Few geoscience technologies can have caused such a sensation as the 2002 commercial launch and subsequent early adoption of the controlled source electromagnetic (CSEM) survey method. It was hailed as the most important marine geoscience innovation since the introduction of 3D seismic.
Who would have thought that nearly 25 years later Electromagnetic Geoservices (EMGS), the Norwegian company that started it all, would be teetering on the brink of going out of business? Last month it stated, 'It was likely to be dependent on securing additional financing to continue as a going concern beyond the near term’.
This development signalling the virtual disappearance of CSEM from the oil industry toolbox is stunning. The validity of the original concept remains intact, as do future possible applications to meet demands of the energy transition.
CSEM promised a way to enhance seismic data by confirming whether suspected hydrocarbon prospects are actually present in a structure, without going to the expense of drilling a well. As the industry moved into more costly, deeper-water exploration, the promise of fewer dry wells, improved ranking of development prospects, and more accurate or reduced appraisal drilling was enthralling.
EAGE’s First Break in March 2002 carried the first technical presentation under the unassuming title of ‘Sea Bed Logging (SBL), a new method for remote and direct identification of hydrocarbon-filled layers in deepwater’ by Terje Eidesmo and seven co-authors. The article described the method and results of a cruise survey successfully confirming the presence of hydrocarbons over the known oil-bearing Girassol field, offshore Angola. It was the prelude to an unexpected, frenetic investment boom bringing three specialised service companies on to the market, but ultimately with unfortunate consequences.
'Prelude to an unexpected, frenetic investment boom'
The initial technique, refined over the years to address different geological settings, involved the relatively simple (though it emerged not cheap) process of deploying a horizontal electric dipole source to transmit a low-frequency electromagnetic signal to an array of seabed receivers. As the source is towed over the receiver array, the recording of the variations in the amplitude and phase of the received signal provides the data to determine the resistivity structure of the subsurface. The technology takes advantage of the fact that there is a significant contrast between resistive hydrocarbon-saturated reservoirs and surrounding more conductive layers saturated with aqueous saline fluids, hence the ability to confirm oil finds.
The first cruise aboard the UK research vessel Charles Darwin was sponsored by Statoil (now Equinor) on the initiative of Eidesmo and Svein Ellingsrud, the company’s lead researchers. Ellingsrud was aboard accompanied by representatives from Scripps Institute of Oceanography (SIO) and its commercial partner AOA and from Southampton University. The two academic research centres supplied most of the source and receiver survey equipment. These had been developed in their continuing respective academic research into the resistivity of the lithosphere deploying offshore EM instrumentation (but not recognising the huge commercial potential). SIO’s Steve Constable had been in on the earliest offshore EM work in the US dating back to the 1970s and 80s. His boss then was Prof Chip Cox who developed marine technology to investigate the resistivity of volcanic fluid systems in the crust and mantle.
Meanwhile ExxonMobil had been researching somewhat independently CSEM’s hydrocarbon exploration possibilities. Very soon after the Statoil cruise, it commissioned its own trial offshore Angola, with the same Charles Darwin and Sinha’s transmitters. This was led by Len Srnka (later to become EAGE’s only American president in 2012). The company quickly applied the method for real, notably associating it with a series of major finds offshore Angola. Their discoveries using its proprietary Remote Reservoir Resistivity Mapping (3M) technique were featured in a Wall Street Journal article, helping to fuel investor interest in the technology, said to have reached nearly $2 billion in money of the day.
Three service companies sprang up to exploit the new wonder technology, all stemming from that first cruise. First out of the gate was Electromagnetic Geoservices (EMGS), spun out of Statoil, led by the original team of researchers, and the only company that would survive the challenges ahead. Rival operator Offshore Hydrocarbons Mapping (OHM) was a UK company supported by the University of Southampton team, notably Prof Martin Sinha and Dr Lucy MacGregor. Both these entities would enter the stock market via well-supported IPOs. Finally, AOA Geomarine Operations (AGO), associated with Scripps, also began its own commercial services but was soon swallowed up by WesternGeco as seismic contractors soon wanted to add CSEM to their portfolios. OHM would form an alliance with CGG.
By 2007, the peak year for CSEM, hundreds of surveys had been completed worldwide. Leading the pack, EMGS (74% of the market) had carried out more than 300 surveys for companies including Shell, ExxonMobil, Statoil/Hydro, BP, Reliance, ONGC, Petronas, Woodside, and Murphy building a fleet of five vessels in three years with two more planned. Revenue was up from $22 million in 2004 to $140 million, 35 employees had grown to 260. The same year OHM had delivered its quota of surveys, was commissioning its first dedicated CSEM vessel and also acquiring Rock Solid Images, a specialist in interpretation and integration of seismic data with well-log and production data.
Adding to the mix in 2004, a new company MTEM (Multi-transient Electromagnetic), was launched as a spin-out from research at the University of Edinburgh by Prof Anton Ziolkowski, Bruce Hobbs and David Wright. The company proposed a variant of EM sounding which measured the flow of controlled pulses of electrical current put into the ground and then detailed the resistivity of the rocks and hence the nature of the fluids. Initially aimed at land and shallow water applications, MTEM was potentially attractive to geoscientists being more like seismic in its application technique.
Everything began to unravel in 2008. The financial crisis that year took its toll on the service sector and CSEM was deeply impacted. WesternGeco withdrew from the market the following year, OHM only survived until 2011. Its marine operations were taken over by EMGS, and processing and interpretation morphed back into Rock Solid Images, an early advocate of a multi-physics strategy. As sole remainng operator EMGS continued in a softening market with a three-year plan to expand the application of 3D EM beyond traditional de-risking of drilling decisions, persuade more customers to use CSEM and build confidence in the data.
Sifting through the company’s annual reports for the next decade tells the story of EMGS investing in many initiatives to improve the company’s offerings, including multi-client services. But managing a decade of limited oil company exploration spending, with declining interest in CSEM, required constant cost-saving measures and refinancing. The Covid pandemic didn’t help. In 2020 the company had conducted more than 900 surveys across most major mature and frontier basins in the world in water depths ranging from 20 to 3600 m for more than 150 customers.
But now it only retained one vessel on charter; in 2023 no new vessel work was obtained and only minimal contracts were posted in the next two years.
The warning signs were always present, easy to identify in retrospect. Throughout the first decade, the service providers were always having to create the market. That same challenge has often affected marine seismic contractors when introducing new technology to a notoriously risk-averse oil industry. In this case a lot of energy was spent on convincing oil companies of the value of the CSEM technique. This was not helped by a series of patent disputes pursued by EMGS claiming its proprietary claims to the technology had been infringed, impacting its rivals but also causing uncertainty in the marketplace.
Most of the early adopters were major oil companies with money to shell out on innovation, encouraged by significant early successes. The initial focus was on data acquisition, accumulated globally at a frenetic pace by three competing contractors, soon diminishing the number of obvious targets. Pressure on margins for operations, considered discretionary spending by their clients, would also take its toll.
Ironically, what denied the concept of CSEM a lasting future were the data results. Outside academic institutions and a few companies, there was little expertise in processing and interpretation of collected data.
Much of the onus was on the contractors themselves to point the way. It was soon clear, as Srnka and colleagues wrote in 2006, that ‘Resistivity determination is clearly not a foolproof method for hydrocarbon identification, as many non-hydrocarbon-bearing geologic facies such as evaporites, volcanics, and tight carbonates can exhibit enhanced electrical resistivity relative to their surroundings’.
EMGS itself acknowledged that CSEM was best treated as a complementary tool to be applied in conjunction with marine seismic surveys. In 2012, one of the original researchers, MacGregor, who joined Rock Solid Images as chief technology officer, highlighted the thinking in an SEG honorary lecture tour entitled ‘Integrating well log, seismic, and CSEM data for reservoir characterisation’.
Around 2020 MacGregor was briefly chief technology officer of Ocean Floor Geophysics, a Canadian seabed mapping and site investigation company that continues to develop a multi-physics approach including CSEM. OFG had acquired exclusive rights to the towed-streamer controlled source electromagnetic (CSEM) acquisition system developed by PGS but abandoned in 2018. It was an early entrant into the field, in 2007 acquiring MTEM at considerable cost, hoping to leverage its technology, but never getting beyond a prototype.
As EMGS falters, extensive research into the optimum value of CSEM continues apace, judging from the stream of papers available at EAGE's Earthdoc geoscience database. The consensus seems to be that CSEM offers several advantages over seismic for some specific use-cases, notably improved sensitivity to gas saturation, robustness in the presence of overburden effects, and the potential for undertaking repeat time-lapse surveys at reduced cost. The commercial challenge is to exploit these advantages at scale for a range of existing and new applications.
'Extensive research into the optimum value continues apace'
Views expressed in Crosstalk are solely those of the author, who can be contacted at andrew@andrewmcbarnet.com.
