Baker Hughes

Hughes Tool Company's oil drill manufacturing plant in downtown Houston, 1915.

The Hughes Tool Company was founded in 1908 by business partners Walter Benona Sharp and Howard R. Hughes, Sr., father of Howard Hughes, Jr. That year, Hughes, Sr. and Sharp developed the first two-cone drill 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 December 1908, the partners had already formed the Sharp-Hughes Tool Company in Houston, Texas, to manufacture the bit in a rented space measuring 20 by 40 ft (12 m).

After Walter Sharp died in 1912, Hughes purchased Sharp's half of the business. The company was renamed Hughes Tool Company in 1915, and Hughes, Jr. inherited it after his father's death in 1924. Through the 1950s and 1960s, Hughes Tool Company remained a private enterprise, owned by Hughes. While 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; 1964 saw the introduction of the X-Line rock bits, combining new cutting structure designs and hydraulic jets.

Reuben C. Baker was a farm boy with a third grade education who followed his brother Aaron Alphonso Baker into the oil business. In 1895 he got a job in a California oilfield with 95 cents in his pocket. His first job was driving a horse team to haul oil for drillers. One year later he became a drilling contractor.

In July 1907, the 34-year-old inventor and entrepreneur was working in Coalinga, California when he was granted a U.S. patent for a casing shoe that enabled drillers to efficiently run casing and cement it in oil wells.[11] The casing shoe revolutionized cable tool drilling by ensuring the uninterrupted flow of oil through the bottom of the casing in the well.[12]

This innovation launched the business that would become Baker Oil Tools. In 1928, Baker Casing Shoe Company changed its name to Baker Oil Tools, Inc., to reflect its product line of completion, cementing and fishing equipment. Baker Oil Tools expanded to Houston in the 1920s, and although buffeted by the Great Depression, survived and continued growing into the 1960s. In 1976, it became Baker International Corporation with almost all of its operations headquartered in Houston.

In early 1956, during one of the most successful periods in the company's history, Baker retired as President of Baker Oil Tools and was succeeded by his long-time associate Ted Sutter. Baker died only a few weeks later after a brief illness at the age of 85. Although he only had three years of formal education, Baker received more than 150 patents in his lifetime.[11] In 1964, Sutter was succeeded by E.H. "Hubie" Clark, who became the first Baker Hughes chairman of the board in 1987. During its 80-year history prior to its merger with Baker Hughes, Baker Oil Tools had only three chief executives.

INTEQ also originally incorporated the drilling fluids division of Baker Hughes which consisted of Milpark and others. This division was called 'INTEQ drilling fluids' which provided the premier brands in oil and gas well drilling muds and wellbore cleaning fluids. In 2003, these product lines were spun off to form the separate entity of Baker Hughes Drilling Fluids (BHDF), with INTEQ continuing as the Drilling and Evaluation (D&E) company. INTEQ provides directional Drilling, MWD/LWD, surface logging (mud logging) and coring services.

The company's flagship brand was the AutoTrak rotary steerable drilling system which was a pioneering directional drilling tool. Introduced in 1997 with Agip S.p.A., the tool is fundamentally different compared to contemporary rivals such as the PowerDrive and the GeoPilot employing the hybrid technique of "pushing and pointing (vectoring) the bit" rather than only "pointing the bit" or only "pushing the bit".[13][14]

As a result of the 1980s oil glut, in 1987, Baker International merged with Hughes Tool Company to form Baker Hughes Incorporated.[15][16]

In 1999, the only new seismic technology that was being introduced was the 4-dimensional seismic survey monitoring.[17]

In 2000, during a downturn in the petroleum industry, the company merged its Western Geophysical division with Schlumberger's Geco (Geophysical Company of Norway) to form WesternGeco.[18]

In 2006, Baker Hughes sold its 30% share of WesternGeco to Schlumberger for $2.4 billion in cash.[19]

In April 2007, the company pleaded guilty in U.S. federal court to violations of the Foreign Corrupt Practices Act (FCPA). The company made $4.1 million in "commission" payments between 2001 and 2003, after which the company was awarded an oil-services contract in the Karachaganak Field in Kazakhstan. The company agreed to pay $44.1 million in fines and penalties.[20][21]

On June 11, 2012, during the annual period of negotiations between trade unions, including SAFE, the Norwegian union for energy workers, and their employer counterparts in Norway, 114 Baker Hughes employees were called to a strike action, which would have affected over a dozen installations.[22] On June 18, 2012, the strike was called off after the parties agreed to a new collective agreement.[23]

In 2001, the company introduced the largest hydraulic fracturing proppants vessel for deepwater work in the Gulf of Mexico. It was named after founder Howard R. Hughes Sr.[24]

In November 2014, the company entered talks with Halliburton over a merger deal valued at $34.6 billion.[25] If consummated, it would have been the largest merger in the history of the petroleum industry. The merger was approved by both companies' stockholders and was waiting on approval from several jurisdictions; however, on April 6, 2016, the United States Department of Justice sued to block the transaction.[26]

There were concerns that the merger would affect competition and prices in the oilfield service industry. Public officials believed that the asset sale would not help the combined company retain competitiveness, as smaller buyers would not utilize their larger rivals’ assets efficiently. On May 1, 2016, the companies terminated the merger agreement.[27][28]

At the end of October 2016, the company was in negotiations with General Electric to combine with GE Oil and Gas.[29] The deal was cleared by the European Union in May 2017, and by the United States Department of Justice in June 2017.[30][31]

In December 2016, it was announced that the company would shed its North America Land Pressure Pumping division to form a new BJ Services as part of its divestment agreement with GE.[32] The new BJ Services merged with ALLIED Services and ALTCEM. The merger was consummated in July 2017.[33]

In September 2019, GE announced it had sold some of its shares in Baker Hughes, therefore losing its majority control of the company.[34] Baker Hughes subsequently divested from GE becoming an independent company once again.[35]

In July 2019, they set up a JV with Aramco to create a new non-metallic materials company called Novel Non-Metallic Solutions Manufacturing. Novel's facility is being developed at King Salman Energy Park.[36]

In 2021, they announced the creation of a drilling services JV with Akastor ASA's subsidiary, MHWirth AS.[37]

In 2019, the firm pledged to halve carbon dioxide equivalent emissions by 50% by 2030, and 100% by 2050, from a 2012 baseline.[38]

In 2021, Baker Hughes announced a Memorandum of Understanding with Borg CO₂ to develop carbon capture, liquefaction, and transportation technologies on a waste-to-energy plant in Sarpsborg.[39]

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. In 1978, Hughes Tool Company acquired Brown Oil Tools. 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 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, Baker Oil Tools introduced the ZXP Liner Top Packer, with expandable metal seals, which set the stage for development of expandable screens, casing systems and liner hangers. In 1994, Baker Oil Tools introduced multilateral completion systems, which enabled operators to install completion tools and perform selective intervention work in multiple horizontal sections from a common main borehole.

On April 28, 2010, Baker Hughes acquired BJ Services.[40] After the division suffered market share losses, the company sold a majority interest in BJ Services to private equity firms to obtain approval for the merger with GE Oil and Gas.[41]

Exploration Logging Company (EXLOG) was founded in 1952 in Sacramento, California by Vern C. Jones, and had 800 employees. It was a leader in mud logging.[42][43] In 1972, Baker Hughes acquired EXLOG.

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, Eastman Whipstock Inc. was founded by Eastman and Roman W. Hines, the same year the company drilled the world's first relief well to control a blowout in Conroe, Texas, that had been on fire for more than a year.

In 1957, Frank Christensen's Christensen Diamond Products opened its manufacturing plant in Celle, Germany. The facility built diamond core heads and drilling bits and soon began producing stabilizers, drilling jars and other equipment. In 1977, the Celle engineering and manufacturing team introduced the Navi-Drill line of downhole drilling motors, which has led the drilling industry in performance and reliability for three decades. Other innovations developed in Celle include the industry's first steerable motor system, and the AutoTrak Rotary Closed Loop System. In 1978, Christensen Diamond Products was acquired by Norton Co. and its name changed to Norton Christensen. In 1986 Eastman Whipstock merged with Norton Christensen to form Eastman Christensen.

In 1990, the Baker Hughes acquired Eastman Christensen from Norton Abrasives for $550 million. To receive approval from the United States Department of Justice, the company sold its Hughes Tool diamond bit business.[44] Baker Hughes combined Eastman Christensen and the remainder of Hughes Tools to form Hughes Christensen.

In 1993, Hughes Christensen introduced the AR-Series PDC bits, anti-whirl bits with increased penetration rates up to 100% in some applications and extended bit life as much as four-fold, compared to previous bit designs.[45] By 1995, Hughes Christensen's Gold Series PDC line increased drilling efficiency by reducing the frictional forces that can accumulate in front of the cutting edge, reducing the energy required to remove the rock.[46] In 1996, patented ChipMaster PDCs, known for their efficiency and durability, were built on the success of the Eggbeater product line. Hughes Christensen next introduced the Genesis HCM bits for steerable motors with patented EZSteer depth-of-cut control technology. This same technology was adapted to Genesis HCR bits for rotary steerable systems, such as the Baker Hughes AutoTrak rotary closed loop system. Genesis ZX PDCs followed with new Zenith cutters. In 2007, the Celle Technology Center became Baker Hughes' leading research and engineering facility in the Eastern Hemisphere.

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 Aquaness, and in 1964 the combination became Milchem. 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.

In 2001, Baker Hughes acquired OCRE (Scotland) Ltd. from Maritime Well Service, a division of Aker ASA.[47]

Petrolite was formed in 1930 from the merger of William Barnickel's Tret-O-Lite with Petroleum Rectifying Company of California (PETRECO). In 1997, Baker Hughes acquired Petrolite for $693 million in stock. At that time, Wm. S. Barnickel & Co. owned 47% of Petrolite.[48]

In 2003, the division acquired Cornerstone Pipeline Inspection Group.[49]

Teleco Oilfield Services was founded in 1972 and introduced the world's first MWD tool in 1978.

April 1992, Baker Hughes acquired Teleco Oilfield Services, a provider of directional measurement-while-drilling technology, from Sonat for $200 million cash, preferred stock and royalty from future sales of Teleco's "triple combo" sensors. In 1993, Baker Hughes INTEQ was formed by combining five of the company's oilfield divisions.[50][51][52] Teleco had approximately 1,300 employees, including 430, in Meriden, Connecticut.[53]

In June 1989, Baker Hughes acquired Bird Machine Company for $47.5 million. In addition, Baker Hughes acquired Vetco Services for $37 million and EDECO Petroleum Services for $12.1 million the same year.[54]

Tri-State and Wilson companies were acquired by Baker Oil Tools and merged in 1990. Tri-State provided milling operation, spears, and packer retrieving.

Tri-State Oil Tools, an oil field services and fishing tool pioneer headquartered in Bossier City, La, was purchased by Baker in the early 70s. Over the course of the next 10+ years, Baker invested capital to make Tri-State an international company. Offices were opened in Scotland (Dyce, near Aberdeen), Egypt, Singapore, Malaysia, Australia, and Alaska's North Slope, amongst others. In 1984, Baker dismissed several of the top executives of Tri-State and replaced them with Baker executives from Houston, thus putting the project of moving Tri-State to Houston into action. By 1990 the move was completed.

Western Atlas was divested from Litton Industries in 1994. Western Atlas specialized in finding oil by mapping geological formations with sound waves and using wires to manipulate tools and gauges in oil and natural-gas wells.[55]

In 1995, Western Atlas acquired 50% of PetroAlliance Services Company, Ltd., which offered seismic, well-logging, and integrated project services in the Post-Soviet states. In May 1997, Western Atlas acquired Sungroup Energy Services, a Canadian well logging, production testing, and completion services provider. During the fourth quarter of 1997, Western Atlas acquired Geosignal, a seismic data processing company; Seismic Resources, a provider of nonexclusive seismic surveys; and ParaMagnetic Logging, a well-logging research company. In the fourth quarter of 1997, the company acquired Heartland Kingfisher, a Canadian well-logging company.[56]

On August 10, 1998, the company acquired Western Atlas for $5.5 billion in stock plus the assumption of $700 million in debt.[57][58][59] The acquisition was made in part to prevent an acquisition of Western Atlas by Halliburton.[60] The acquisition added strong seismic-data operations as well as downhole wireline and testing services.[61]

In February 2006, Baker Hughes acquired Nova Technology Corporation, an oil and gas data acquisition and monitoring service company.[62]

In October 2010, Baker Hughes acquired JOA Oil & Gas BV. JOA have developed JewelSuite, a reservoir modelling software.[63]

In 2020, Sterling Auxiliaries & Artek Surfin Chemicals have acquired Baker Hughes' Sand Springs facility.[64]

In November 2020, Baker Hughes acquired the company Compact Carbon Capture, a company developing solvent-based carbon capture patents.[65]

In February 2021, Baker Hughes announced it would acquire ARMS Reliability, a company providing advisory services and software to several industries.[66]

In March 2021, Baker Hughes acquired from SRI International a license for the use of Mixed-Salt Process technology for flue gas carbon capture.[67][68]

in March 2022, Baker Hughes acquired the Norwegian headquartered oilwell specialist company, Altus Intervention.[69]