Baker Hughes
| Company type | Public (NYSE: BHI) |
|---|---|
| ISIN | US05722G1004  |
| Industry | Oil and Gas |
| Founded | 1987 (merger) |
| Headquarters | Headquarters in Houston. Operates worldwide |
Key people | Chairman & CEO: Chad Deaton President & COO James Clark |
| Products | Oil field services & equipment |
| Revenue | $9.0 billion USD (2006) |
Number of employees | > 34,600 worldwide (2007) |
| Website | BakerHughes.com |
Baker Hughes NYSE: BHI is the world's third-largest oilfield services company behind Schlumberger and Halliburton, its main competitors.
Chad Deaton is the CEO.
Baker Hughes Incorporated was formed when Baker International and Hughes Tool Company merged in 1987. Baker Hughes is headquartered in Houston, Texas and operates worldwide with major offices in Aberdeen (UK), Singapore, Dubai, Research & Maintenance Facility in Celle (Germany) and (Lafayette) Louisiana. The company is administered broadly in 4 regions worldwide, namely EARC (Europe, Africa, Russia & Caspian), MEAP (Middle East, Asia-Pacific), NA (North America) and LA (Latin America).
History
The Hughes Tool Company was founded by Walter B. Sharp and Howard R. Hughes, Sr., father of Howard Hughes, Jr., the famous aviation enthusiast (of The Aviator movie fame) who flew the infamous Spruce Goose. Howard Hughes, Jr. formed the Hughes Aircraft Company, which was eventually splintered into various business units and merged with Raytheon, General Motors and Boeing.
In 1908, Howard Hughes, Sr. and his partner Walter Sharp, built the first two-cone bit, designed to enable rotary drilling in harder, deeper formations than was possible with earlier fishtail bits. They conducted two secret tests on a drilling rig in Goose Creek, Texas. Each time, Hughes asked the drilling crew to leave the rig floor, pulled the bit from a locked wooden box, and then his associates ran the bit into the hole. The drill pipe twisted off on the first test, but the second was extremely successful. In 1909, the Sharp & Hughes bit was granted a U.S. patent. In the same year, the partners formed the Sharp-Hughes Tool Company in Houston, Texas to manufacture the bit in a rented space measuring 20 by 40 ft. After Walter Sharp died in 1912, Mr. Hughes purchased Sharp's half of the business. The company was renamed Hughes Tool Company in 1915.
Through the 1950s and 1960s, Hughes Tool Company remained a private enterprise, owned by Howard Hughes, Jr. While Mr. Hughes was engaged in his Hollywood and aviation enterprises, managers in Houston, such as Fred Ayers and Maynard Montrose, kept the tool company growing through technical innovation and international expansion. In 1958, the Engineering and Research Laboratory was enlarged to accommodate six laboratory sections that housed specialized instruments such as a direct reading spectrometer and x-ray diffractometer. In 1959, Hughes introduced self-lubricating, sealed bearing rock bits. After collecting data from thousands of bit runs, Hughes introduced the first comprehensive guides to efficient drilling practices in 1960. The year 1964 saw the introduction of the X-Line rock bits, combining new cutting structure designs and hydraulic jets.
Baker International was formed by Reuben C. Baker, who developed a casing shoe that revolutionized cable tool drilling. In July 1907, R.C. Baker, a 34 year-old inventor and entrepreneur in Coalinga, California, was granted a U.S. patent for a casing shoe that enabled drillers to efficiently run casing and cement it in oil wells. This innovation launched the business that would become Baker Oil Tools and Baker Hughes Incorporated. Mr. Baker had arrived in the California oilfield in 1895 with 95 cents in his pocket and dreams of making his fortune in the Los Angeles oil boom. Subsequently, he hauled oil for drillers with a team of horses and became a drilling contractor and an oil wildcatter before achieving success as an innovator in oilfield equipment. In 1928, Baker Casing Shoe Company changed is name to Baker Oil Tools, Inc., to reflect its broad product line of completion, cementing and fishing equipment.
In 1929, H. John Eastman introduced "controlled directional drilling" in Huntington Beach, California, using whipstocks and magnetic survey instruments to deflect the drill pipe from shore-based rigs to reach oil deposits offshore. In 1934, Mr. Eastman gained notoriety, and respect for directional drilling techniques, when he drilled the world?s first relief well to control a blowout in Conroe, Texas, that had been on fire for more than a year. INTEQ carries on the leadership in directional drilling established by the original Eastman Oilwell Survey Company.
Baker Hughes completes a 100 years of corporate history in 2007.
Until recently, Baker Hughes was co-owner, with Schlumberger, of WesternGeco, the geophysical and seismic data acquisition company (see timeline below).
Business Units
- Baker Atlas - Advanced Wireline logging and Data Analysis
- INTEQ - Directional Drilling, MWD/LWD, Surface Logging Systems (Mudlogging) & Coring
- Baker Hughes Drilling Fluids - Drilling fluids & oilfield solids waste disposal technology
- Baker Oil Tools (BOT) - Completion, fishing, and workover solutions
- Baker Petrolite - Specialty chemicals and Processing
- Hughes Christensen (HCC) - Drill bits & Drilling optimization
- Centrilift - Electric submersible pump systems
- Production Quest - Production Optimization
- Baker Hughes Business Support Services (BHBSS) - IT, Finance, Payroll, Compliance (Financial & IT)
Acquisitions
Completions
In 1929, Cicero C. Brown organized Brown Oil Tools in Houston, and patented the first liner hanger in 1937. Liner hangers enable drillers to lengthen their casing strings without having the liner pipe extend all the way to the surface. This saves capital cost and reduces weight borne by offshore platforms. Hughes Tool Company acquired Brown Oil Tools in 1978. In 1970, Baker Oil Tools acquired Lynes, Inc., which produced liner hangers and other completion equipment. In 1978, Baker Oil Tools introduced the Bakerline casing liner hanger. In 1985, the FlexLock® Liner Hanger Packer was introduced, extending the performance range and functionality of liner hanger systems. In 1987, the Brown liner hanger technology was merged into Baker Oil Tools. In 1992, BOT introduced the ZXP Liner Hanger Packer, with expandable metal seals, which set the stage for development of expandable screen and casing systems. Today, Baker Oil Tools is the industry leader in liner hanger technology, and liner hanger systems are BOT?s largest product line.
Production
In 1957, the Centrilift electrical submersible pump (ESP) was developed in Vernon, California, and the product line was purchased by Byron Jackson Pumps division of Borg Warner. More than 20 prototypes were built and tested. In 1959, the first Centrilift ESP system was installed in a well on Signal Hill in Long Beach, California. Also in 1959, Centrilift's engineering and manufacturing operations were moved to Tulsa, Oklahoma. In 1980, Hughes Tool Company purchased Centrilift from Borg Warner, and the Claremore plant was opened the same year. Also in 1980, Centrilift acquired variable speed drive technology when it purchased Submergible Oil Services. With the addition of the cable plant in 1983, Centrilift took design and manufacturing control over all major ESP components. The company is still the only ESP supplier that holds this distinction.
Drilling Fluids
In 1931, Max B. Miller devised a drilling mud using a white clay as a weighting material. To market the new mud, he formed The Milwhite Company in Texas. In the mid-1930s, the company mined barites in conjunction with the Magnet Cove Barium Corporation (later called Magcobar). After a hiatus during World War II, the company resumed grinding operations using barite from a mine in Missouri and conducted mud sales through independent distributors. After 1956 Milwhite Mud Sales Company built its own sales network. In 1963 the company acquired the Aquaness chemical company, and in 1964 the combination became Milchem Incorporated. In 1971, Baker Oil Tools acquired Milchem. In 1985, Baker International acquired the drilling fluids division of Newpark Resources and merged it with Milchem's mud division to form Milpark. Meanwhile, in 1942, Oil Base Drilling Company was founded by George Miller, and made its first application of oil base mud. The company was acquired by Hughes Tool Company in 1979, and renamed Hughes Drilling Fluids in 1982. In 1987, when Baker Hughes was formed, Hughes Drilling Fluids was merged into Milpark, and in 1993, Milpark became a product line within Baker Hughes INTEQ. Baker Hughes Drilling Fluids was established as a stand-alone division in 2004.
Mud Logging
In 1952, in Sacramento, California a group of Stanford University engineering and geology graduates founded Exploration Logging Company (EXLOG) to provide geologic mud logging services from wheeled logging units using technical innovations in hot-wire gas detection. Vern Jones was the company's first president. EXLOG would become a world leader in surface logging, rig instrumentation and data acquisition. Baker International acquired EXLOG in 1972, and invested in its expansion. By the 1982, the company had more than 200 logging units and 1,000 geologists on staff. Its broad expertise in geological services would eventually become the Surface Logging Service product line of Baker Hughes INTEQ.
Directional Drilling & Diamond Drill Bits
Measurement while Drilling
The legacy MWD company which was merged into INTEQ in 1987
Fishing Tools & Services
Specialty Chemicals
William Barnickel's Tret-O-Lite business in 1920 had outgrown his initial manufacturing plant, so he built a new one in Webster Groves, Missouri. The ingenious new facility had six times the capacity of the old plant and was built on a hillside so that raw materials were unloaded from a railroad line on the top of the hill, and the chemicals flowed through the plant using the force of gravity. Finished product was loaded on rail cars at the bottom of the hill. In 1922, the company sold 10,815 drums of Tret-O-Lite demulsifier, representing a recovery of 50 million barrels of oil from produced oil/water emulsion. In 1923, Mr. Barnickel died at age of 45, of a perforated ulcer, and John S. Lehmann succeeded him as Tret-O-Lite president.
Meanwhile, Frederick Cottrell and James Speed were developing electrostatic methods for separating oil from water. In 1911, Allen C. Wright formed the Petroleum Rectifying Company of California (PETRECO), which built electric dehydrating plants --based on Contrell's and Speed's inventions -- to serve California oilfields. By 1922, Petreco had 417 treaters in operation, but was running into competition from Barnickel and his chemical process. In 1930, as the worldwide Depression began, the two competing companies -- PETRECO and Tret-O-Lite-- merged to form Petrolite
Seismic Exploration, Well Logging
(previously formed by the merger of Dresser Atlas & Western Geophysical)
In 1932, Bill Lane and Walt Wells invented bullet gun perforating and formed the Lane Wells Company in Vernon, California. They performed their first job on Union Oil's La Merced #17 well in Los Angeles. The company that would become Western Atlas (later Baker Atlas) grew quickly and added other wireline services, including the gamma ray log in 1939 and the neutron log in 1941, which were developed by Well Surveys Inc., an affiliated company. In 1948, a Lane Wells crew performed the company's 100,000th job on La Merced #17, the site of the first perforating run.
Joint venture
In 2000, Baker Hughes and Schlumberger formed a joint venture called Western Geco. The Joint venture was signed for a period of 5 years in November 2000. Western Geco was formed by the merger of Baker Hughes's Western Geophysical and Schlumberger's Geco-Prakla which were the two leading seismic interpretation companies.
In 2006, Baker Hughes announced in a press release that it was selling its 30% share of the Western Geco joint venture to Schlumberger for $2.4 billion in cash. Goldman, Sachs & Co. provided advice on the transaction.