Oil Prices, Other Factors Affecting Seismic

3-D Seismic Symposium

It’s plain enough that the drop in oil prices is the leading factor impacting 3-D seismic exploration in the American West, but the extent of that impact might not be so well known.

“It overpowers and affects every decision,” AAPG Honorary member R. Randy Ray recently told the EXPLORER.

“When revenue just got cut in half and nobody’s spending any money, you can’t do any planning,” he continued. “I hope we’ll start a recovery in mid-year as the price comes up to between $50 to $60 a barrel.

“My sense is that everybody is still waiting to see what happens to the oil price,” he said. “What you want to know is that it has hit bottom and won’t go any lower. It needs to stay in a stable price range for a month or two months.

“Then if it starts moving up gradually, everyone can look ahead and begin planning more activity,” he added.

Ray was the kickoff speaker at the annual 3-D Seismic Symposium in Denver last month.

One of the founders of the 21-year conference, Ray is the president of Denver-based R3 Exploration and has specialized in the interpretation of geophysical and geological data for petroleum exploration.

“The drop in oil prices to one-half of what it was four months ago has really changed our world in geophysics and geology,” he said. “It’s going to cause all of us to be more cost-conscious and to work more cost-effectively.”

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It’s plain enough that the drop in oil prices is the leading factor impacting 3-D seismic exploration in the American West, but the extent of that impact might not be so well known.

“It overpowers and affects every decision,” AAPG Honorary member R. Randy Ray recently told the EXPLORER.

“When revenue just got cut in half and nobody’s spending any money, you can’t do any planning,” he continued. “I hope we’ll start a recovery in mid-year as the price comes up to between $50 to $60 a barrel.

“My sense is that everybody is still waiting to see what happens to the oil price,” he said. “What you want to know is that it has hit bottom and won’t go any lower. It needs to stay in a stable price range for a month or two months.

“Then if it starts moving up gradually, everyone can look ahead and begin planning more activity,” he added.

Ray was the kickoff speaker at the annual 3-D Seismic Symposium in Denver last month.

One of the founders of the 21-year conference, Ray is the president of Denver-based R3 Exploration and has specialized in the interpretation of geophysical and geological data for petroleum exploration.

“The drop in oil prices to one-half of what it was four months ago has really changed our world in geophysics and geology,” he said. “It’s going to cause all of us to be more cost-conscious and to work more cost-effectively.”

Lost in Translation

The state of the seismic industry is influenced by more than just the price of oil, though. A second dynamic affecting 3-D seismic exploration currently is the poor communication between disciplines in the energy industry.

Ray said 3-D seismic is one of the most powerful sources of information for both exploration and resource play development.

“The 3-D seismic image is the geological context, the starting point from which you can pull geologist, geophysicist and drilling engineers together,” he said.

He pointed out, however, that geophysicists tend to talk about 3-D seismic and expect engineers and geologists to fully understand what it is.

“They know conceptually what it is,” he said, but they often don’t realize the subsurface image helps envelope and integrate their own work.

“I think we should call it an ‘earth scan’ for horizontal surgery,” he said. “Would you go into surgery without first getting a CT scan? Then why drill a two-mile horizontal well underground without an earth scan to guide it?

“The problem is these disciplines get caught up in technical translation,” he added, “and sometimes the significance of the 3-D information is not completely communicated.”

New Tools

A third dynamic impacting seismic exploration is the use of microseismic data – acquiring seismic around the horizontal wellbores by setting up a recording system to capture microseismic events when wells are fractured.

“It’s one of the fastest growing seismic tools,” Ray said.

Although geophysicists are using it, they’re often not integrating this valuable data with the 3-D seismic that surrounds it.

“This is a huge pitfall,” he warned.

“We need to put this data together,” he added. “Let’s have a conversation amongst the disciplines that integrates all the information.”

Lean Times

Consolidation of seismic companies is another major factor affecting the North American seismic business.

“What’s happening in the acquisition side is a real consolidation of crews that shoot seismic,” he said. “It’s shrinking because they’re being bought out by each other.”

That consolidation began before the oil price drop, he said – but the slowdown in the number of projects accelerates the movement.

For instance, there’s a hold on many seismic projects because of the plunge in oil prices.

“Three-D seismic shooting is a leading indicator of future activity,” Ray observed. “You plan to do that early. It can take from six months to permit and shoot new data. It typically leads drilling activity, so when budgets are being cut, 3-D seismic is the first to be affected. You plan to spend that money at the start.”

By contrast, microseismic data can be recorded in adjacent wellbores and can be designed and acquired quickly as part of the well completion plan. Microseismic is more real-time data that helps the completion engineer evaluate the effectiveness of his expensive formation fracs.

But with prices down, many projects are not moving forward as they would otherwise. Planned and future planning of 3-D seismic acquisition is on hold.

“They’re everywhere from not hurrying even though they’ve started to waiting awhile on it,” Ray said.

“I think it’s temporary, particularly in the western United States,” he added. “Our permit cycle for 3-D is a full year, especially on any federal lands administrated by the Bureau of Land Management.

In the U.S. West – the Rockies and California – the drilling rig count has dropped precipitously.

“New drilling has stopped,” he said. “Resource play drilling that already has started is going on because once you drill and frac a shale well you can’t turn them off, because it will damage the ultra-tight reservoir,” he said.

“In the United States,” he said, “it’s going to take us a year to sort this low oil price cycle out.”

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