Despite two years of setbacks, the marine geophysical sector is poised for busy times.

Funny what a difference a decade makes. In 1999, the seismic industry was cursing the multiclient business model since it had been used as an excuse to keep boats busy when no contract work was available. In 2011, the multiclient model is being praised as one of the segments that helped keep the marine industry afloat during the recession and the fallout from Macondo.

That is one of many observations made by companies in the marine geophysical industry. E&P asked these companies about the recession, Macondo’s impact on their business, and their plans going forward.  

The Recession

During the recession, some companies fared better than others. Companies that operate mostly on a contract basis said that 2009 actually was a better year than 2010 because they were working through their backlog, whereas companies that operate more on a multiclient basis said 2009 was a very difficult year.

The BOS Arctic

The BOS Arctic heads to the North Sea for the summer. (Photo courtesy of Bergen Oilfield Services)

“Together with the fall in oil prices and the general economic downturn in 2008-2009, the profit margins for contract seismic were eroded significantly in 2010 compared to 2009,” said Per Arild Reksnes, executive vice president, Marine Contract for PGS. “However, the need for new and better seismic data to find more oil and gas has made oil companies willing to steadily invest in multiclient data.”

According to Beno?t Ribadeau-Dumas, executive vice president, Marine Division, CGGVeritas, the mid-decade technology gains such as wide-azimuth (WAZ) seismic helped. “Demand was driven by technology (higher resolution surveys) and a general increase in regional activity,” he said. “The seismic services market also improved, with commercial activity increasing globally in most regions.”

However, he added, pricing remained under pressure due to a longer period of overcapacity than originally expected, mainly based on events in the Gulf of Mexico (GoM).  

Unlike previous downturns, when oil companies were less likely to insist on using the latest technology, demand still was strong for high-end services. “It was interesting during the recent downturn to note that our clients did not stop exploring, nor did they ‘trade down’ from WAZ, 4-D, and other high-end approaches,” said Edward Kotochigov, marine marketing manager for WesternGeco. “These services deliver the incremental value clients are looking for.”

He added that, while overcapacity has been an issue, techniques like WAZ “consume many more vessel months per square kilometer than conventional narrow-azimuth exploration. This sucks up a lot of vessel capacity, and as they grow, the industry will face localized shortfalls later in 2011 and 2012, despite the addition of new capacity.”BGP Inc. already has plans to launch a 12-streamer vessel. The objective is “to meet higher demand from our clients,” said Zheng Huasheng, vice president of the company. The vessel will be outfitted with ION Geophysical’s DigiSTREAMER system. This need for the latest data has played nicely into the hands of TGS, a company that relies almost solely on a multiclient model. CEO Robert Hobbs said once companies are ready to start exploring again, the quickest way for them to do so is to license data off the shelf rather than embark on an expensive and time-consuming proprietary survey. It does require, of course, that the data being shot on a multiclient basis are in an area of interest to the oil companies. Hobbs said his company has to “stay out in front” of its clients and to invest almost counter-cyclically.  

New processing techniques like reverse time migration have revolutionized the marine seismic industry. (Image courtesy of TGS)

“We didn’t significantly decrease our investments in 2009 from 2008,” he said. “Our asset-light business model allows us to take advantage of the cycles in our industry. We are going to the other seismic vendors to get vessel capacity. We can get it for lower cost because of the market, and I can continue to invest in multiclient data and then be prepared for the upswing when it comes.”

Overcapacity in the market is good not only for TGS, Hobbs said. “We like it when we see these companies announce new vessels on the market because it gives us more capacity to utilize,” he said. “But it’s also a sign that those companies have a positive view on the marketplace – they believe demand for seismic is going to increase going forward.”  


As the global financial situation began to stabilize, the industry as a whole was starting to view 2010 with at least a faint ray of hope. That changed on April 20 when the Macondo well in the GoM blew out, killing 11 people and causing the worst environmental disaster in US history.

CGGVeritas’ Oceanic Vega

CGGVeritas’ Oceanic Vega shoots a WAZ project in the GoM. (Image courtesy of CGGVeritas)

The Obama administration acted quickly to repeal earlier claims that licensing rounds would be held in the eastern GoM and the East Coast of the US and declared a drilling moratorium in the deepwater GoM. This had an immediate near-term impact on the geophysical industry.

Even companies that had no activity in the GoM felt the impact. “Since 2009, we haven’t been in the GoM, so we haven’t been relying on that business,” said Jan Sovik, vice president of marketing for Bergen Oilfield Services (BOS). “But it has affected the vessel availability, meaning that a number of seismic vessels have been pulled out and have been spread to other markets. That’s putting pressure on prices and availability of work in other markets. So indirectly it has affected us.”

Companies active in the GoM had considerable fallout. “Uncertainties in the Gulf shaped multiclient sales in 2010, which were below typical levels until the fourth quarter,” said Ribadeau-Dumas, adding that this uptick was driven by a renewed interest in activity despite the ongoing uncertainty. In fact, several companies’ 4Q 2010 earnings were far above analysts’ expectations, driven mostly by multiclient sales.  

Added Reksnes, “The event led to a halt in the oil companies’ purchasing of seismic data for some time. Their willingness decreased significantly to prefund new surveys in the deepwater areas because they didn’t know the future conditions.

Technicians work in the recording room during a dual coil operation.

Technicians work in the recording room during a dual coil operation. (Image courtesy of WesternGeco)

“Also, the incident has increased the attention operations connected to oil and gas exploration get in the public domain, especially the HSE elements.”

WesternGeco continued to explore in the GoM because its clients were enthusiastic about its dual coil project, said Kotochigov. “They signaled that they had confidence in our capabilities and would continue to support us,” he said. “We appreciate that for our clients in the Gulf of Mexico it was a challenging year that will take some time to work out. However, the Gulf of Mexico is recognized as one of the world’s major basins, and its long-term importance to the domestic economy is not in doubt.”

This is being expressed by clients which, based on the 4Q 2010 results of CGGVeritas and others, are signaling their continued interest in the area through their wallets. Ribadeau-Dumas noted that WAZ prefunding and sales remained active throughout the year. “This highlights the long-term confidence in and importance of the deepwater Gulf of Mexico to the industry and the value that wide-azimuth brings to exploration and production,” he said.

“It’s interesting,” added Hobbs, “because oil companies, while they’ve been very cautious about the GoM, are still buying seismic data there. That says they’re taking a longer-term view.”


The marine market still lags behind land in all regions. (Graph courtesy of World Geophysical News)

This is a sign of preparedness for when normalcy returns, so oil companies are buying seismic data and maintaining employment levels for geologists and geophysicists, he said.  

The View For 2011

Even without unrest in the Middle East and North Africa, which likely will put upward pressure on oil prices (which occurred after these interviews were conducted), geophysical contractors in general seem bullish on 2011 and beyond. According to Kotochigov, 2011 will be a busy year. “We see a high level of bidding activity in the industry, and we have a confirmed backlog through 3Q 2011. In fact, as expressed as quarters of activity, the global seismic backlog is the highest it has ever been.”

For CGGVeritas, the year could partially restore the drivers that pushed oil prices so high in 2008. “We see global energy demand at peak levels, low reserve replacements rates, complex and challenging exploration opportunities, and maturing reservoirs,” said Ribadeau-Dumas. “In the face of these challenges, most analysts estimate that E&P spending will increase in 2011, with exploration and seismic spending outpacing the general trend.”

He added that he expects the marine market to be up around 20% over 2010, and it will continue to strengthen  in most regions, though not necessarily the GoM. S?vik said BOS will be active mainly in the Middle East and Asia while wrapping up a survey in the North Sea and planning a return to West Africa. Many companies also are tentatively targeting the Arctic.

“The Arctic is an area that has not really been solved,” said Tim Rigsby, senior vice president, Strategic Initiatives for ION Geophysical. “It’s a challenging area to operatein, and it’s an area where oil companies have a tremendous need for data. To help companies get the data they need, we developed proprietary technology that allows for in-ice acquisition. Using this technology, we’ve expanded traditional acquisition boundaries into new territory and extended the shooting window far beyond what was previously possible.” ION’s Arctic data library now contains more than 30,000 miles (50,000 km) of data across the Canadian Beaufort and US Chukchi seas as well as northeast Greenland.

Polarcus brings DNV-acknowledged arctic procedures to the area and winterized vessels with high ICE-1A Class. It is the only seismic company in the industry with 3-D vessels less than 20 years old that carry this class notation. On order, with delivery early in 2012, are two new 14-streamer seismic vessels, which will incorporate ICE-1A (super ICE-Class) capabilities.  

Technology Leads The Way

It has been refreshing for these companies to see the industry’s consistency in its interest in new technologies despite the downturn. One of the key technologies cited by many players is increased bandwidth.

“The benefits of acquiring broadband marine seismic data have long been accepted, but until recently this has been difficult, if not impossible, to achieve,” Ribadeau-  Dumas said. “Today, new equipment, techniques in acquisition, and advances in imaging technology have overcome most challenges.” Obtaining a larger range of frequencies also is desirable, Ribadeau-Dumas said, because broad bandwidth produces sharper wavelets for better resolution. Several companies have introduced broadband solutions:

-CGGVeritas’s BroadSeis solution combines equipment with novel acquisition geometries and proprietary processing algorithms to produce better subsurface images;

-WesternGeco offers DISCover, a full-offset broadband solution; and 

-PGS has its GeoStreamer cable system and now is working on a new source technology that applies similar de-ghosting techniques on the source side. 

The end result, Reksnes said, is increased amplitude in the low and high frequencies. In addition to streamer techniques like WAZ surveys, ocean-bottom cable and nodal systems also are gaining favor. Shell recently showcased a new type of autonomous underwater vehicle that can be preprogrammed to place sensors on the seabed, eliminating the need for costly ROVs. But better data require better processing, and many see this as an area that will undergo major improvements in the next few years. “We believe that the new acquisition technology will be followed by processing technology, taking advantage of the increased bandwidth and the ability to use both the up- and down-going wavefields in imaging and multiple removal,” Reksnes said. Huasheng added, “Imaging is a continuous R&D program. Reverse time migration (RTM) and RTM with anisotropy algorithms will become a standard migration.” At TGS, one of the ways it stays ahead of its clients is through interpreting its own data, and this requires advanced processing. “Where we differentiate the quality of our product is in the processing of the seismic data,” Hobbs said. “That’s when you assure the quality; that’s when you make sure that what you give the client is error-free and the highest resolution that you can deliver. If you look industry-wide, most of the technology advancement and differentiation has been on the processing side of the business.”

TGS and others also are taking advantage of advances in computer technology, and an exciting recent move is shifting the processing from central processing units to graphics processing units (GPUs). “Right now we’re moving toward doing more of our RTM on GPUs,” Hobbs said. “The improvements in speed have been quite impressive.”

A Wild Ride, As Always

Geophysical contractors are no strangers to difficult market conditions, and these past few years again have challenged them to face down tough problems. But something seems different this time, and it is possible that oil and gas companies finally are in sync with their seismic contractors, paying a premium for new technologies even in the darkest times because they know these technologies will get them closer to the answers they need.

R&D has not taken a backseat to survival, and the results truly are paying dividends.