Industry's refocus will alter fleet to meet demand
It has been another difficult year for the contract seismic industry. Data saturation in many markets, limited spending on new multi-client surveys, high debt loads, and delays in industry acceptance of technology advances have all hampered the seismic con-tractors from capitalizing on their considerable capabilities.
The marine seismic industry has been beaten by fierce internal competition and the oil operators' drive for maximum data at minimal cost. Now, the cheap ride is over. The seismic industry has no more to give and is now regrouping and reconstructing its business. The bottom line is that data purchasers will have to pay more for the value they receive from the seismic technology they need and use (Offshore, October 2002). Seismic industry cash flow has been negative and, because of oil company consolidation, the speculative model of seismic sales has become ineffective.
Change is required and has begun. Fleet consolidation continues, but most of that effort has already occurred through mergers over the past three years. Only TGS-Nopec left the vessel business this year, having sold their last vessel in November 2002. Now the tough internal consolidation begins. The active fleet must be reduced by:
- Decommissioning vessels from seismic operations
- Converting ships to other purposes
- Selling vessels into the market to generate cash
- Retiring/destroying the oldest hulls.
Much of this needed reduction is already accomplished through stacking ships. No clear numbers are available for stacked vessels or for the disposition of the onboard equipment. Since much of the equipment is leased, it is easily dealt with. Crews can be released so that continuing vessel costs collapse to slip (docking) fees. This buys some time and preserves the option of returning the vessels to activity once demand improves.
Only one or two of the remaining contractors can now be all things to all oil companies. All the others are specializing their capabilities. With tighter control on more focused offerings, acquisition costs will flow directly to the survey buyer. This new transparency should be good for all parties.
For the 2D seismic market, new competition is adding more financial stress. In discussions with several contractors, a consensus developed that Russian and Chinese crews are gaining a wider foothold because of their lower operating costs.
Large seismic vessels collect many 3D speculative seismic surveys, whose economics have been undercut by oil company mergers.
Their technology is less sophisticated than that of the full-line contractors, but in the present limited expenditure environment, they have an edge and are winning more work. Their last-generation seismic technology is sufficient for many reg-ional projects. More expensive and higher technology surveys can follow later once oil company spending limits ease.
This year's survey updates statistics for 105 vessels, down slightly from last year's listing. Changes from last year are relatively minor with the Veritas Vantage being the only newbuild vessel to enter the fleet in 2002. The tragic loss of the CGG Mistral to a fire early this year counters that addition. Several contractors have decommissioned at least one vessel or sold them to other players.
WesternGeco still maintains the largest fleet, but chose not to participate in the survey. PGS has the second largest seismic fleet at 18 vessels. Its fleet of 11 towed streamer vessels is augmented by seven vessels in its seafloor seismic division. Fugro's fleet of 13 vessels is the third largest due to their focus on ocean bottom cable work and coastal 2D surveys.