Informa

24 - 26 NOVEMBER 2020

MARINA BAY SANDS, SINGAPORE

Seismic players see hope on horizon 

June 7, 2018 | Singapore | OSEA2018 Industry Insights

 

Seismic players see hope on horizon

Optimism on rise after worst downturn in history of sector

Much of the talk at the European Association of Geoscientists & Engineers (EAGE) 80th annual conference and exhibition this week in Copenhagen is likely to focus on the first shoots of a recovery from the worst downturn in the history of marine seismic operations for the oil and gas industry.

Just what that recovery will look like is another question, especially for the towed streamer vessel market.

Optimism has been inspired mainly by the higher prevailing oil price, now hovering in the $60 to $70 per barrel range, and the increasingly positive cash flows being reported by oil companies as a result.

The hope is that oil companies now have the funds, and cannot put off investment in reserves replacement for much longer.

The discoveries of 7.8 billion barrels of oil equivalent made by the industry in 2017 is the lowest level since 1947, according to UCube, the E&P database of Norwegian consulting service Rystad Energy.

However, all the evidence suggests oil companies, notably the majors, are taking a cautious, risk-averse approach to exploration spending and in any case have less incentive, given the unexpected bonanza from unconventionals in North America.

Upward cycle

On the positive side, Petroleum Geo-Services (PGS) estimates that spending on seismic increased by 9% in 2017, though oil company E&P spending was lower. In the company’s view, this is an early indicator of an upward cycle.

As the summer season opens, all 21 active towed-streamer vessels operated by the main contractors are being utilised, with much of the activity focused on West Africa, where major oil companies have been tying up acreage in underexplored basins.

PGS has eight vessels in service, CGG has five, Polarcus four, and Shearwater Geoservices three, while WesternGeco has one contracted for work.

After five brutal years, the vessel-owning marine seismic contractors are not best poised to capitalise on improved market conditions, with heavy debt hanging over all but Shearwater, the newcomer with fresh equity. WesternGeco is not really in the equation.

Savage cuts at all companies mean fewer boats and fewer skilled people — the latter being an underestimated issue in a technologically savvy industry in which experience plays an important role.

Many of the vessels which have been withdrawn are too old to be resuscitated, especially as the cost of bringing back a vessel from dry stack can be as much as $50 million.

 

This article was originally published on upstreamonline.com