Submit to FacebookSubmit to Google PlusSubmit to TwitterSubmit to LinkedIn

In the current oil market, much ink has been devoted to operators pulling back on drilling activity and selling off assets, including prime pieces of property.

But what about the geophysical side of the business?

Seismic surveys and data, for instance, are crucial to exploration.

But when exploration slows and actually halts in some places, explorers aren’t expected to ink pricey seismic contracts and other services. At best, they’ll bring all of their bargaining skills to the negotiating table in an attempt to get more for less.

There has been some buzz about how the downturn is actually a good thing, giving everyone in the oil industry time to regroup and focus more on cutting costs, ramping up R&D; and becoming more efficient overall.

This is nonsense, according to industry veteran Jim White, president of Houston-based ARKeX.

“We (industry) are barely keeping the lights on,” he noted with dismay. “The notion that we benefit from a refocused downturn is a farce.”

Not Your Father’s Downturn

“This time is different,” White emphasized. “I’ve never seen it happen quite so dramatically as this go-around. We’re in a position where companies are going to start going by the wayside.”

And, in fact, it’s already happening.

Certain operating companies continue to announce cutbacks, and they are accompanied by some of their geophysical brethren.

ION Geophysical, an established firm outside of Houston, is a recent casualty, announcing a 25-percent reduction in its workforce.

Tom Fleure, senior vice president of geophysical technology at Global Geophysical Services, shared some of his observations about the current tumultuous times.

“Some of our clients are going through a lot, even the big guys,” he said.

“From a contractor’s point of view, business is down at least a half and maybe as much as 70 to 80 percent from a couple of years ago,” he noted.

Research and Development

“From a technology point of view, it doesn’t mean you stop working on new stuff,” Fleure commented. “We’re still going forward with our own R&D; and engineering.”

“In this business, you’re dead if you stop, because all will go by you when this turns around,” he added.

Software and algorithms take manpower, but not huge capital investments, so Fleure predicts companies will spend available funds on software as opposed to hardware.

But, there’s a problem when it comes to bringing in and retaining the needed software developers.

“We’re competing with other industries, and these guys are hard to get,” Fleure noted. “Others see what’s happening to our industry, and there are other industries they can go to.”

Global concentrates on the surface rather than downhole. Fleure explained that microseismic tends to dominate their conversations with clients today, particularly with regard to microseismic data’s contributions to shale plays.

Among other areas of expertise, Global pushes the access-constrained targets, using roads and trails for vibroseis rather than offroads, which can be problematic. Think of the West, for example, where the BLM controls offroad access.

The resulting 3-D is chaotic, or pseudo-random, and it’s price-driven.

“We have a lot of clients who want to do 3-D but don’t have much budget,” Fleure said, “so this way they get 3-D at a lower cost.”

He emphasized that this is an effort being used at Global, and not necessarily an industry trend.

Workforce, Technological Impacts

Of course, current market conditions are particularly challenging for anyone trying to start their careers in the geophysical industry, and in the oil and gas industry in general.

“Newcomers coming in to see it deteriorate are not apt to weather this storm,” White predicted. “It will be a wake-up call for young guys who say they don’t want to go through this. Many of the veterans are leaving, too.

“We’ve done a poor job of managing supply and demand, so the oil companies win and get stuff cheaper and take advantage,” he said.

“The one thing, maybe, new blood might bring to the equation is the outlook to deviate from the norm and change our approach to doing business by not bringing more capacity into the equation and going back to the same old things,” he noted optimistically.

When asked about new technology, which will continue to be a must-have, White predicted that much of it will originate at the universities with funding by the industry.

“For now, the challenge is to focus on what will bring immediate returns,” he said. “The last thing we need to be doing is looking for growth opportunities.”


As to the future, companies with good balance sheets are the ones who will make it through, as will the companies with their own equipment, according to White.

There are some upbeat predictions emanating from the International Association of Geophysical Contractors (IAGC), but there may be a long wait until they’re realized.

“IAGC is focused on the overall global energy demand long term,” said recently installed IAGC president Nikki Martin.

Martin is the first female to be appointed to this role in the organization’s 44-year history.

“It’s estimated that by 2040, 80 percent of global energy demand will come from oil and gas,” she said. “Meeting energy demands is long term, and that can’t be driven by last year, this year or next year’s oil prices.”

A telling comment about the situation today came when Martin mentioned that, for the first time in a long time, there is not one 3-D survey operating in the U.S. Gulf of Mexico, which some might find to be a tad unsettling, even though there is some activity closer to Mexico, which is now welcoming new operators.

Given the severity of the current down cycle, the industry may look quite different before long.

“One way to look at it is that it’s like a cleansing,” White said.

“It will promote discussions for consolidation, and to me that’s a good thing, ” he asserted. “It will be a chance to right the ship and hopefully prepare for the next one, so it won’t hurt as much. We need to right-size the amount of supply for the current demand.”

And demand for geophysics is sure to increase, according to Martin.

“You can’t have successful E&P; without the geophysical industry,” she said. “So it will remain a critical part of exploration and development of global oil and natural gas resources for many years to come.”

- See more here.

AAPG / Explorer - By Louise S. Durham

Comente este artigo


CGG Rodapé