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Phil Wahba

How SLB is trying to reinvent itself for to weather climate change

(Credit: Courtesy of SLB)

A year after Schlumberger rebranded to SLB and dropped the family name of the founding brothers, the oil-field services leader is seeing the benefits that change is having on reinventing itself as a new energy company.

The business, which started in France as the Electric Prospecting Company and then Schlumberger, created its SLB name last year to signal a refocus on newer energy services, such as carbon-capture technology and the development of hydrogen, geothermal energy and geo-energy. SLB predicts that new energy should be a $10 billion-a-year business by 2040, up from just from a tiny fraction of that amount now.

At the same time, CEO Olivier Le Peuch, a Frenchman who took the reins in 2019 and has been at SLB for decades, said its bread-and-butter oil-fields services business is not going anywhere, predicting that oil and gas will remain dominant in energy production for a long time yet. In that area, SLB hopes to make exploration and extraction more efficient.

"We need to explain the energy system as it is, and how it will evolve, and recognize that the world today cannot live without oil and gas but at the same time, stand up and to demonstrate our commitment to decarbonization," Le Peuch told Fortune.

This interview was edited and condensed for clarity.

Fortune: Last year, you changed your well-known corporate name to "SLB" from "Schlumberger." Was that to sound less French? The company does not offer consumer-facing services, so why tinker with a name that is almost 100 years old?

This was an opportunity to reset our vision. We had set a strategy in motion four years ago and I think COVID gave us the opportunity to launch that vision and was a branding opportunity to position ourselves as a global technology company with the opportunity to innovate and create both the decarbonization of the current energy system and accelerate solutions for the future.

You call SLB a nearly century-old entity a "tech company." What makes you a tech company now?

It goes back to our roots. For almost 100 years, we've been a science and innovation company with the mandate to put first and foremost research ahead of profit. We have been innovating and inventing new technology for the purpose of performance in energy extraction. There is a priority in accelerating decarbonization and the performance of oil and gas so they can contribute to the energy mix more sustainably, using digital tools for sampling and increasing energy efficiency across the board. The new energy that we need will take decades to come to market and we believe that our contribution will be to deploy technology anywhere we can scale.

Help me reconcile two contradictory trends I am hearing. On the one hand, we keep hearing that the climate crisis is urgent and we have to reduce our fossil fuel use immediately, and on the other, many CEOs have told me they think oil and gas consumption will keep rising in absolute terms for decades.

We have to commit to reducing emissions from oil and gas exploration, development and production. This is a major action. This starts with abating methane, eliminating flaring and reducing the carbon footprint of operations we provide to our customers, and reducing the energy required to lift, produce, process and transport oil and gas to the market. The second aspect is to produce more efficiently. That's where we use digital tools to be more effective and more productive. And lastly, the plan is to participate in and accelerate renewable and clean energy.

Do you ever feel that the oil and gas industry is unfairly reviled in this climate discussion, and do consumers fully understand the implications if society stops using fossil fuels cold turkey?

It's not a surprise to us in the industry but I think we need to do a better job of explaining why oil and gas is part of the fabric of society and why there is no substitute in the short term for supplying the energy and the byproducts of gas that the industry provides to the world. This is a reality of today and we must be clear in documenting it. At the same time, we need to do a much better job of showing the action we are taking to commit to decarbonizing emissions. We need to explain the energy system as it is, and it will evolve and recognize that the world today cannot live without oil and gas but at the same time, stand up and to demonstrate our commitment to decarbonization.

Given all the push back on the sustainability goals within ESG guidelines, will the desire of your clients to hit those environmental goals weaken?

We have set out our goals independently of any ESG pressure or ESG activists. We were the first company in our sector to include Scope 3 emissions for net zero and we did that back in 2020. But we don't like the fact that ESG metrics are not unified, and that they add complexity and a lack of transparency. We more than welcome any initiative that will simplify reporting.

New energies are part of your big plan for SLB. But wind and sun power remain relatively small sources, even in countries like Denmark. Why is this key for SLB?

We have no choice but to participate in new energy development. We have one or two decades to seed the initiatives organically and using our technology, camera capability, and warehousing adjacency because our customers are going with us in this field of new energy and we are using our geographical footprint to expand and use technology innovation for CCS (carbon capture and storage), for geothermal, for hydrogen and deploy it. We have been in CCS for 25 years and it's still a small portion of our business but it's something that is growing fast. If you combine all these, you realize that you can create a whole new chapter for the company.

Given many people's negative views of the oil and gas industry, what is talent attract like for you these days?

I believe our rebranding, vision and position have helped us to really push our company clearly as a global technology company innovating for the future and for a balanced planet. We tap into a talent pool globally. We have not been seeing any setback in the last two or three years in our ability to recruit. People from the new generation are really inspired to some extent by our vision and by the ability to work on solutions, including digital, and things like carbon capture and energy storage, so that is very attractive to them, to work on practical, pragmatic solutions.

You were trained as an electrical engineer. Does that help you as a CEO or are firmly just in the world of strategy and execution?

I spent the first 10 to 15 years of my career making technology, innovating, and understanding how to transform ideas into an engineered product and how to tap different disciplines to make it work. It also has helped me to better understand the value proposition we can offer to customers. I can then spend the balance my time between guiding the team on the strategy and added insights on the technology.

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