhibitors – Another problem caused by water
mixed with downhole hydrocarbons is corrosion of the well’s
tubulars and other production equipment. Corrosion can also
be caused by dissolved hydrogen sulfide (“H2S”) gas, which
reacts with the iron in tubulars, valves and other equipment,
potentially causing failures and leaks. Additionally, the reaction
creates iron sulfide, which can impair treating systems and
cause blockages. Baker Petrolite offers a variety of corrosion
inhibitors and H2S scavengers.
Emulsion breakers – Water and oil typically do not mix, but
water present in the reservoir and co-produced with oil can
often become emulsified, or mixed, causing problems for oil
and natural gas producers. Baker Petrolite offers emulsion
breakers that allow the water to be separated from the oil.
Refining, Industrial and Other Specialty Chemicals.
For the refining industry, Baker Petrolite offers various process
and water treatment programs, as well as finished fuel addi-
tives. Examples include programs to remove salt from crude oil
and to control corrosion in processing equipment and environ-
mentally friendly cleaners that decontaminate refinery equip-
ment and petrochemical vessels at a lower cost than other
methods. Baker Petrolite also provides chemical technology
solutions to other industrial markets throughout the world,
including petrochemicals, fuel additives, plastics, imaging,
adhesives, steel and crop protection.
Pipeline Management. Baker Petrolite’s Pipeline Manage-
ment Group (“PMG”) offers a variety of products and services
for the pipeline transportation industry. To improve efficiency,
Baker Petrolite offers custom turnkey cleaning programs that
combine chemical treatments with brush and scraper tools
that are pumped through the pipeline. Efficiency can also be
improved by adding polymer-based drag reduction agents to
reduce the slowing effects of friction between the pipeline walls
and the fluids within, thus increasing throughput and pipeline
capacity. Additional services allow pipelines to operate more
safely. These include inspection and internal corrosion assess-
ment technologies, which physically confirm the structural
integrity of the pipeline. In addition, PMG’s flow-modeling
capabilities can identify high-risk segments of a pipeline to
ensure proper mitigation programs are in place.
The main driver of customer purchasing decisions in
specialty chemicals is superior application of technology and
service delivery. Specific opportunities for competitive differen-
tiation include:
•฀ higher฀levels฀of฀production฀or฀throughput,
•฀ lower฀maintenance฀costs฀and฀frequency,
•฀ lower฀treatment฀costs฀and฀treatment฀intervals,฀and
•฀ successful฀resolution฀of฀environmental฀issues.
Baker Petrolite’s primary competitors include Champion
Technologies, Inc., Nalco Holding Company and Smith.
Key business drivers for Baker Petrolite include oil and
natural gas production levels, the number of producing wells,
total liquids production, and the current and expected future
price of both oil and natural gas.
Centrilift
Centrilift is a leading manufacturer and supplier of electri-
cal submersible pump systems (“ESPs”) and progressing cavity
pump systems (“PCPs”).
Electrical Submersible Pump Systems. ESPs lift large
quantities of oil or oil and water from wells that do not flow
under their own pressure. These “artificial lift” systems consist
of a centrifugal pump and electric motor installed in the well-
bore, armored electric cabling to provide power to the down-
hole motor and a variable speed controller at the surface.
Centrilift designs, manufactures, markets and installs all the
components of ESP systems and also offers modeling software
to size ESPs and simulate operating performance. ESPs may be
used in both onshore and offshore wells. The range of appro-
priate application of ESP systems is expanding as technology
and reliability enhancements have improved ESP system perfor-
mance in harsher environments and marginal reservoirs.
Progressing Cavity Pump Systems. PCPs are a form of
artificial lift comprised of a downhole progressing cavity pump
powered by either a downhole electric motor or a rod turned
by a motor on the surface. PCP systems are preferred when the
fluid to be lifted is viscous or when the volume is significantly
less than could be economically lifted with an ESP system.
The main drivers of a customer purchasing decision in an
artificial lift include the depth of the well, the volume of the
fluid, the physical and chemical properties of the fluid as well
as the capital and operating cost over the run life of the system.