Offshore in depth

Marine seismic data is the starting point for offshore oil and gas exploration. New acquisition and processing techniques have enabled discoveries in frontier areas, and have found reservoirs in challenging geologies beneath salt layers. It’s no exaggeration to say that quality seismic data is critical to the future of offshore field development.

However, the business of marine contract data acquisition is highly cyclical and very capital intensive. In the current downturn, oil and gas companies have cut back their exploration budgets substantially, and demand for new, proprietary seismic surveys has declined by more than 50% since 2014. The seismic market is expected to be weak through 2016. Marine seismic companies have reduced streamer capacity by 50% since peak levels in 2013, but further reduction will be needed before supply and demand reach a balance.

In this environment, multi-client survey data is an attractive option for operators evaluating offshore blocks, before bidding in both mature and new areas. Seismic suppliers acquire multi-client data in key prospective areas for oil companies that subscribe in advance (pre-funded sales) or license the surveys after they are taken and processed (late sales). Operators have access to the data at a fraction of the cost of proprietary surveys. Multi-client surveys also typically cover more area than individually contracted surveys. Building, maintaining and licensing multi-client data libraries are central to the business strategies of seismic companies in their efforts to weather hard times.

Survival mode. The four largest seismic suppliers have pursued slightly different survival strategies, but their approaches—gleaned from questionnaire responses, websites and investor presentations—have several common elements. Seismic suppliers have reduced capital expenditures, culled their fleets, cut operating costs, and maintained vessel utilization by conducting multi-client surveys.

Seismic data providers are focusing new multi-client data acquisition on geographic areas with the greatest client interest, like offshore Mexico, East and West Africa, Eastern Canada and Brazil. They also are integrating new seismic surveys, with reprocessed data and other G&G data, to provide integrated geoscience services.

WesternGeco. WesternGeco, a Schlumberger company, owns a library that covers hydrocarbon basins worldwide, with a substantial inventory of 2D and 3D data available from mature basins and frontier areas.

WesternGeco recently completed its EDGE project, which includes reprocessing of wide-azimuth (WAZ) and full-azimuth (FAZ) seismic data, with a full integration of non-seismic and well data for 50,000 km² in the central Gulf of Mexico. Combined data enable detailed mapping and risk assessment at both prospect and field scale. WesternGeco also recently launched a multi-client campaign to acquire new data in the deepwater Campeche basin and the Flemish Pass offshore Newfoundland, and has recently completed projects in Mozambique and the UK.

CGG has reduced its marine seismic fleet—from 18 vessels in 2013 to just five in 2016—as part of a transformation from being primarily a seismic acquisition company, to an integrated geosciences company. For 2016-2017, the company plans to have an average three vessels conducting multi-client surveys.

CGG’s multi-client strategy is to harvest value from its existing library, which includes large data sets from the Gulf of Mexico, Scandinavia and West Africa. In addition, CGG continues to develop its library of data on specific basins in Brazil and the North Sea. The company intends to differentiate itself by using more advanced technologies. CGG’s library consists entirely of high-quality 3D data, with a large amount of data acquired per square kilometer. CGG also plans to reprocess its vintage libraries of older data, including 38,000 km² of wide-azimuth surveys taken offshore Mexico, in the Perdido fold belt.

PGS has a global multi-client library, which it values at nearly $700 million. The most recent customer interest has been focused on its data from Brazil and West Africa. PGS also has pursued a strategy of exchanging seismic survey data for a 45% ownership in an E&P company, Azimuth Ltd. Azimuth holds 48 exploration licenses in Norway, the UK, Ireland, Latin America and Southeast Asia. This approach has helped keep the company’s vessel utilization high, while building equity in potential future production.

In 2016, PGS plans to make multi-client cash investments of approximately $230 million, with a healthy prefunding level of nearly 100%. Slightly less than 50% of PGS 3D seismic vessel time is planned for multi-client work in 2016.

TGS has a different business model from its larger competitors, in that it acquires data by contracting third-party vessels. Early in 2016, TGS had up to five subcontracted 2D vessels acquiring data offshore Mexico as part of its Gigante survey. This covers proposed licensing rounds in the Perdido, Campeche and Mexican ridges regions.

In its first-quarter earnings announcement, TGS reported that is has substantially increased its library during the downturn, taking advantage of low acquisition rates under favorable contract arrangements, to invest counter-cyclically in the U.S. and Mexican Gulf of Mexico, Eastern Canada, the Barents Sea, Greenland and Australia. TGS plans to reduce its multi-client data investment by 50% in 2016, compared to 2015, with multi-client investments of $220 million this year, prefunded at the rate of 45% to 50%. In conjunction with the 120,000 km of 2D data acquired during its Gigante survey, TGS is acquiring multi-beam, coring and geochemical data over approximately 600,000 km², to provide an integrated geosciences data library for the area, which should be available to clients by the end of 2016. 

About the Authors

Ron Bitto

Contributing Editor

Ron Bitto has more than 30 years of experience as a technology marketer and writer in the upstream oil and gas industry. RON.BITTO@GMAIL.COM