Counts for the CIS are based on partial data. There are an estimated 340 crews currently working in the CIS. Far East counts include only partial data for China and India. Copyright 2011 IHS Inc. All rights reserved.
Midst all the dismay triggered by the Macondo well’s disastrous blowout in April 2010 in the Gulf of Mexico, something significant was evolving onshore that would prove to be the economic salvation for a number of industry participants.
The burgeoning unconventional onshore resource plays, principally shale, had begun shifting gears.
Players increasingly were becoming convinced that a shale is not just a shale to be drilled and produced in cookie cutter style. Instead, they are highly complex and variable rocks, often causing production to differ between wells in the same field.
Recognition of the need to define and understand this complexity was a clarion call for the seismic companies.
Indeed, seismic data rapidly became an essential ingredient in the operators’ efforts to understand the risks and nuances of these shales, be they dry gas, oil or gas liquids producers.
“It’s been recognized for maybe a couple of years that 3-D seismic data can play an important role in shale plays,” said AAPG member Robert Hobbs, CEO at TGS-NOPEC Geophysical Co. S.A., in Houston. “We’ve been able to demonstrate that seismic data can be processed and analyzed such that you can interpret sweet spots in shale sections.”
“I shudder to think where we’d be if shale plays weren’t here,” Jim White, CEO of F.T. Seismic Support, commented late in 2010. “There would be hardly any work going on.” White is former chairman of the International Association of Geophysical Contractors.
He reiterated this observation recently, emphasizing that “without shale plays we’d be in a difficult situation right now.”
Teamwork – And Surviving
The proverbial fly in the ointment is that the big shale boom originated with shale gas. Before long, the industry watched somewhat aghast as gas prices came tumbling down as production volumes surged, creating a huge imbalance in supply and demand.
“Net-net is, the industry has produced itself – as we often do – into a low price environment for natural gas,” said Bob Peebler, executive chairman at ION Geophysical Corp., which specializes in the equipment and processing parts of the business.
As a result, there’s been a rapid adjustment among certain operators who not only have cut back their gas production but, in many instances, shifted to the oil and gas liquids-prone areas such as the Eagle Ford in Texas.
Even so, the wells that are not oil but gas liquids are producing gas themselves in some amounts.
“The industry will adjust and catch up with itself,” Peebler predicted.
In the unconventional world of shales, steep decline curves are part of the package, placing an emphasis on the need for productivity.
“There clearly is increased emphasis – not only in the mechanical aspects of completing these wells but (also on) the geophysics and geologic aspects of where to drill and how to be more precise in designing completions,” Peebler noted.
That drumbeat is still beating.
“There are a lot of people in that game, ourselves included, that are looking at the science; we think it will be a substantial area of growth,” he emphasized.
“For us in the geophysical business, we’re having to adapt to an understanding this is mainly an engineering problem, and we’re helping them understand the reservoir more from an engineering point of view,” Peebler said.
“It’s how does the reservoir (fracture)? Where are the natural (fractures)? What is the rock brittleness? It’s getting more into this idea that a shale is not a shale, and where it appears the same in two wells, they can produce differently,” he explained.
“Without that, I don’t think seismic could survive in this low price environment.”
Onshore Multi-Client Surveys
A significant change brought on by the need for onshore seismic is the popularity surge for multi-client surveys on land where the norm has been proprietary shoots.
Some of the shale plays have a huge geographic extent with numerous operators – and numerous landowners – and individual proprietary shoots would break the bank, so to speak.
Peebler emphasized that the multi-client trend has to be driven by oil companies wanting to underwrite geophysical surveys.
ION has become involved in fairly significant activity on North American land and expects more to come. Among other programs, the company recently managed and executed a 200 square mile 3-D program in the Marcellus Shale.
“The multi-client business model onshore has taken off in areas such as the Marcellus (and) the Utica in Ohio,” Hobbs said. “The Marcellus has been a boon for multi-client opportunities onshore.”
TGS recently made its first foray into the onshore unconventional scene. Its business model entails assembling multi-client projects and chartering other companies to acquire the data.
TGS’ initial move to onshore shale came in 2011 with its announced entry into the Utica Shale play, where a sizeable survey is planned to top out at almost 800 square kilometers. It awarded the acquisition to Tideland’s Geophysical Services.
“From the get-go we decided to focus on liquids plays – wet gas and oil – with a strong feeling we’d get increased customer interest in that,” Hobbs said. “The Utica has a lot of liquids, oil, wet gas.”
Besides the Utica, Hobbs said they’re looking at the Mississippi lime play in the Kansas area and plan a couple of projects in that region to kick off this year.
At press time a 280 square mile survey was under way in southern Kansas.
Seismic and the “F” Word
None of this would be happening without hydraulic fracturing, which is crucial to be able to fracture these dense rocks so the hydrocarbons can be produced.
Yet fracturing has become a dirty word in some sectors of the United States and elsewhere – including overseas, where France banned it in all corners.
“The (hydraulic fracturing) question is a real paradox,” Peebler said. “In North America, the momentum is so strong for natural gas and the job creation, I can’t imagine places like Ohio, Pennsylvania and others pulling back.
“To me, water contamination isn’t the issue – it’s water conservation and how we become more efficient in using and recycling water,” he emphasized. “A lot of us have to focus on that, and it will get better and better.”
The manner in which a hydraulic fracturing job is approached is primarily based on seismic imaging, according to White.
“Negative press on (hydraulic fracturing) will have a negative impact on seismic because of the extended nature of the oil and gas business,” he said.
The negative impact begins early on.
“When a group of citizens protest (hydraulic fracturing) and we come along and try to permit those same people to do seismic exploration, the reception will not be pretty,” White said.
© Copyright 2011 IHS Inc. All rights reserved.
Impact on Unconventionals
Seismic data acquisition efficiency is a big deal for the onshore, which historically has been under-sampled. Getting good geophysical measurements in this environment is difficult – and expensive.
Technology advances are the driving forces that have enabled success in the unconventional plays.
Currently, there apparently are no jaw-dropping new technologies on the cusp of a splashy debut. Still, there’s plenty to be accomplished with the available, relatively new high-tech tools already spurring efficiencies in the market.
Wireless, or cable-free, acquisition systems still are relatively new and have proved their worth commercially.
“Wireless technology is being put out to the general market, and the best thing is there’s some commerciality to it,” White said. “It’s not prototypes.
“This is good for the seismic sector,” he continued, “because their viability, dependability and increased efficiency over conventional systems bodes well for margins and success rates of some of these seismic companies.
“We all have access to this technology, so that levels the playing field.”
Regarding onshore action on the international scene, Peebler views the next logical place for seismic data applications to be Europe. ION is conducting a land Span program in Poland, to try to understand the basin geology for the shale plays. The plan is to begin with a scientific approach.
Don’t expect to see much activity in France, which has banned any and all hydraulic fracturing. In a bit of irony, French company Total S.A. recently inked a joint venture deal to team with Chesapeake in the latter’s Utica shale action.
Conventional Results? ‘Huge’
Unconventional activity clearly has a lock on sex appeal. Even so, conventional work has not gone the way of the dodo bird.
“Where we’re seeing the greatest activity on land is the Middle East where we have desert shooting,” Peebler said. “Areas like Nigeria, Saudi Arabia and Oman are still quite active. Libya was active, but I don’t know if it will come back this year.
“The main trend in the Middle East is huge mega-surveys,” he said, “100,000 station kind of surveys.
“The size of the crews has grown substantially over the last few years,” he noted. “We’re now seeing super crews. Part of that is with super crews you can collect an enormous amount of 3-D quickly – that means cheaply.
“The oil companies want to collect a lot more for less,” Peebler said. “The total cost of the survey may be up, but they’re getting enormous amounts of data – terabytes of data a day. It’s huge.”
As for the offshore international arena, TGS just announced a large 3-D survey offshore Angola, and Hobbs said they see a lot of opportunities overseas.
“Activity is increasing, and we’re optimistic about this year,” Peebler said.
Jim White, CEO of F.T. Seismic Support, concurred: “We still see a sustainable level of activity on the seismic side.”