Gulf of Mexico saturated with seismic; what's the next move for contractors?

What's the next move for the seismic industry operating in the Gulf of Mexico? Look closely at the off-shelf 3D seismic coverage maps. The active interest, near-deepwater is thoroughly shot with 3D seismic; the shelf is blanketed with 2D and 3D seismic; the slope is thoroughly covered; and the near-deepwater is laced with 2D seismic as well as 3D. There is enough recent data available for companies to chew through for 2-3 years to come. Wherever the industry chooses to search, there is a data set available for their use.

In addition, industry compression continues reducing the number of oil company interpreters. Those that survive are attempting to keep the active projects moving forward at the same pace, before mergers squeeze their colleagues out. Who has time to examine new data sets? More active projects per interpreter on existing data sets means fewer sales of new data sets.

On top of all this, the seismic acquisition component is beginning the consolidation process (Baker Hughes/Schlumberger deal to form Western GECO). Those contractor personnel the survivors relied upon to help with technical questions are now in jeopardy. Skilled service hands will become disconnected from their dataset expertise and the network of relationships will change significantly. Delays and dislocations are inevitable as the contractors reorganize.

This is not a pretty picture.

There is hope, however, for both for seismic acquisition and for the "redundant" acquisition and processing community. While data sales will likely suffer for another year, the inventory of 3D seismic data sets is a treasure trove of knowledge that will be purchased in time.

For these companies, near-term profits will be squeezed, but not long-term effectiveness. In fact, the longer-term picture is bright because of the extended usability of the newer data sets. Three-dimensional seismic data is much more flexible than 2D ever was, and visualization technology permits ever more thorough examination of geological problems.

Outsourcing

Squeezed and deadline harried interpreters in oil companies are ripe for secondary help. Outsourced projects, both processing and interpretation, will be required for oil companies to meet the timetable for projects already in process. Growing US demand for both oil and natural gas, coupled with strong prices, will keep the economic forecasts of active projects in the black and assure sufficient profit motivation for companies to keep them moving forward.

Much of the next year's activity will be by independent oil companies. Joint ventures, partnering, and resource sharing are normal parts of their corporate cultures. They routinely hire experienced contractors and consultants to help them complete projects. The Gulf of Mexico is a bright place for the "newly freed" with confidence in their skills.

The major oil companies have shifted their sights to the deepwater over the past few years and left the shallower areas to the smaller independents. Deepwater requires a longer planning horizon, more front-end investment, and different geological models for success. It also requires extra attention to deepwater 3D seismic datasets.

Seismic is now being used as an initial input into integrated economic forecasting. The earth models created by interpreters form the foundation that drilling, reservoir, and production engineers will use to develop corporate cash flow models of individual projects.

With thinned ranks and tight budgets, and more projects with shorter planning cycles, the majors will have to have help. Most producers cannot do all the required work in the time allotted, even with the latest software tools.

The market shift to higher demand has caught many firms off-guard and not fully prepared. Without adequate staff, they will need more outsourced help. In-house personnel will, of necessity, become ad hoc project managers, if the companies are going to take full advantage of the opportunities in the current market.

If this sounds a lot like a traditional independent company approach to the business - it is. The market forces reshaping the majors are forcing them to act more like independents. Since they cannot move as fast and must have very large discoveries, the move into deeper water helps them achieve both ends. They can quicken their internal processes on longer-term projects that have the potential to add major new reserves. It buys them time.

Opportunities

So, while the major players in the seismic contracting business follow their major oil company clients through the merger grinder, smaller stable data processors and consulting firms are set to grow and expand their service offerings. Here are three trends taking shape:

• Navigation and positioning: 3D seismic data sets are complex and all elements of the survey must be correct or correctable. Navigation data are crucial to final bin location and much of modern seismic processing requires that data be corrected to a regularized voxel form. Seismic contractors, boutique processors, or professional consultants with experience with these data forms will find plenty of work.
• Processing: The number and types of processing have exploded as the datasets have become denser. Pre-stack depth migration is essential for companies targeting near-salt or subsalt prospects. This requires detailed velocity analysis, often on a trace-by-trace basis in problem areas. Amplitude versus offset and amplitude versus azimuth (angle) are now being applied to 3D seismic. Multiple forms of seismic attribute analysis are possible as well. Expect more exotic attribute combinations to address special problems.
• Interpretion: Aside from the usual pre-lease sale jobs, expect more long-term projects involving mini-basin analysis or regional integration work. Companies must understand the way salt movement has affected the sedimentation patterns before they can identify and support unusual counter-intuitive projects (drilling in a "low" to tap thick, productive sands). Field development geophysics is also a possibility. Companies will need to build integrated field models based on the latest 3D seismic for inclusion into their cash flow models.

So, for seismic acquisition the Gulf of Mexico will likely be a "quiet sea," rather than "dead sea," in the coming year. Existing data sets will be heavily used and the workload will shift to detailed processing and interpretation. Customer relations will help service firms learn their client's needs and focus outsourced professionals on a project basis to address problems as opportunities. A premium will be placed on expertise, speed, mobility, and flexibility.