Question of the day: what do the following have in common?
Question of the day: what do the following have in common? Vessel management for port authorities, support for new battery technology, the world’s first carbon-free high-performance computing (HPC) campus, infrastructure monitoring services, and technology for ex-President Trump’s US-Mexican border wall project.
The unsurprising answer is that these are among many business initiatives by leading geoscience companies previously focused more or less exclusively on the oil and gas industry. They have seen the writing on the wall and taken action accordingly. Diversification has become the order of the day as prospects for the long-term sustainability of seismic-related services for hydrocarbons E&P seem increasingly marginal.
This is just as well because the original biblical tale of the writing on the wall (which conflates legend with fact deduced from archaeological findings) ends badly for the principal protagonists, very badly in fact. The Old Testament Book of Daniel recounts the story of the notorious feast held by Belshazzar, the co-regent of Babylon, son of King Nabonidus (556-539 BCE). Belshazzar’s fatal error was to offend God by recklessly allowing the assembled guests to imbibe from vessels looted from a temple. During the festivities ominous writing mysteriously appeared on the wall of the banqueting hall. The court’s wise men were unable to interpret. On the recommendation of the queen, the visionary Daniel was brought in to translate and deliver the bad news. The writing accurately predicted the imminent end (that very night) of the Babylonian Empire at the hands of the invading Medes and Persian armies.
Belshazzar’s predecessor, the all-conquering tyrant Nebuchadnezzar II (605-562 BCE), notorious for the sacking of Jerusalem, also experienced the wrath of God. Legend has it that a dream, interpreted for him again by Daniel, railed against his vainglorious despotic rule. The subsequent punishment was a seven-year period of madness in which he wandered the wilderness like an ox and fed off grass. Then, apparently humbled by the experience, Nebuchadnezzar resumed his reign.
In modern day terms writing on the wall implies foreboding about the future, but not necessarily with the drastic consequences depicted in the biblical story. So we can say without too much hesitation that PGS has got the message that the days of the oil and gas business are numbered concluding that alternative strategies need to be explored. This revelation emerged in July when the company announced the setting up of a new energy business unit with a plan to build on its geophysical and operational capabilities as a leading marine seismic contractor to ‘develop solutions internally, and build external partnerships to support energy transition as a preferred partner to the industry’.
The avenues PGS intends to pursue are already on the radar of many of its competitors. These include involvement in carbon capture, utilization and storage (CCSU), development of offshore wind turbine locations, harvesting seabed metals/minerals for improved battery technology, and geothermal site identification and viability. In every case there is the promise of potential demand for seismic subsurface investigation technology, analysis and in some cases long-term monitoring.
At the moment it is a waiting game. None of these industrial activities with a likely need for subsurface imaging data is sufficiently developed for seismic companies to map out a proper business plan. There are way too many unknowns. They have also learnt a lesson the hard way from the oil and gas business over several decades that product differentiation by heavy investment in research does not always pay off. It would be extremely risky to try to establish any technology leadership role in a new transition business if significant research funding was needed. In any case, the service sector is still struggling mightily from the effect of the long period of low oil prices and the Covid era. The main priority of geoscience service providers will be to capitalize on any recovery in oil and gas demand that results in some new oil company E&P spending, however modest. All that being said, no company can afford to be left behind when the energy transition bandwagon really starts rolling, as surely it will. It is a difficult balancing act.
With the continuing lack of clarity, seismic companies understandably remain cautious about how they will fit into the transition era technology and business. About the only company that has basically thrown its stack of chips into exploiting the potential business ahead is the marine geophysical company SeaBird Exploration. In May the company renamed itself Green Energy Group. The existing marine seismic operations will continue as a subsidiary alongside its new Green Minerals subsidiary, which is where the future action will be. The company is working on a complete mineral mining production system so that it can enter the bidding for participation in the first mineral mining licensing round offshore Norway. This is under consideration by the Norwegian Petroleum Directorate possibly as soon as 2023. In March, Green Minerals indicated it means business by announcing a letter of intent with a consortium led by Oil States Industries (UK) to collaborate on a FEED study for a turnkey harsh environment deep sea mining system (HEDSMS) against a long-term contract for exclusive use within Norwegian jurisdiction. The company said it anticipated first ore under its planned pilot in 2026. The recovered ore is expected to contain significant grades of minerals needed for the ‘green shift’, such as copper, cobalt, nickel and rare earth elements (REE).
For some geoscience companies doubts about the sustainability of their oil and gas related operations have prompted moves to diversify outside the energy resources industry into something completely different. There have been some success stories but nothing as yet that has been enough to change the core business. For example, ION Geophysical has found a new application for Marlin, its software for the ‘command and control’ management of marine seismic vessel acquisition operations. Marlin has now been adapted to monitor and manage vessel movements in ports and harbours. Focused on safety, Marlin provides an optimized digital solution visible to port authorities, transport and shipping companies, terminal operators, and other service providers who need to plan, visualize, schedule, communicate and optimize all activities during a port call.
In a recent contract UK-based CalMac Ferries agreed a deal to implement the Marlin SmartPort management information system at 17 of its harbours, including the major ferry port at Oban and the commercial cargo port at Perth (both offshore Scotland), over an initial four-year term. CalMac Ferries is the UK’s largest ferry operator, managing 29 routes to more than 50 destinations across 200 miles of Scotland’s west coast, and operates 27 ports and harbours across Scotland.
Despite this foray into the wider maritime world and some defence-related work, ION still looks to its multi-client and seismic processing activities for oil companies as the mainstay of its business – for how long, who knows?
In the case of CGG, the company has seen an opportunity for its Sercel subsidiary. It now seems prescient in the light of the recent catastrophic collapse of an apartment building in Florida that Sercel recently linked up with the international risk management group Apave to launch AP’Structure. This is a structural health monitoring (SHM) solution, said to be the only one of its kind in the European market. It enables operators to monitor the integrity of entire buildings and infrastructure in real time, receive warnings about irregularities and prolong the life cycle of the infrastructure. AP’Structure deploys S-lynks, a fully connected and autonomous wireless solution from Sercel for measuring structural vibration. It incorporates its ultra-sensitive QuietSeis sensor first introduced for seismic data recording in 2014.
A further illustration of enterprising diversification is how DownUnder Geosolutions (DUG), coincidentally featured on p. 17, has changed with the times since its modest beginnings as a start-up seismic data processing company in Perth, Western Australia. In the last 15 or so years it has grown into a major global contender, invested in high performance computing (HPC) and now finds itself venturing outside the oil and gas business with potentially limitless opportunities. One cornerstone of this continuing, if unintended, diversification was the company’s decision to build in Houston a giant new data centre, believed to be one of the most powerful supercomputers on earth, home to the company’s geophysical cloud service, and originally targeting oil industry data processing demand. The facility also boasts green credentials with patented immersion cooling technology.
What DUG has found is that its global HPC capacity can appeal to customers in other fields. It has been working with astrophysicists to search through five years of data from the Murchison Widefield Array (MWA) radio telescope in Western Australia for the first stars and galaxies that formed after the Big Bang almost 13 billion years ago. The company has also been involved in medical and meteorological projects and has plans to build a massive multi-use HPC centre in Western Australia that one day may run entirely on renewables, namely wind and solar power plus a hydrogen-powered battery system.
Finally, we come to Geospace Technologies. The company is usually associated with its range of marine seismic streamers, its permanent seabed reservoir monitoring system and its land and ocean bottom nodes for seismic recording. This entire business has taken a big hit as oil companies have stopped spending. As a result the company has been eyeing more seriously its adjacent and emerging markets. This was first signalled by the purchase in 2018 of Quantum Technology Sciences, a tactical security and surveillance systems solutions provider and subsequently by the appointment of two new directors with a background in defence contracting.
An early contract, which apparently greatly improved the Geospace quarterly results, was providing a surveillance system for the wall between the US and Mexico partially built during the Trump Administration. It seems to have been an effective response to the writing on the wall …
‘The original biblical tale ends badly … very badly in fact.’
‘At the moment it is a waiting game.’
