As the tailwinds around energy transition intensify, we are taking steps to accelerate our strategy to fully capitalize on the opportunities that lie ahead, drive increased shareholder value, and build a world-class energy technology company. Our strategy remains aligned with our purpose of taking energy forward. In 2021, we demonstrated strong progress, differentiated our offerings, and solidified our leading position to capitalize on the growing commercial opportunities in new energy and industrial areas.
The push for a net-zero world continues to intensify. We provide proven technologies to help our customers as they progress towards their own net-zero objectives. In 2021, we saw the first wave of commercial success from our energy transition efforts, generating approximately $250 million in new orders, primarily in hydrogen and CCUS applications. We remain confident in our ability to grow this business over the next decade.
To further support our energy transition strategy, we began to align the company across two broad business areas: Oilfield Services and Equipment (OFSE) and Industrial Energy Technology (IET). These two business areas have differing growth trajectories that will require their own unique approach to operations and capital allocation. We believe that focusing on these two business areas will better position the company by enhancing our flexibility, improving commercial and operational execution, and providing long-term optionality.
The OFSE side of Baker Hughes is a leading global enterprise comprised of our OFS and OFE product companies. It is positioned to benefit from cyclical growth in the coming years, and its core strengths include drilling services, flexible pipe, artificial lift, and chemicals. We have a strong leadership team in place and a world-class technology portfolio, which will support customers as they continue to invest during what is expected to be a multi-year recovery.
The IET side of Baker Hughes is comprised of our TPS and DS product companies. We view IET as a significant growth opportunity for Baker Hughes, specifically in areas including hydrogen, CCUS, and industrial asset management. IET represents a strong foundation to build an even more comprehensive presence in the broader industrial markets, and we are taking steps to prepare for future growth.
Additionally, we formed the Climate Technology Solutions (CTS) and the Industrial Asset Management (IAM) groups to bring together our capabilities and provide structure for our growth initiatives. These groups represent an intensified commercial and strategic focus on these key growth areas.
CTS encompasses CCUS, hydrogen, emissions management, and clean, integrated power solutions. These solutions are already primarily housed in TPS, using proven technologies that can now be scaled and better positioned to meet our customers’ increasing need to lower the emissions from their own operations.
IAM will bring together key digital capabilities, software, and hardware from across Baker Hughes. IAM will focus on accelerating the commercial development of solutions-based offerings to support customers’ digital transformations through increased efficiencies, improved performance, and reduced emissions. This includes our partnership with C3 AI, known as BakerHughesC3.ai (BHC3), Bently Nevada condition monitoring, ARMS Reliability, and Augury Alliance teams, among others.
Baker Hughes established our three strategic pillars in 2020, and we took steps to accelerate our progress in these areas in 2021.
Transforming the core represents our focus on improving margins, free cash flow, and returns across our businesses. We continued to make progress on this initiative in 2021 through continued cost improvements, portfolio rationalization, rooftop consolidation, remote operations, and new business models.
Many of the initiatives that started in 2020 continued to pay off in 2021, particularly in OFS and OFE, which both saw solid margin rate improvement despite volume challenges.
Investing for growth remains focused on driving organic and inorganic growth in high potential segments where we have a strong position. In 2021, we acquired ARMS Reliability and made an investment in Augury, which combined with our Bently Nevada business, will advance our Industrial Asset Management capabilities.
Positioning for new energy frontiers was a significant strategic focus in 2021, leading to multiple collaborations, investments, and pronounced commercial successes. We achieved commercial successes and executed several transactions in the areas of hydrogen, CCUS, and clean, integrated power.
As we position Baker Hughes to be a leader in new energy frontiers, we strongly believe that collaboration is needed, and the partnerships we forged throughout the year are positioning the company to lead in the energy transition. Our collaborations are helping to accelerate new energy economies, forming the basis for new and differentiated revenue streams for Baker Hughes.
SRI International – exclusive license for mixed-salt capture
Novatek – global partnership for lower carbon hydrogen solutions for LNG
Horisont Energi – Polaris carbon storage project in Norway
Air Products – global hydrogen projects partnership
Borg CO2 – CCS hub for Norwegian Industrial Cluster
Hy24 – anchor investor
Electrochaea – bio-methanation and synthetic natural gas investment
Ekona – novel hydrogen production technology
Clean, integrated power
Bloom Energy – integrated power and hydrogen solutions
Our 2021 annual report
We are an energy technology company. We take energy forward, making it safer, cleaner, and more efficient for people and the planet.