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Home / Issue Archive / 2009 / February #2 / ION Enters The "Solutions Year"

№ 2 (February 2009)

ION Enters The "Solutions Year"

ION is a leading technology-focused seismic solutions company that provides advanced acquisition equipment, software and planning and seismic processing services to the global oil & gas industry.

By Pat Davis Szymczak

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Here Oil&Gas Eurasia talks with Jean Januard, ION’s Vice President, Russia and CIS about the challenges facing the industry in 2009.

Oil&Gas Eurasia: Did the industry anticipate the fall in oil prices?

Jean Januard: In 2008 we saw skyrocketing demand with oil prices reaching $147 a barrel. What that meant for various regions of the world, but particularly was true for the Middle East, China, Russia and the CIS, was that many companies increased their capacity, raised channel counts, hired more seismic crews. For ION, that meant more equipment sales. I would say the market was really booming until mid-year and for certain types of business it was even booming up until September. We knew commodity prices were very high but nobody was expecting such a quick and steep fall.

OGE: Can you be a bit more specific about Russia?

Januard: Specifically for Russia, the market was certainly booming up to the point that oil companies and seismic contractors finalized their plans for 2009. Some had already made steps towards '09 in terms of signing contracts, making commitments, hiring people, sometimes even moving equipment to remote places in such cases as, to reach the far North you need to use rivers and can only do so before the water freezes.

So in the fall, the market collapsed and with it the price of oil while contractors were gearing up for the winter season, and sometimes making pretty strong financial commitments. In October and November there were very diverse rumors in the marketplace about not only job cuts but also about cuts in the book of business, in the orders of leading oil companies including state-owned oil companies, smaller players, and western players in Russia. Actually, in November-December we figured out that the cuts were not as huge as expected. And we went back and made a more cautious and conservative assessment of what the 2008-2009 winter season would look like.

For ION, 2008 was a very successful year in terms of acquired business and with such a year behind us, ION’s position today is quite different both globally and in Russia from what it was at the end of 2007.

OGE: What do you expect in 2009?

Januard: Since 2006, we had been on an up-cycle. Demand was high in terms of equipment sales and especially in terms of the more expensive, high-tech equipment. Now what we see and predict is probably a lower demand for new equipment because there are roughly no new crews, no increase in channel count; no market growth. But oil companies are refocusing their attention on getting better value for money. So if in past years they invested in new seismic acquisition, it is likely that now they’ll want to use this investment and reprocess their data or process it with higher technology so as to get better value.

For ION, as a solutions provider, that means that our new processing technologies really fit into the picture. One of our achievements globally, and specifically in Russia, is that we have setup alliances with local partners in order to process and interpret data. We have an alliance in Russia, for example, with LARGEO since Q2 2008 and this alliance has been very well received by leading Russian oil-and-gas companies such as Rosneft and Gazprom.

OGE: What products and services is ION highlighting now?

Januard: Mid 2008, we released a new marine digital acquisition system called DigiSTREAMER which fits into our marine portfolio. Another product is FireFly, a land cableless digital acquisition system that we have operating in several countries. We also, as I mentioned, expanded our data processing and interpretation technologies by setting up alliances around the world including Russia. In Russia, we plan to offer land multicomponent 3D data processing in 2009.

And last but not least, we acquired a company called ARAM Systems based in Calgary, Canada. ARAM is a manufacturer of cable-based land acquisition systems. ARAM is known for being rugged, reliable and well-adapted to remote, harsh and cold environment. ARAM’s operations were predominantly concentrated around North America so Russia is a new frontier.

The ARAM system is one of a kind in that it is a land acquisition system that is able to work in water of up to 75-meters depth. It is the only land acquisition system that can do this. So it has good prospects with Russian customers as acquisition in transition zone, or TZ, will develop in West and East Siberia, where there are rivers and lakes – deep rivers with strong currents like the Ob. It’s fit to purpose. I would say ARAM is a Canadian company offering real heavy-duty Canadian equipment. Prior to its acquisition by ION, ARAM had sold very few systems into Russia.

OGE: As you bring more products to market, what service provisions earlier versions of your acquisition systems.

Januard: I’d like to clarify that, following the acquisition of ARAM, there have been rumors in the marketplace about what we’re going to sell and manufacture moving forward. We’ve been selling a lot of System Four and Scorpion which were ION land acquisition systems. These systems are still in operation and we will continue to support and maintain them. We will still sell expansions if a customer wants more channels. For the foreseeable future we will be able to sell more Scorpion systems if the customer wants to buy. On the other hand, on the ARAM side, we have just released Aries II which is a new acquisition system, but we will continue to support and maintain Aries I. For now, ION and ARAM together will offer Scorpion digital which works with VectorSeis, a full-wave digital land acquisition system. Together, we will sell the Scorpion analog system and the Aries II analog system. This is what we offer now and we will of course work hard to make these systems compatible and at the end of the day create a digital version of ARAM Aries II. The message to our customers is that all these systems are working and we have no plans to retire any of them.

OGE: How have your alliances helped ION service clients?

Januard: In 2008, we managed to increase traction with the oil companies because now we can supply through the data processing alliance and also through our offering of data library, made of basin-based geological reports that we developed in other parts of the world such as India, the US and Canadian Arctic, West Africa and South America. Because of this, we’ve managed to get much closer to companies such as Rosneft and Gazprom because we’re better placed to address their issues and hot topics around the world, and not just sell equipment that helps them to acquire their data in West Siberia. In 2008 we won the largest Russian deal ever for ION.

OGE: So how do you see 2009?

Januard: I think for us, weathering the storm means refocusing on addressing very specific issues with each oil company. By that I mean addressing specific fields, specific structures, and specific geological problems. In 2009, there is not going to be a “deal of the year” or a “sales person of the year.” It’s going to be a “solutions year”, a “fit to purpose year”. The path to success in 2009 is to get to key customers and find out what they need from you, not what you have in your portfolio to sell them. For instance, before the crisis, our approach was to gather several oil companies in one room and present our technology to them. But what we’ve done is to refocus, and now we visit oil companies one by one; department by department and discuss with them the technical issues they face.

Globally ION has seen lots of improvements and in Russia specifically, as I’ve said, we’ve gone through a huge change, a real evolution from being an equipment supplier to becoming a real, more subtle solutions engineer, a trusted advisor to oil-and-gas companies, and this is paying off.

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