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Oil & Gas Journal

Bob Tippee
Editor

The incoming president of the Society of Exploration Geophysicists sees "a strange set of circumstances" emerging in the oil and gas industry.

All signs point to greatly increased demand for energy, including oil and natural gas, notes Craig Beasley, chief geoscientist at WesternGeco and a Schlumberger fellow.

"The way to satisfy that demand would be through new technology and increased effort in the field, yet I think it's fair to say that today that's not being done," Beasley says.

Oil and gas companies, which must produce the needed energy and for which profits currently are high, aren't rushing to respond to the need.

"To be fair, there are signs that activity is increasing, but it will take time to translate into a market response," the new SEG president says.

"We look at the technology spend at oil companies, and it seems to be decreasing," he adds, although exceptions can be found. "There are some major oil companies and a few of the service companies who do believe in technology and are investing quite heavily in the future. I believe that those are likely to be the winners in the long term."

An important product of past research is 3D seismic, which oil companies consistently cite as especially valuable, Beasley notes. But the value creators have largely missed out on the rewards.

"When you look at providers of that [set of 3D technologies], it hasn't been very profitable for them."

Evolving role
Along with profitability challenges, geophysical contractors have had trouble communicating to the financial world their complex activities and evolving role in the upstream petroleum business.

Outside the oil and gas industry, for example, the view persists that seismic surveys are principally exploratory tools; in fact, seismic and other geophysical methods have become at least as important to reservoir monitoring and production management as they are to exploration. When investors hear that exploration is declining in relation to development activities, Beasley says, some of them conclude the news is bad for geophysical contractors.

"The old split of oil companies' efforts into exploration and production in a way doesn't fit with today's reality very well," he says. For example, production departments often conduct work that's technically exploration in existing fields.

"When you shoot a 3D seismic survey, you really don't know all the things that your customer's going to do with that data. It may primarily be a production survey, but there may be an exploration component to it."

Although contractors have written down much of the value of the speculative seismic data that glutted the market in the late 1990s, Beasley sees no imminent resurgence of acquisition activity for speculative data. Spec data shot in the 1990s remains on the market, and oil companies have large libraries of proprietary data.

And although acquisition and processing techniques have improved, "I wouldn't say we've obsoleted a lot of data, and that existing data can satisfy some of the market demand," Beasley adds. "I'd like to see demand for newer, higher-resolution spec data, but I'm not sure it will happen in the near future. In today's environment, geophysical contractors are requiring high levels of precommitments for spec programs."