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   Bob Peebler, CEO of the global seismic solutions company ION Geophysical, notes experts estimate 25 percent or more of the world’s unproven hydrocarbon reserves lay in the Arctic. In an interview with Oil&Gas Eurasia Editor in Chief Pat Davis Szymczak, ION’s CEO discusses technology advances and project management solutions that are enabling ION to assist its clients in penetrating the last and perhaps most challenging oil and gas frontier.

Oil&Gas Eurasia: What type of seismic data has been shot so far in the Arctic?
Bob Peebler: Most of the seismic data shot in the Arctic is quite old, and the majority of it is short offset, short record length, analog 2D datasets. In general this also applies to the Russian offshore data that was shot in the 1980s.

OGE: What is the SPAN product line and how is it useful in the Arctic offshore?
Peebler: SPAN is an ION brand name that originates from the idea that you’re spanning a whole basin with data. The main principle behind the SPAN product line is that, for explorationists to succeed, they must “explore” for hydrocarbons and not just “prospect” for hydrocarbons. To truly explore, it is important to go back to basics and understand the evolution and architecture of a basin, as these are critical to understanding petroleum systems as a whole within the basin. To achieve a seismic program and to assist in this understanding we use very long offsets, large source sizes and long record lengths because these allow us to see much deeper into the stratigraphy of the basin than a typical 2D or 3D survey. SPANS are unique because even though they are a multi-client product, in reality they are more of a collaboration between our internal geological experts and our client’s internal regional experts rather than a random exploration grid. We have seen tremendous industry adoption of our BasinSPAN programs around the world over the last 5 years as oil companies and NOCs alike understand the importance of high-quality basin scale programs to help make a leap in understanding of the basins in a truly regional context.
Depending on the geologic setting we will go as far as processing a BasinSPAN program with our proprietary, state of the art processing algorithms like Reverse Time Migration (RTM). This is one of the new depth imaging technologies which ION pioneered and is now being used more and more in the industry on very complex reservoirs.

OGE: Has ION approached Russian companies to do a SPAN survey in the Russian Arctic?
Peebler: We have had ongoing conversations with some Russian companies that have seen the benefits derived from our ArcticSPAN surveys. Though the community of Russian oil companies recognizes the benefits of SPAN data and has participated in SPAN programs outside of Russia, there has been hesitancy in accepting the model in the Russian territorial waters. This is not from a lack of interest in our products, but more to do with a need for more clarity from the Russian government regarding the laws surrounding seismic permits in the Arctic and data ownership.

OGE: Considering that Russia’s largest companies are state owned, can you comment on the role you see NOCs playing in your business?
Peebler: There’s something like 80 percent of the world’s reserves under the control of the NOCs. But what we’re seeing now with lower oil prices is that the NOCs are interested again in cooperating with the IOCs. The IOCs are still pretty rich in cash and still have a lot of technology.
The problem with the Arctic is a combination of cost and lack of infrastructure technology. It is like going to the moon. You think you can get there but you have to invent the technology first. I think the recent strategy of Russian companies partnering with NOCs or IOCs in specific Arctic basins is a wise move. It facilitates an opportunity for technology exchange as well as capital exposure and risk reduction. With this collaborative approach, I think we will witness that the timeline for Arctic exploration and, more important, production, has been reduced significantly.

OGE: Do BasinSPANS include land exploration, and could a Russian SPAN cover Yamal?
Peebler: It could. But rather than ask could a survey be shot, the question should be what are the geological questions that remain unanswered in the basin and to what extent do these answers affect the economic potential of the entire basin. We tend to think of the questions in macro terms. We think it is important to understand the tectonic and structural history of Western Siberia before focusing on the sequence stratigraphy of each individual basin.

OGE: What is ION’s business strategy today?
Peebler: ION’s business focus today is based on a solutions strategy. Whether we are focusing on solving a client’s complex reservoir imaging challenges or focusing on Intelligent Acquisition (IA) data acquisition systems, our goal is to be the “go to” company for solutions for the most complex geophysical challenges.
A great example is offshore Greenland. NE Greenland is quite possibly the worst place on the planet to try and acquire marine seismic data, as up to 5,000 cubic kilometers of polar pack ice pass through this area every year. In addition, the area has complex imaging challenges related to volcanics in the basin. To meet this challenge ION tailored an IA-Arctic-focused solution. Combining our formidable Arctic operational expertise with a focused acquisition tool designed and delivered by ION’s Marine and Concept Systems divisions, we have developed the world’s first integrated seismic acquisition system for collecting marine streamer data under pack ice.

OGE: What is happening with your Russian processing JV with LARGEO?
Peebler: Our data processing joint venture is a little like a franchise where we’re bringing to the table our high-end imaging technology, our global oil company relationships, and our imaging technology and training. In turn LARGEO brings their local knowledge, their impressive local talent and their own technologies. By blending these two companies together we are a formidable competitor that is stronger than the two companies could be if they operated independently.
Our initial focus has been to get them working with our higher technologies in marine processing so that the joint venture can offer the Russian E&P community technologies such as Reverse Time Migration, with the advantage of having the imaging work completed locally in Moscow. We are in the final stages of completing a project in the Black Sea that involved the first-ever applications of several advanced processing techniques in Russia.
Additionally, should we expand our SPAN business to Russia, we would process the data in Moscow.

OGE: How is the recession affecting ION’s business?
Peebler: Overall we have suffered a slowdown like other oil field service and technology companies. Our land systems business has been the most severely impacted due to the sudden activity drop in both North America and Russia. More specific to our SPAN business, we have seen the data library business fall off like everyone else. So even for data that is extremely important for long-term exploration, you still see the oil companies being quite conservative right now. New projects require large amounts of working capital, and due to some capital constraints we have had to prioritize projects more than usual. But I don’t see this slowdown continuing into next year if oil prices stay even in the $60-a-barrel range. If world economies start to improve, energy demand will pick up, and I expect that the oil companies will start increasing spending from 2009 levels.

OGE: Is it easier to work with Russian NOCs having a Russian JV partner?
Peebler: No question about it. And we’re not just doing that in Russia. We have, for example, a joint venture processing center in Egypt and another in Nigeria and are also looking at this model in other parts of the world. Partnering with really good technical people who have an existing business and understand the NOC’s business and technical challenges, and then bringing our technology and the global know-how to apply this technology is an excellent combination. We’re not doing this for convenience, but fundamentally believe this is the most efficient model to deliver the true potential of our technology, especially to NOCs

OGE: What is Reverse Time Migration?
Peebler: Geophysical data processing has moved from delivering seismic sections of the earth migrated in “time” to images of the earth in depth . This makes a lot of sense as the the earth is in feet and meters, it is not in time. Converting time data in to an accurate image of the Earth’s subsurface in depth has been is one of the industry’s biggest challenges.
The basic equations to solve the depth imaging problem have been understood for a long time, and the first commercial applications were made about 15 years ago. At that time, there was not a great deal of computer power, so lots of assumptions – or short cuts- were made in the early depth imaging solutions such as the Kirchhoff application. As computer power increased, algorithms that made fewer assumptions and had correspondingly improved accuracy and fidelity such as Wave Equation Migration became commercially available. About seven years ago ION-GXT were able to take this to the next step pioneering the commercial implementation of reverse time migration. (RTM). RTM provides an alternative approach to migration with fewer compromises. It works by running the wave equation forward in time for the source and backwards in time for the receiver. RTM properly propagates the wavefields through the most complex velocity regimes, including sub-salt, for structures having dips in excess of 90 degrees, and in the presence of reflection boundaries that may generate internal multiples.

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