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Home / Issue Archive / 2007 / June #6 / Input/Output Aims to Deliver Equipment to NOCs, Forecasts Market Boom

№ 6 (June 2007)

Input/Output Aims to Deliver Equipment to NOCs, Forecasts Market Boom

By Sergei Balashov

In Russia, the new oilfields haven't been actively scouted and developed for a long time, with the oil companies trying to get as much as they could out of their present fields to boost profits. 

Today, national oil companies are looking to change this situation to ensure oil production grows, thus creating a huge market for companies like I/O. Input/Output, one of the leading producers of seismic acquisition solutions, held its 5th Moscow Technology Forum at the Le Meridien Country Club in the Moscow suburb of Nakhabino in the hope of reaching its customer base with the latest corporate news and suming up the latest trends in an industry which seems to be gaining importance at a fast pace.

The I/O Sponsored 5th Moscow Technology Forum was a two day event with the first day focusing on marine seismic acquisition and the second day having land seismic acquisition as the primary theme. The audience at the forum included representatives from the leading oil and gas companies, with over 120 senior executives among them.

"We're pleased we've managed to gather our customers here. These aren't just our customers, we consider the clients we have invited as our partners", I/O Land Sales Manager Igor Skobelev told OGE in an exclusive interview. "Such forums give us the chance to listen to our clients; hear about the problems they're having and what they're dealing with on a regular basis. It is most necessary for us to ensure we get this information from our partners," he added. The representatives present in the audience were given the opportunity to directly ask I/O executives questions that concerned them and make suggestions that would be immediately reviewed by the company. "Getting the opportunity to talk to our customers is the most important thing for us," said I/O's Russia&CIS director Jean Januard.

"No one here puts any doubt on the necessity of organizing such forums", TNG Group's Deputy General Director Vladimir Zolotukhin told OGE.  "This is a way for the equipment producers to get in touch with consumers. When we're at an exhibition we're just looking at whatever is showcased by the exhibitors, yet here we have a chance to discuss it with the producing companies. As for me and my company, I really like Input/Output's seminars and find them very useful."

"We don't really get people to convene here to present  to them educational reports and speeches," continued Skobelev. "Our company has got a lot to say as here in Russia gossip spreads much faster than genuine information and we have to fight the gossip by telling our customers what's going on with us, like what's the present standing of the company and what our plans for the future are." Russia is most certainly an important part of this future and a compelling component of the company's overall export strategy. Delivering this message clearly was one of the points of the Forum.

"Our company has been exporting seismic exploration systems to Russia and CIS for over 15 years and we're committed to this market and to our customers," said I/O Senior Vice President Dave Moffat who was in attendance at the conference. "Our equipment is known for its high quality and sustainability." And I/O has a lot to show for it, also living up to this promise of giving its clients a behind the scenes look at what's been going on in the company."

"Prior to this season we produced a new seismic exploration system, Scorpio, and shipped a few of those to Western Siberia, yet the project was undergoing testing and was not fully operational", clarified Moffat. Yet, now the testing if finished and the system can be used to its full capacities.

Representatives of I/O and other companies were busy delivering presentations to the guests over the both days of the forum starting with the introduction of Input/Output, a company with a market value of $1 billion and 40 percent of its employees stationed outside the US where I/O is based. The company revealed that land imaging systems make for a 41 percent segment of its business while 25 percent is left to marine imaging systems. I/O announced the goal to ensure the clients have imaging solutions that are cost-effective ranging from 2D images to over 25,000 station firefly surveys. The objective to put over 60,000 VectorSeis sensors in the market has been achieved mostly because the Russian market has been absorbing a good share of this production, once again emphasizing the importance of the skyrocketing market for Input/Output.

Special attention was drawn to the ever-increasing energy demand which also serves as the prime premise for the growing demand for seismic equipment which was stressed in David Moffat's presentation. According to I/O, trends show that oil production in developing countries will grow threefold in 2001-2030 compared to the previous three decades, while the consumption in these countries will increase slightly over than two times. With the developed states such as the US the demand for oil will outstrip the production by 4 times, while the overall demand for both oil and natural gas will be growing steadily for the next 25 years meaning the increase of the need for seismic equipment, especially in countries like Russia. According to I/O, national oil companies are already looking for reserves in other countries.

While the aforementioned factors clearly spell a higher demand for reserves the oil producers are running out of reservoirs and new reservoirs getting harder and harder to find. Investments in future reserves getting more expensive as improved imaging is required to extract value and drilling costs soaring with Input/Output estimating ultra deep water daily rig costs jumped from $200,000 in 2004 to $500,000 in 2006 and drilling a well in the Gulf of Mexico now costs $100 million (BP America alone spend $2 billion a year on Gulf exploration). Thus, Seismic equipment producers clearly see the challenge as the provision of a variety of technical solutions and in order to do that investments should flow into new equipment, technology and R&D.

Input/Output showcased a series of technologies that they think will help them meet this challenge and ensure the growing demand for seismic technologies is covered. Among the illumination techniques presented were node systems which have proved useful in congested and obscured areas, but are yet to enter mainstream areas, and have already been purchased by several companies such as Faifield, CGGVeritas and Seabed AS. Another technology, Marine Controlled Electromagnetic (CSEM), developed by Statoil, allows remote detention of hydrocarbon layers by performing EM field measurement thrugh special discrete receivers and then producing a sub-seafloor resistivity model as hydrocarbon and water reservoirs produce different resistivity levels.

Companies like emgs are also contributing to the developing market by expanding rapidly offering new services, which was also highlighted during the presentation. The company carried out its first commercial survey in November 2006 and now has over 200 completed surveys on its record with four vessels in operation and two custom designed vessels on order for 2008 when the company plans for another seven vessels. Whilst current survey types are 2D, 3D and 4D surveys, undershoots, multi-vessel swathe and long offsets, the new types include complex 4D, MAZ, WAZ/WATS, RAZ, Dynamic Geometry and Increased Spatial Sampling (HD3D). Other companies are also taking steps to win a bigger share of the market: notably the merger between CGG and Veritas to establish CGGVeritas, Fugro's fleet expansion and moving from 2D to hi-end 3D acquisition, PGS adding new Ramform vessels and COSL adding up capacity with two new vessels. Besides the expansion of the existing companies, new ones are being set up to meet the market challenge. New marine seismic companies include Wavefield Inseis AS with six vessels, Scan Geophysical AS with three vessels scheduled for 2008, Australian company Eastern Echo with four new vessels scheduled for 2008 and 2009 and BGP which will enter the market with one 3D and two 2D vessels in 2007.

Among the conclusions drawn from its market analysis, I/O listed expecting solid growth in the eastern Hemisphere including Russia and CIS and also its expectation to derive the bulk of its profits from the national oil companies that express interest towards seismic exploration, demanding advanced solutions and specialized seismic. The requirement to understand and monitor the existing reservoirs is growing along with EM services. I/O states the activity will remain on the high levels until at least 2010 driving the industry's need to bring new people aboard and attract investors willing to fund the development of new technologies.

As of now, organizing forums and seminars is the right way of doing just that they reveal the importance of the industry to potential investors and provide clients with the latest specs of the equipment to help them find the right solutions for their daily operations. "We're fully satisfied with the Forum", commented Igor Skobelev. "This has been an annual thing for us as we've held five such seminars so far and we'll certainly continue doing so in future."

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Copyright © 2007 Eurasia Press (www.eurasiapress.com)