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Submitting Grievances and Whistleblowing as a Foreign Worker

Submitting Workplace Grievances and Whistleblowing as a Foreign Worker

Submitting Grievances and Whistleblowing as a Foreign Worker – Part One: The Ambush Meeting

  • Submitting Grievances and Whistleblowing as a Foreign Worker - Part One The Ambush Meeting

By administrative-injustice-legal-blame’ model I mean ‘investigations’ focusing on finding ‘unreasonable’ actions influenced by the negligence Bolam definition of failing and which results in un-remediated ‘injustice’.  This whole model is inherited from negligence claims and is very different and often totally contrary to the goal of finding out why harm was caused and how to prevent it.

Richard von Abendorff, Why finding ‘maladministration’ is a flawed model

It is worth mentioning that compromise agreements, at whatever level, are used widely in the NHS, the private sector and other parts of the public sector. That does not necessarily mean that someone has been stopped from speaking about patient safety, and to connect the two all the time is erroneous and wrong.

David Nicholson, The price of silence: to what extent is the NHS gagging whistleblowers?

Can a UK employer legally simultaneously apply to continue sponsoring a foreign worker on a Tier 2 SOL Visa (15 July 2013) as well as initiate disciplinary actions based on poor performance (13 June 2013)?

As a US citizen, I was sponsored for employment by a company in England whose parent company is based in Norway. The initial three-year sponsorship was ending, and I was applying for a leave to remainor to renew my and my dependent family member visas. The company in England was in the process of renewing their sponsorship of my Tier 2 visa. The application process based on Shortage Occupation List (SOL) was not trivial nor inexpensive and required the intentional and directed involvement of company agents. The company had even engaged a legal firm specializing in Tier 2 visa sponsorship to review the documentation submitted to the UK Border Agency to facilitate a successful application process so that I could legally work in the UK. The process additionally included processing applications for my dependent wife and school aged children. Of course, as one can imagine, as a foreign worker especially, the visa application renewal process was a principal concern and interest of mine.

UK Tier 2 Visa Application

Unfortunately, there had been issues in the workplace for several months. These issues came to a head about a month before (13 June 2013) my leave to remain application processing and continued Tier 2 sponsorship had been approved. I had been invited to a distressing meeting on very short notice by the human resources (HR) manager, my first line supervisor, and his boss. Following this watershed event in my working life, I sent an e-mail and requested an explanation as to what had just happened from the HR Manager? I was denied all of my requests made within my e-mail to the HR Manager. Many troubling assertions were made during this meeting, and I wanted to address them head-on. Most notable of my requests was whether the meeting was compliant to the company’s policy and procedures. Given the tone and topic of the meeting, it seemed unconscionable to me that minutes were being withheld. I knew at this point that something wrong was happening to me, but I was powerless because my legal right of redress was being perverted and obstructed. I was near positive that policy and procedures and my rights under contract of employment were being breached.

My Workplace Bully/Bullies Ambush Meeting

What if the meeting was not compliant to the company’s policy and procedures? What was the legality of being denied constructive, correct and thorough answers to workplace questions in a timely and professional manner? Would I have been submitting a workplace grievance or blowing the whistle? At the time, I had no idea what was happening to me. I have a better idea now, years too late, through reading about topics of workplace bullying, harassment and abuse. What I had just experienced is referred to in bullying literature as an ambush meeting, a tactic often (always!) used by workplace bullies against their targets. The HR manager was intentionally obfuscating the event which he likely knew very well was neither compliant nor legal under law and employment contract. The HR manager was now misdirecting the event to become a disciplinary action rather than a grievance. But, I was a foreign worker being sponsored under Tier 2 SOL visa provisions. The employer had made legal claims regarding my competence and abilities to the UK Border Agency that allowed me to work in the UK and displace a local worker. Simply, it did not make sense that a “poor performer” could be legally employed on a Tier 2 visa. Could they? BUT, poor performance is a legitimate reason to terminate an normal resident employee in the UK. This is what the HR manager knew very well!

Workplace Bully Ambush Meeting – IMG 1/2
Workplace Bully Ambush Meeting – IMG 2/2
Ambush Meeting – Workplace Bullying Institute (WBI) Namie Video

There are things you learn best in calm, and some in storm.

Willa Cather

In my work with the defendants, I was searching for the nature of evil and I now think I have come close to defining it. A lack of empathy. It’s the one characteristic that connects all the defendants, a genuine incapacity to feel with their fellow men.

Captain G. M. Gilbert, the Army psychologist , Nuremberg trails (1945-1949)
Recommended Workplace Grievance Process – Headline
How UK Employers Should Deal with Grievances – ACAS
HR Response to Ambush Meeting Query

Can a UK employer legally simultaneously apply to continue sponsoring a foreign worker on a Tier 2 SOL Visa (15 July 2013) as well as initiate disciplinary actions based on poor performance (13 June 2013)? I had never been provided with information by the HR manager or company directors which definitively addressed these important issues constructively. I never received confirmation that company policy and procedures, as well as UK labor standards were being followed. Mind you, the bullies through HR were essentially threatening my professional reputation and livelihood during the meeting. Yet, in spite of the seriousness of the matter, I was being intentionally denied information and documentation to act on. I saw this all as unfair, unreasonable, and unprofessional. I still do. The company had challenged me to a duel, but was not allowing me to defend myself. It clearly was a violation of the company’s published Core Values and Code of Conduct. Further to this, I was a foreigner in a foreign land being treated this way, which made it all even more distressing.

These presented e-mails showed that there was a conspiracy to withhold actionable information from an employee. (This information was discovered through a Data Protection Act 1998 subject access request.) The employee had essentially been forced to leave their employment because of misrepresentations (lies) and withholding of actionable information, such as the ambush meeting minutes. Isn’t this fraud? In lieu of the minutes to the 13 June 2013 ambush meeting, a letter was written that captured many of the (unsubstantiated) claims which were made during the meeting. What was not immediately apparent at the time was that the letter had transcended the ambush meeting participants. The letter was written and signed by the manager of HR on behalf of the UK company. The UK company was directed by Norwegian parent company executives, including the CEO/President and the CFO/EVP (executive vice-president). A lawyer who worked for the UK company served as secretary. So, this lawyer essentially wrote the letter signed by the HR Manager (24 July 2013). Therefore, if there was a breach in policy, procedure, or employment and contract law, it was not only understood and approved by these company directors and secretary, but was part of a nefarious (criminal?) conspiracy. In other words, any non-compliance or breach in policy or law would have been carried out intentionally and with comprehension of any legal violations or ramifications. This would include any duplicitous information provided to UK Border Agency to affect the Tier 2 SOL visa.

HR and Bullies Ambush Meeting Conspiracy and Cover-up – 1

HR and Bullies Ambush Meeting Conspiracy and Cover-up – 2

Ambush Letter produced in Lieu of Providing Requested Ambush Meeting (13 June 2013) Minutes – Part 1

Ambush Letter produced in Lieu of Providing Requested Ambush Meeting (13 June 2013) Minutes – Part 2

Ambush Letter produced in Lieu of Providing Requested Ambush Meeting (13 June 2013) Minutes – End of Letter Part 3
The UK Companies Act 2006 – General Duties of Directors
UK Companies Act 2006 – Role of Secretary
Code of Conduct – UK Law Society
UK Whistleblowing – Public Interest Disclosure Act [PIDA]
The Norwegian Code of Practice for Corporate Governance – Ethics
Whistleblowing and Norway’s Working Environment Act 2015

As a foreign worker, the mistreatment was very distressing. At the time, I was unfamiliar with the concept of workplace bullying, mobbing, and the tactic of the ambush meeting. At the same time, I had been an employee most of my life and had a conceptual understanding of fair and legal employment practices. Prior to my work in the marine seismic survey industry, I had been employed with various entities under or contracted by the US Department of Defense (DoD). During that time I had completed management training which covered US employment laws and best practices. Work attached to the US Federal government is especially sensitive to issues that would place the US government, as an employer or contractor, in legal jeopardy. I also understood the importance of proper and justified documentation. Even though US employment is known to be at will, it did not mean that employee rights could completely be trampled on. However, in the UK my employment was bound by an employment contract which is supposed to provide more worker protections and avenues of redress. I can honestly say that I did not completely understand the performance improvement plan, except that I reasoned that it could not be put into effect unless it was backed thoroughly by documented evidence. I was confident that no such evidence or justification existed. I had never experienced HR being so involved in the evaluation of my work performance. I did not even work with the HR department and the HR Manager had no direct knowledge of my work. I remained committed to follow through on my initial instinct and challenge and respond to the propriety and merits of the Investigation into possible implementation of a performance improvement plan (PIP) with a grievance.

At this point, it’s really important that you don’t get caught up in shaming or blaming. Just answer the question and give your spouse or partner room to do to the same. You are simply noticing what aligns with your values and what doesn’t.


Your relationship with your line manager may give a clue as to the real reason for the PIP. The importance of workplace relationships should not be underestimated; it is frequently the case that contention in the workplace is down to a personality clash. Many individuals who are put on a PIP can cite an underlying motive which has nothing to do with the standard of their work and more a breakdown of personalities.

Philip landau
The Geo-Services Industry

Paul Pelletier – Public Salon: – Workplace Bullying


Institutional Betrayal, DARVO, Workplace Mobbing, Gaslighting, and the Geo-Services Professional

One trick is to pull a little bait and switch on your own brain. It goes like this: When the urge comes to do the counterproductive thing, don’t resist. Instead, replace.

Carl Richards

When a person trusts that a system designed to defend, respond, protect, or seek justice will do its job after an interpersonal trauma, and when that system either chooses not to respond (omission) or worse, chooses to lay blame at the feet of the victim (commission), institutional betrayal occurs.

Phil Monroe, Institutional Betrayal: Secret Ingredient to PTSD

According to research by psychologist Jennifer Freyd, PhD, when wrong-doers are confronted with their acts (which may be criminal), they show a pattern that can be abbreviated as DARVO, which stands for Deny, Attack, and Reverse Victim and Offender.  Victims of wrong-doers have a need for the truth to be revealed and for justice.  But, the proclivity of the toxic and narcissistic organization is to suppress such truth, protect the wrong-doers and evade responsibility by denying the truth and attacking the victim.  Therefore, rather than a victim making specific public allegations that will invoke such focused attacks and reprisals, it is perhaps safer and more productive to illuminate patterns of behavior, grounded in research, that will enlighten and protect potential future victims of institutional betrayal, while giving credence to current victims’ narratives.   In institutional betrayal, power and prestige within the institution is preserved through protecting the wrong-doer over the victim.  Victims place their trust in institutions based on expectations that the institution is worthy of their trust.  Stakeholders in the institution trust that the published institution core values, policy, and procedures are in place to protect their own, as well as other institutional stakeholder’s, vested interests.  After all, the main objective of publishing such information within business proposals and annual reports is to inculcate such feelings of trust in the values of the institution and its leadership.  When institutions do not respond in accordance to their espoused values, they betray this trust and in such cases, this betrayal of trust can be more traumatizing to the victims than the initial perpetrated wrong-doing, according to Betrayal Trauma Theory (BTT).   

Institutional DARVO
Institutional Betrayal

Mobbing is the nonsexual harassment of a coworker by a group of other workers or members of an organization of the one who is targeted.  The term psychological terrorism is also used to describe workplace mobbing.  Mobbing is not a conflict over facts and reasons.  Mobbing is a form of genocide where the objective is to eliminate the target that poses a threat to the power structure, influence, and reputation of the institution, and more precisely, its leadership.  Workplace mobbing tactics often are used against whistleblowers – workers who report concerns about illegal or unethical behavior in the workplace.  Mobbing requires the support of top management.  Mobbing cannot be sustained without the permission and/or direction from top-management.  The damage done to a person through workplace mobbing is an injury, not an illness.  Fundamentally, it is a workplace health and safety issue.  Therefore, there is always an effort by top-management to skirt responsibility and accountability for their intentional or negligent injurious actions.  The objective is to make the workplace so miserable for the target that they will leave voluntarily without a fight.  Workplace mobbing and bullying results in a number of health injuries and consequences for both the target, as well as his/her family.   The fabric of relationships within the organization is damaged and the victim of mobbing has suffered an injury that can be life threatening.  Victims of mobbing are documented to become ill and die prematurely or commit suicide.  Mobbing is violent health-harming abuse perpetrated through the abuse of authoritative power and a profound breach of trust.

Gaslighting is an insidiously cruel form of sociopathic narcissistic psychological manipulation and abuse often practiced to gain power and control over a target.   The objective of the gaslighting is to cause the target to lose their sense of identity and perception of what’s really happening around them.  The term originates from the 1938 stage play, GaslightIn the play, a husband dims the gas lights while he searches for jewels that he believes were hidden in the attic by his wife’s aunt, who was murdered in the apartment which his wife inherited.  The wife notices the dimming gas light, as well as other strange goings-on.  The husband tries to persuade her that she is imagining the light change, and other things.  The objective is to replace the truth with a lie.  The term gaslighting is now used colloquially to describe efforts to manipulate someone’s perception of reality.  Gaslighter’s will use persistent lying, denial, misdirection and contradiction to destabilize the victim’s beliefs and make them doubt their perceptions of events.  In the workplace, for instance, an individual who reports or discloses being harassed and bullied, or other workplace behaviors that may contradict their understanding of policy, or even the law, may become targets of gaslighting.  Gaslighter’s may try to make the victim believe that no wrong-doing has occurred and that they are just coping badly with “work performance” or other unrelated issues.  Gaslighting and workplace mobbing, or gang-bullying, can be applied together in a collective effort to force the target out of their job in retaliation for disclosing and revealing such wrong doing.  Mobbing and gaslighting are tactics used to force whistleblowers out of the workplace.

DARVO also exists on an organizational level. When a company or organization is complicit with the accused who employs the same strategy, it’s “institutional DARVO,” and what Freyd calls a form of betrayal.

Ashley Judd

And leadership is even more frightened that they might lose power, so any signs of “trouble” can easily be perceived as threats to that power.

Janice Harper, PhD, Just Us Justice

What is the difference between lying and fraud?  At what point does telling lies go from being a poor decision to a violation of the law?  Fraud is an intentional false representation intended to mislead the receiver to their detriment.  Courts will often look at what the liar(s) gain if the lie is believed and what harm is caused to the person who relied on truthful information.  If the victim believed the lie and acted as if it were true and suffered some sort of injury because of the betrayal in trust, there could be liability for fraud.  Denying or ignoring the truthful narrative of a victim is a lie and a betrayal, and a particularly pernicious form of denial is DARVO.  Organizations, like people, have an incentive to protect their ideal image.  Organizations have attributes and personalities formed by the decisions and actions of directors and top-management.  It is these decisions and actions which form the institution or corporate character.  This is not to be confused with the published corporate values, mission statements, and annual reports, which are created to form an ideal perception of the corporate character.  Narcissism describes a self-absorbed person.  Narcissists are prone to frequent lies and exaggerations and enjoy getting away with violating rules and social norms.  Narcissists project a false idealized image of themselves and use or control others as an extension of themselves.  The narcissistic organization becomes similarly self-absorbed in protecting an ideal identity above dealing with contrasting reality.  When agents of organizations gang-bully and gaslight targets in the workplace, it above all involves a conspiratorial myriad of intentional false representations intended to mislead and change the targets perception of true events to their detriment.

Participants in the atrocities and genocide carried out by Nazi Germany justified their actions on following the orders of superiors, or obedience to authority.  Could it be that the millions of accomplices in the Holocaust were just following orders?  In 1961, US Yale University psychologist, Stanley Milgram, began his famous experiments into analyzing obedience to authority.  The Milgram Experiment wanted to determine if ordinary people are likely to follow orders given by an authority figure, even to the extent of killing an innocent human being.  Obedience to authority is ingrained in us all from the way we are brought up.  People tend to obey orders from other people if they recognize their authority as morally right and/or legally based. This response to legitimate authority is learned in a variety of situations, for example in the family, school, and workplace.  The experiment concluded that ordinary people are likely to follow orders given by an authority figure, even to the extent of killing an innocent human being.  Ordinary kind and humane people can easily become sadistic under certain conditions.  When someone in a position of leadership makes it clear that certain individuals are undesirable, these targets may be mistreated, shunned, and even falsely accused of misconduct and crimes.  If people believe that they will not be held accountable for their actions, and the more they see others acting aggressively without sanction, the more likely they will behave aggressively.  However, if people were reminded that they had responsibility for their own actions, almost none of them were prepared to obey. 

It is important to remember that the heinous genocide and elimination of those deemed socially undesirable during of the Holocaust was not only legal, but also a principal objective of the authoritative Nazi regime in power.  There was, and would have been, reprisal and punishment to those citizens who thwarted those objectives.  Nevertheless, many charged in carrying out these objectives were punished, and even executed, following the Allied trials that followed the conclusion of the Allied victory of World War 2.  In the Milgram experiment, teacher subjects were allowed to dispense punishment to “learners” under the direction and authority of the Yale University researcher.  Yale University’s reputation provided additional allegiance and obedience to follow these instructions.  Further, the teachers were not enfranchised in the Yale University organization.  They were not fellow researchers with an understanding of the experiment or knowledge of human psychology.  Mobbing and gaslighting behavior may be authorized by leaders – those holding authoritative decision-making power – of organizations, but those who follow the sole instruction of authority are also agents who have pronounced their commitment to uphold laws, organization policy, and organization values. 

We should never forget that everything Adolph Hitler did in Germany was “legal” and everything the Hungarian freedom fighters did in Hungary was “illegal.” It was “illegal” to aid and comfort a Jew in Hitler’s Germany.

Martin Luther King, Jr.

Retaliation against whistleblowers is common and severe and includes negative job performance evaluations, micromanagement, isolation, loss of job, and blacklisting.

Kathy Ahern, PhD., RN, Institutional Betrayal and Gaslighting: Why Whistleblowers are So Traumatized

Gang-bullies and gaslighter’s breach all of these commitments and provide their allegiance to corrupt wrong-doers with authoritative power.  Categorically, this not “professional” behavior.  Beyond this, the law and organization policy most certainly advocate the intervention by professionals to not follow lawless, arbitrary and capricious authority that can seriously endanger the health and well-being of a coworker.  For any policy not to state this would be malpractice.   (This was not the case in Nazi Germany.)  Joining the mob and protecting corrupt leadership may enable employees to secure benefit and promotions for helping management eliminate a “difficult” employee – the whistleblower – or the target of discriminatory or abusive treatment.  Isn’t this bribery for the purpose of perverting the course of justice? Anyone who threatens the narcissistic delusion of the organization has put themselves in jeopardy.  In a safe and functional organization, disclosures are handled according to both the law and policy.  Whistleblowing tends to refer to disclosures which are not handled appropriately and result in acts of retaliation and reprisal against those who make protected disclosures.  So, why is providing protected disclosure – or whistleblowing – about organization wrong-doing so dangerous and damaging for professionals who do so, when just the opposite should be true?

Transparency International, U4 Expert Report

When what should happen is quite the opposite to what the employee who discloses wrong-doing is experiencing, cognitive dissonance is created.  There is a betrayal of trust which undermines one’s sense of reality and confidence.  Most whistleblowers disclose with the belief that the organization leadership will be just as troubled by the reported behavior as they are.  The whistleblower has been promised by the organization that disclosures will be handled fairly and effectively.  It is a legal and fiduciary promise made by leadership.  When the whistleblower begins to see the published proclamations as false assurances and is at the receiving end of unabashed reprisals, this distresses the whistleblower immensely.  Many whistleblowers experience long-term Complex Post Traumatic Stress Disorder (C-PTSD).  Disclosing organization wrong-doing often implicates higher level executives, directly or indirectly.  DARVO occurs when the perpetrator, which could be an organization, literally accuses the victim of doing something specific that they did.  For instance, if you accuse perpetrators of defamation for evaluating your performance arbitrarily and not in accordance to the organization performance management system, as is common for workplace bullies and the mob, the perpetrator will deny the bullying and claim your accusations are defamatory.  The organization will protect the improperly empowered wrong-doers.  There will be no fair investigation or resolution, in contradiction to the written policy.  The victim of harassment/bullying by the mob will likely be terminated and blacklisted, all the while the narcissistic organization will preserve the myth of being guided by high values and fairness.  This is an orchestrated deception.

Betrayal is very threatening to our survival as humans.  When former colleagues and professionals assist in the elimination of the betrayed target, it comes as a shock.  It is very painful and confusing to the target who cannot understand what’s going on?  The betrayed target is likely to be enraged at the trusted institution and fellow employees who have breached their trust and demonstrated cowardice and lack of moral fortitude.  Once former colleagues align themselves with the immoral mob, there can be no redemption.  An initial moment of guilt may occur with the initial small betrayal.  This is followed by anger at the target because being angry with the corrupted power structure and calling them out is too risky.  The anger is fueled by fear and guilt that they have become accomplices in evil and compromised their own principles by betraying the target.  Following the initial betrayal, the subsequent lies and betrayals increase in intensity.  The problem is that eventually the betrayals will be discovered.  The mob must create justifications for their decisions that support the false narrative of events aligned with the corrupt power structure that oversaw the gaslighting and manipulation in the workplace which was orchestrated to eliminate the target.  The mob would like to frame the targets reaction as unhinged, when it is entirely normal for a betrayed person or victim to act as a betrayed person or victim.  The participants within the mob must collectively maintain the mythological institution identity or face internal or external legal reprisals and accountability.  They do this knowingly to protect a hypocritical and corrupted power structure and false institution identity at the expense of the victim.                          

Every life is a test but, in the workplace, few are tested more than whistleblowers.  The act of whistleblowing is a comprehensive test of the whistleblower’s values, loyalties, and above all their self-worth.  The whistleblower who survives, survives these tests. 

K. R. Sawyer, The Test Called Whistleblowing

Whistleblowers are “not” wimps. They are mighty men and women of valor as Jesus Christ was when He overturned the tables of “The Den of Thieves” who were using His Father’s House to make money.

Margaret Kannaday, Jesus: The Whistleblower

Mistreatment of workers in the workplace has always existed.  At the same time, more recently a growing attention has been given to issues such as workplace harassment, bullying, and mobbing.   In 1976, Carroll M. Brodsky, a psychologist and anthropologist, opened the discussion of workplace abuse with his book The Harassed Worker looking at the outcomes and accidents from worker stress and exhaustion.  In the mid-1980s research by psychologist and pedagogist Heinz Leymann began further investigating workplace stress and introduced our modern concept of workplace bullying and mobbing.  Workplace bullying and mobbing are identified as principal workplace health and safety hazards.  Workplace environments where mobbing and bullying occur have been antecedent to both the Piper Alpha (1988) and the Deepwater Horizon (2010) offshore oil rig disasters.  The Piper Alpha disaster cost the lives of 167 offshore workers and was the deadliest offshore disaster.  The Deepwater Horizon is the largest offshore environmental disaster and it also cost the lives of eleven (11) offshore workers.  Workplaces environments where there are feelings of economic uncertainty from downsizing and restructuring leave fewer people to do more work and also make the competition for positions intense seem to fuel harassment, bullying and mobbing cultures.  While the cyclic oil and gas industry that employs geo-services professionals is not unique in terms of harvesting workplace conditions conducive to workplace harassment, bullying and mobbing, but is especially susceptible during down cycles which exacerbate uncertainty.

Much of the research work by Freyd focuses on sexual offenders and identifies a form of institutional betrayal, which is a negative reaction when an assault is reported.  This negative response by the organization adds additional trauma to the victim beyond the interpersonal violation.  The comment that is often heard, “The rape was bad, but what was even worse was how I was treated after the rape occurred.”  Institutional DARVO occurs when DARVO is committed by an institution (or with institutional complicity).  Institutional DARVO is when an institution minimizes – sometimes to the point of ignoring – the harms done to the victim(s) and frames the alleged perpetrations in such a way to blame the victim and protect the perpetrators.  An example of institutional DARVO would include to institutional leaders responding to disclosures by gaslighting victims into thinking they do not have a sufficient understanding of policy and practice and that there was no non-compliant or illegal behavior.  In the case of bullying and mobbing, the ruse of “poor performance” is often used as a justification for mistreatment.  Institutions may also obstruct the victims redress through outright lying about policy and legal obligations of the institution.  Institution betrayal really boils down to leadership corrupting the processes of redress in order to avoid culpability.  The institution does not follow their own rules and decisions are made with arbitrary caprice. 

Milgram demonstrated the power of authority over the minds and wills of ordinary people.  Milgram’s experiment was conducted following the trial of Otto Adolf Eichmann in Jerusalem.  Eichmann was executed in 1962.  The trial was followed closely by the media and was the inspiration for several books.  One of the more famous books was written by Hannah Arendt.  Arendt’s Eichmann in Jerusalem coined the phrase “the banality of evil” to describe Eichmann.  Banal evil is characterized by a belief that what one is doing is not evil, rather, what they are engaging in is a behavior that is, or has been, normalized by the society in which they reside.  The horrors of the Holocaust, to which Eichmann assisted through overseeing the deportation of many of the Jewish population to the Auschwitz concentration camp, resulted in the murder of about 75 percent upon arrival.  Eichmann was loyally following the laws and carrying out the evil objectives of the Nazi regime.  Institutional betrayal and acts of psychological violence in the workplace, such as harassment, mobbing and bullying is different.  Those who follow the evil dictates of authority are usually acting against the policy and laws.  Such “professionals” are actively and willingly complicit in the destruction of the victim’s professional life and reputation, as well as the family and loved one’s who depend on their betrayed victims.  These acts are evil.  Such behavior is only normalized through the indifference of legal authorities to pursue such evil institution leadership and mob participants.  Scientific research has determined proclivities and patterns followed by abusers and criminals.  Now, institutional governance bodies and law enforcement must actively embrace the research and the body of knowledge it provides to aid victims.  For institutional governance and law enforcement not to do so is a further betrayal to victims and a miscarriage of justice.  Being a victim or doing the right thing should not be dangerous. 

The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated communist, but people for whom the distinction between fact and fiction, true and false, no longer exists.

Hannah Arendt

Consecrated persons, chosen by God to guide souls to salvation, let themselves be dominated by their human frailty or sickness and thus become tools of Satan.

Pope Francis, 2019 Sex Abuse Summit

No Narcissists in Geo-Services – NONGS

No Narcissists in Geo-Services – NoNGS
No Psychopaths in Geo-Services – NoPGS
Characteristics of Psychopaths
No Bullies in Geo-Services – NoBGS

…  we argue that organizations can adopt collective narcissistic identities that will produce wrong (i.e., non-virtuous) behavior. This happens because the organization’s narcissistic identity—including the corresponding motive to protect its identity—is more powerful than a motive to behave morally

Extreme narcissistic organizations want to appear ethical because appearing ethical feeds their narcissism, and so the costs of creating formal ethics programs are small compared to the ego-defense benefits. But such programs are instrumental for the narcissistic identity, not ethical conduct, and therefore will not much affect the behavioral status quo. ~ Organizational Narcissism and Virtuous Behavior

Why Enterprise Compliance Programs Fail (24-April-2016)

Our Deepwater Horizon (4-April-2016)

Workplace Bullying is an Agency Problem and Often a Crime (1-February-2016)

When Human Resources is Corrupt (10-August-2015)

Between the Bully and the Deep Blue Sea (5-June-2015)

Avoiding the Tragedy of Whistleblowing
Bribery – Wikipedia

Bribery is the act of giving or receiving something of value in exchange for some kind of influence or action in return, that the recipient would otherwise not offer. Bribery is defined by Black’s Law Dictionary as the offeringgivingreceiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legalduty.[1] Essentially, bribery is offering to do something for someone for the expressed purpose of receiving something in exchange. – Wikipedia

It is unethical for a lawyer to threaten to present criminal, administrative or disciplinary charges to obtain advantage in a civil dispute.  Blackmail consists of threats made to gain anything of value from the other person, such as money, property or sexual favors.  Extortion constitutes a threat to accuse someone of a crime, or to expose or impute to him/her any significant misconduct, accompanied by a demand for payment “or else.”

Shearing the Trough in Marine Seismic Streamer Acquisition with Nodes

Ocean Bottom Node Seismic Acquisition Challenges High-end Seismic Streamer Acquisition

History is so important. It has been said that the three most important words in the English language are “remember, remember, remember.” 

Carl Richards

Chances multiply when you take them.

Doug Pedersen

Since May 2015, MarineSeismicSurvey (MSS) blog articles have mostly focused on the marine seismic streamer market as a gauge of the health and trend of offshore geophysical exploration.  However, marine seismic streamer activity can no longer be considered singularly in such analysis.  The growing ocean bottom seismic (OBS) market, being forged by ocean bottom node (OBN) technologies, must be taken into account moving forward.  The percentage share of OBS in the marine seismic survey market has been increasing over the past decade, and some analysts are predicting that OBS will command a 30% marine seismic survey market share by 2020 with its continued rise.  This is remarkable for several reasons.  The plunge in oil prices in mid-2014 significantly impacted marine geophysical exploration.  However, marine geophysical exploration has historically been a boom or bust business defined through a litany of bankruptcies, mergers, and acquisitions.  Oil prices have always been cyclic.  Therefore, the trend and buoyancy of the marine geophysical exploration survey industry remains a good indicator for the overall trends and health of the offshore oil and gas industry. 

Marine seismic surveys, in simple terms, map the subsurface points between a source and receiver(s).  For some time, the most time-efficient and cost-effective way to map these points is through narrow azimuth (NAZ) streamer acquisition.  Standard NAZ marine seismic acquisition is where source(s) and streamers are towed together behind a single vessel.  It is principally the cost of the seismic vessel and seismic in-sea equipment that determines the price of a survey.  Surveys are priced on a day rate, square kilometer rate, or the number of these “mid-points”, or common depth points (CDPs) mapped.  Because each source, almost always an air gun blast or “shot”, maps to the number of receiver sensors located on the streamer cables, there has been an incentive to tow as many streamers as possible to reduce time and costs of marine seismic surveys.  To facilitate this, newer marine seismic streamer vessels have steadily become larger and more powerful.  They are also more expensive to equip and operate.  OBS acquisition has been slower and more expensive method.  However, OBS is seen to provide better data quality.  There have been notable technology innovations introduced into the marine seismic streamer market during the past decade to improve data quality.  Similarly, more powerful computing power has improved final data quality and imaging of marine seismic streamer acquisition.

The marine seismic streamer market has always been tenuous and competitive.  In late 2013, CGG acquired Fugro GeoScience’s marine seismic streamer fleet.  Fugro exited the marine seismic streamer market before the mid-2014 plunge in oil prices.  However, they retained their OBS capability as a joint venture with CGG which is Seabed GeoSolutions.  OBS data was regarded as “better” because it was derived from multi-component (2-4) sensors, whereas seismic streamer data sensors were single component.  One of the problems with marine seismic streamer data was the loss of recorded bandwidth which correlates to depth that sources and streamers are towed.  This loss of bandwidth is known as a “ghost notch” caused from upcoming energy cancelling down-coming energy from the water surface.  In 2007, a dual-sensor towed streamer was introduced into the market that could rival OBS data quality.  In 2009, the first dual-sensor 3D survey was carried out, ushering in an industry wide embrace of “broadband” seismic streamer data.  Another way to acquire broadband seismic data from single-sensor streamers is through varying the depth of the streamers and then applying sophisticated data processing algorithms.  In 2013, a 4-component streamer was introduced into the market. As vessels got larger and towed larger spreads, there also became a need for improved streamer control equipment. 

Innovation distinguishes between a leader and a follower.

Steve Jobs

We are witnessing a seismic change in consumer behavior. That change is being brought about by technology and the access people have to information.

Howard Schultz

While there have been remarkable innovations and advances in marine seismic streamer acquisition technologies and techniques, advances have also been made in OBS that are together transforming marine geophysical business model paradigms.  In a competitive market, innovation is essential.  However, conservative concession operators have shown a reluctance to pay any premium for such innovations.  Within the MSS blog article, Toward a New Horizon in the Marine Seismic Streamer Industry (24-January-2018), we reminisced about Schlumberger’s seismic acquisition entity, WesternGeco (WG)’s, history and their contributions to the marine seismic industry.  Schlumberger’s CEO, Paal Kibsgaard, announced that the company would exit the marine and land acquisition businesses in January 2018.  The reason essentially boiled down to the return on investment developing and deploying innovative technologies.  The MSS blog article, Upstream Exploration and the Paradox of Choice (5-June-2015), describes how the operator competitive bidding process discourages more expensive innovative proprietary technologies until they are commoditized and offered by a variety of service company providers.  An example of this is in the variety of solutions offered for marine broadband streamer acquisition.  Broadband is commoditized, the specific techniques and equipment used are distinct and vary in equipment and operational costs.

On 15 November 2018, it was announced that relative newcomer, Shearwater GeoServices (Shearwater), had completed the acquisition of the marine seismic acquisition and operations of WG.  Shearwater’s portfolio now includes marine seismic streamer, as well as ocean bottom seismic (OBS) exploration services.  On 27 December 2018, seismic streamer player, Polarcus, announced their winning a combined towed streamer and ocean bottom node (OBN) contract that they will perform cooperatively with SAE Exploration.   Earlier, 7 December 2018, ocean bottom node player, Magseis, acquired Fairfield’s Seismic Technologies data acquisition business to become Magseis Fairfield.  These moves in late 2018 have redefined the marine seismic industry.  Both Magseis and Shearwater are both relative newcomers to their respective principal markets.  Through their acquiring additional marine data acquisition resources, they are now both dominant players.  Shearwater added seven (7) marine seismic streamer vessels to their fleet, as well as three (3) multipurpose source and OBS vessels.  MagSeisFairfield will also have a dominant position in the OBS/OBN market.   

Schlumberger made a decision to exit the data acquisition game.  It has been my position since my first blog post article, The Seismic Vessel Over-Capacity Problem (5-May-2015) that the marine seismic streamer market provides a snapshot of the trends and health of offshore development and overall oil and gas spending and growth.  Both Schlumberger (of which WG was a part) and Fairfield will continue to have a presence in providing seismic data processing, imaging, and multi-client (MC) products and services.  Both Schlumberger and Fairfield are innovators of proprietary technologies in marine seismic acquisition and are currently pursuing claims of patent infringement against their rivals.  Schlumberger’s is challenging ION streamer control technology.  Fairfield’s recent claim of patent infringement of their OBN acquisition technology by Seabed GeoSolutions (SG) are current examples.  Both Shearwater and MagSeisFairfield will quite possibly be in sole possession of cutting edge proprietary data acquisition technologies. 

A century ago, petroleum – what we call oil – was just an obscure commodity; today it is almost as vital to human existence as water.

James Buchan

I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.

JefF Bezos

The plunge in oil prices in mid-2014 led most seismic streamer acquisition vessel owners to reduce the number of operating vessels to adapt to the reduced offshore exploration opportunities.  In the near-term, this took a large fleet of capable vessels and equipment off the market.  With reduced demand for oil exploration, seismic streamer vessel fleets have been decimated.  The marine seismic acquisition equation has changed significantly.  Over-capacity in the marine seismic streamer vessel market exists when the number of vessels (streamers) in the market is greater than the demand for data acquisition surveys that will employ such vessels.  In a robust demand market, larger fleets could be deployed strategically to minimize costly uncompensated transit times between surveys.  Equipped streamer vessels are expensive to maintain.  The objective is always to keep vessels working and reduce transit time.  If the marine seismic vessel is on-site, but idle – or on standby – for a variety of reasons, the goal of the vessel owner is to be compensated for the idle time by the contractor.  Of course, the operator/contractor also wants to minimize their incurred expense when vessels are not acquiring data (which meets the contractor data requirements) in the (contract) acquisition business model.  The marine seismic streamer fleet had been steadily adding vessels capable of towing larger streamer spreads, which also meant reduced survey times.  Larger spreads complete surveys in less time.  In a market with reduced opportunities it is even more difficult to keep fleets working steadily and profitably.

In spite of all of these factors, reducing survey time and cost to operators, especially during a time of reduced oil prices, survey cost is the principal consideration.  In times past, in areas of robust exploration, multiple seismic vessels could be working in the same area.  This was problematic for high quality seismic data acquisition.  The sources used by the different survey vessels would impact the seismic data.  Seismic interference, as it was referred to, occurred when the source signal from another survey vessel polluted the recorded records from the primary survey.  Expensive time-sharing agreements would compel seismic vessels to cease data acquisition while the other recorded to reduce seismic source interference.  However, there are now seismic data processing techniques which can separate out unwanted seismic signal, thus again reducing idle time and expense once caused from seismic source interference.  In fact, such data processing has been refined enough to allow surveyors to intentionally overlap source interference.  As mentioned earlier, the points being mapped are essentially the midpoints between the seismic source and receivers.  Adding sources in acquisition and overlapping sources for deblending in data processing is now an offered solution which again reduces survey time and cost, but increases potential vessel idle time.

Geophysical survey customers are cost conscious consumers and are, for the most part, risk adverse and not aggressive using innovative technologies that increase survey costs.  However, geophysical survey customers seem willing to try new technologies and techniques that decrease survey costs.  In such a competitive environment, customers can often get the benefit of both new technology and techniques without a premium cost.  The incentive for vessel owners is to keep the vessels as busy as possible to reduce loss from idle time.  All of these factors do not easily explain the rise in OBS/OBN marine seismic market share so much as the decimation of the marine seismic streamer fleet.  Marine seismic streamer acquisition is still the most time efficient marine seismic acquisition technique.  In times past, offshore project development required that oil prices be above $70 USD/bbl.  This value is not firm, but any trading value of over such an arbitrary threshold provides more opportunities for investment in seismic surveys.  Most frontier exploration initiates with 2D (single streamer) marine seismic surveys.  This data can then be used to evaluate the area and plan subsequent 3D (multiple streamers) marine seismic surveys, which in turn define targets for offshore drilling.  4D marine seismic streamer acquisition is used over existing reservoirs to improve oil recovery.  4D programs are intended to replicate the source and receiver positions of previous 3D surveys and detect changes over time and determine optimal drilling locations. 

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.

Bill Gates

Predicting oil prices is anyone’s guess.

Soren Skou

In the current market (with oil prices trading below the threshold value for profitably), developing new fields is prohibitive.  OBS/OBN acquisition can focus on developed or trafficked areas where streamer acquisition is hindered by obstructions or other hazards and risks that exists when towing a 1100 m x 8000 m (or larger) streamer spread 5-15 m below the sea surface.  OBS/OBN exploration programs can be more focused on quality over quantity of CDPs.  In other words, getting more oil and gas from already developed fields where there is existing infrastructure in place is less risky than exploring in remote expansive areas.  The improved data processing deblending techniques provide the ability to acquire marine seismic data with multiple overlapping sources.  Add to this more sophisticated interpolation algorithms means new acquisition source-streamer configurations can be employed to reduce survey time and costs.  Less in-sea equipment also has many operational advantages.  Towing wider spreads with fewer streamers can save on fuel and reduce the number of streamer control and positioning equipment to monitor and maintain.  Of course, from a health and safety perspective, reduced maintenance means less risk exposure by offshore workers.

OBN seismic data acquisition is becoming more efficient and less costly to deploy and is now poised to challenge the high-end marine seismic streamer market.  OBS/OBN technology is equipped with multicomponent sensors that can collect full azimuth seismic data.  The step change advances in OBN include longer battery life in nodes and faster automated deployment.  Much the higher cost of OBS/OBN is attributed to time efficiency, where as much of the expense for marine seismic is the large and powerful streamer vessels themselves.  OBN technology can acquire 4D seismic data, as well.  OBN surveys will take market share away from high-end marine seismic streamer surveys, especially as oil prices remain below the offshore development threshold price.  In this cost sensitive environment, cost effective 3D exploration employing a combination of three (3) or more sources and seismic deblending data processing techniques will be attractive for frontier exploration.  Marine seismic streamer and OBN will battle for acquiring data to reach untapped regions of existing developed fields.  This is what I believe will shape the marine geophysical data acquisition market.  As has always been the case, oil prices will continue to control marine seismic market.  Also, as has always been the case, innovation that best solves the problems of customers will win the day.    The plunge in oil prices in mid-2014 significantly impacted marine geophysical exploration.  Marine seismic will remain a boom or bust business defined by bankruptcies, mergers, and acquisitions until there is a paradigm shift in how innovation is embraced by marine seismic survey customers.

Keeping customers is about the experience, and the employees control the culture and temperature of the business. Never forget that.

Steve Wynn

At its heart, engineering is about using science to find creative, practical solutions. It is a noble profession.

Queen Elizabeth II


Toward a New Horizon in the Marine Seismic Streamer Industry

WesternGeco Seismic Vessel Amazon Warrior

Toward a New Horizon in the Marine Seismic Streamer Industry

 Content Revised 13 November 2013 by Request of Company to Remove their Named Reference

This challenging commercial environment is clearly reflected in the financial statements of standalone acquisition players who are either at or close to bankruptcy, heavily burdened by weak cash flow and high debt….While these stand-alone acquisition players have no other choice than to stay in and fight on to avoid bankruptcy while hoping for a better future, we at Schlumberger do have a choice and we chose to exit the commoditized land and marine acquisition business. ~ Paal Kibsgaard, Schlumberger’s CEO, 19 January 2018 E&P article

Leaders keep their eyes on the horizon, not just on the bottom line. ~ Warren Bennis

I was in the process of preparing to write another blog article in anticipation of the release of Q4 2017 and full year financials from a conglomerate offshore market players when I learned of Schlumberger’s decision to exit the land and marine data acquisition business.  Schlumberger’s CEO, Paal Kibsgaard’s sober analysis of the seismic acquisition market was refreshing in its honesty and should resonate throughout the industry.  I began working in the marine seismic business in 1998 on board the M/V Western Atlas. I was lured by the 6-week rotation schedule that, I hoped, would allow me to travel and see the world.  (I saw the Gulf of Mexico with Western Atlas, but the industry has taken me around the globe.)  I worked for Western Atlas, an offspring of Western Geophysical.  Western Atlas merged with Baker Hughes later on, and then merged with Geco-Prakla to become WesternGeco (WG).  WG was subsequently absorbed by Schlumberger.  The marine seismic business has always been tumultuous.  WG was the arm of Schlumberger mostly identified with the marine and onshore seismic acquisition business, where they have occupied a forefront position.  WG introduced their two Amazon-class vessels into the fledgling market, Amazon Warrior (2014) and Amazon Conqueror  (2015).  In 2013, WG had introduced their high-technology IsoMetrix™ 4-component streamer commercially.  More recently, it was announced that the US Supreme Court would consider Schlumberger/WG’s claim of technology infringement.  Thus, in many ways, WG has left an indelible impression on the marine seismic acquisition market, regardless.  It will be interesting to learn how their resources and technology will be dispersed into the new market reality that will follow their exit.  In many ways, it is hard to conceive of such a market without WGs presence in acquisition.

The recent Q4 2017 vessel utilization numbers were published at the start of 2018 for two pure play marine seismic streamer vessel operators.  WG had operated several marine seismic streamer vessels prior to the mid-2014 crash in oil prices, but stacked many of them.  WG no longer publishes vessel utilization numbers, since WG is a relatively small component of Schlumberger.  Thus, it would have been difficult to gauge the health of the marine seismic acquisition sector through analyzing Schlumberger/WG anyhow.  CGG also reduced their fleet to become more diversified geoscience company.  CGG filed for bankruptcy and reorganized and now has much less presence in the marine seismic streamer acquisition market, as well.  Many of my blog article posts, which began in 2015, have concentrated on pure play marine seismic streamer company performance to understand the health of the deep water exploration and development sector.  Polarcus’ Q4 2017 vessel utilization was 68% and the other company listed 46%, and has further stated that they will reduce their seismic 3D streamer fleet from eight (8) to six (6) operating vessels.  Seismic streamer vessels are the data acquisition platforms and therefore the main revenue generators, or the revenue losers, for marine seismic exploration companies.  So, while we all must await the Q4 2017 and full year 2017 financials to be released, Q4 2017 cannot be a banner quarter for either of them, based on these already released vessel allocation numbers.  Schlumberger/WGs decision to exit the marine and onshore seismic acquisition markets punctuates that no robust resurgence in deep water exploration is anticipated.

On 12 January 2018, the price of oil edged over $70 USD/bbl for the first time in over three years.  This generated some excitement, but this news was obviously not viewed as a life-line for marine seismic service companies.  In previous blog posts, I mentioned that deep water exploration and development required a risk threshold of a minimum oil price of $70 USD/bbl.  Therefore, every dollar above that threshold would represent an opportunity for revenue generation.  However, marine seismic exploration players know that oil eking over such an arbitrary economic threshold is not going to create a bonanza of deep water exploration.  Every dollar over that arbitrary price may open up more money making opportunities for both license operators and exploration companies.  At the same time, every company has their own unique cost base dependent on their business model and objectives which dictates how their resources are managed.   This enterprise specific cost base is much different than any project related cost adjustments related to a seismic survey areas geology and geopolitics.  The $70 USD/bbl oil price threshold mostly speaks to market stability that supports minimal revenue generating opportunities.  The problem is that minimal revenue generating opportunities are not necessarily enough to pay off debt generated from new build programs and past lean quarters.  When businesses are growing, new assets and improvements are paid for not only by the revenue they generate, but also through the revenue generation of the older assets.  With so many vessels stacked, revenue has to now be generated through fewer opportunities.  At the same time, this reduced revenue flow has to pay for the fewer newer and more expensive vessels working for minimal profit.

You can have data without information, but you cannot have information without data. ~ Daniel Keys Moran


It doesn’t matter much where your company sits in its industry ecosystem, nor how vertically or horizontally integrated it is – what matters is its relative ‘share of customer value’ in the final product or solution, and its cost of producing that value. ~ Gary Hamel

Even before the crash in oil prices mid-2014, the marine seismic streamer market really had too many vessels in operation for the required survey work.  Because of this vessel over-capacity, many oil and gas (O&G) concession operators became more selective in terms of their requirements in vessel and equipment specifications.  For example, several operators would not allow a survey vessel older than twenty (20) years to be tendered in any data acquisition proposal unless such vessels were specially built for marine seismic streamer surveys.  O&G operators also had similar age requirements for support vessels.  These requirements recognized the underlying health and safety, as well as operational efficiency benefits delivered by purpose-built vessels.  However, such requirements are also indicative of operators having the ability to require high standards while also being able to reach their exploration objectives and seize opportunities with a sufficient number of vessels which could efficiently complete surveys affordably.  More in-sea instruments being deployed prompted development of improved streamer and source positioning control technologies, which also soon became a requirement for several tenders. 

O&G operators, through demanding more stringent vessel and equipment requirements, in certain respects, encouraged the building of newer and more efficient wide-tow capable vessels, as well as the development of supporting technologies.  As was also mentioned in previous posts, marine seismic streamer service companies having the ability to complete surveys in less time mostly benefits the operators of the survey area more than the seismic service provider.  Vessels sometimes need to re-survey areas for a variety of reasons related to unpredictable weather and currents.  When streamers and sources are not positioned correctly, the subsurface cannot be imaged correctly.  Data imaging is dependent on correctly discerning the position and geometry between the seismic source (air guns) and the receivers held within the streamer cables. Wide-tow capable vessels towing more streamers (sensors) created new issues in terms of acquiring the correct data.  A certain amount of in-fill, as it is referred to, was always anticipated and calculated into the bid tenders.  Of course, eliminating in-fill was beneficial to the service provider and operators in terms of time-savings in operating the survey vessel.  Especially, in a highly competitive vessel over-capacity market with low profit margins, the use of such technologies became imperative to be commercially successful.

It was recently broadcast (12 January 2018) that the US Supreme Court will consider the issue and ramifications of the unfair global use of intellectual property.  This case has to do with WGs Q-Marine™ streamer control devices and ION Geophysical (ION) infringement on the patented technology from their development and sale of DigiFin™ (4 patented technologies).  The question revolves around recovering $93 million USD from ION for foreign contracts.  ION contends that WG cannot recoup lost profits for the overseas use of ION’s products by ION’s customers, and that lost-profits can only be recouped from a direct competitor.  This will be an interesting decision and there are obviously certain merits to both sides, otherwise it would not be heard by the US Supreme Court.  I prepared marine seismic acquisition proposals for projects offshore the continent of Africa for a UK affiliate of a Norway based company.  This company developed a proprietary dual-sensor broadband capable streamer technology.  However, because operators wanted bidding on a level playing field, such innovative technology could not be bid in some cases until “broadband” was also an offering of competitors in the bidding process.  Operators resist requesting unique proprietary technologies because they are no longer a competitive bid.  So when operators are requiring streamer control capability, they are not intentionally requesting a proprietary technology.  Marine seismic service provider bids needed to offer Q-Marine™ or DigiFin™ capability within their bid proposals.  However, it was not necessarily regarded as the proprietary technology that won the bid, so much as an adjunct technology to meet the base operator specifications.  Operators actually need to also be aware of the specifications that they are requesting and what technologies are available to meet such requirements.

Every exit is an entry somewhere else. ~ Tom Stoppard

If you go long on seismic companies at this point you might want to ask yourself what Schlumberger’s management knows that you don’t?  ~ Jeremy Punnett, Stamford Maritime

In many respects, Schlumberger’s exit from marine and land seismic acquisition markets points to the deficiency in the current business model used.  While data is necessary in the search for resources, the burden of the cyclic nature of the market is placed mostly on the data acquisition service providers.  But, service providers are just that.  Operators define the services that they need or want.  Operators decide the age of vessels used and even the breadth of solutions tendered.  What Schlumberger has learned, as well as the other seismic acquisition service providers, is that there is a gap between what customers ask for and how much they are willing to pay for it:

Kibsgaard added that the company’s customers are not willing to “pay a premium for differentiated seismic measurement and surveys” and “clearly believe that generic technology and performance is sufficient.” This creates a low technical barrier for smaller players to enter the segment, which keeps demand in a chronic state of overcapacity, he said, adding the company’s seismic acquisition business cannot provide the desired full-cycle returns for Schlumberger or compete internally for funding. ~ 19 January 2018 E&P article


The current procurement process operators use to obtain services needs reformation and improvement.  New technologies and solutions are simply being created too rapidly for old and stale procurement models based on a apples-to-apples competitive bidding process.  What Kibsgaard is stating is what I learned tendering bids with a breakthrough technology waiting to be offered.  Service providers cannot reap the timely benefits from their out-of-the-box solutions, but have to wait for competitors to “catch-up.”   Only then, when the market is commoditized and when the only basis for award can be determined to be the final cost of an apple.  (I speak to this dilemma within my blog article, Upstream Exploration and the Paradox of Choice (10-May-2015).)  However, when the economics suits operators, such requirements can be relaxed or ignored.  If the technology has a lower-cost baseline, then, and only then, is the novel solution acceptable for consideration.

What does Schlumberger’s exit from the marine seismic acquisition market say about the markets future?  I do not know.  But, the WG fleet is composed of many seismic streamer purpose built vessels which they can divest from.  These vessels could enter the market at some point, in the same way that other stacked vessels could, potentially, when the market turns.  Perhaps WG will license and sell equipment, like their Q-Marine™ and maybe even IsoMetrix™?  In the near term for this low-cost commoditized market, companies introducing innovative technologies will be stressed even more.  The marine seismic acquisition business model is built around time-efficiently acquiring large swaths of (broad) band data from arrays of 12-16 8000 meter streamers (100 m separation) towed behind large purpose built vessels.  These vast amounts of data will be processed on super-computers.  Companies pioneering new solutions through committed research and development do not really occupy the low-end/low-cost spectrum of the marine seismic streamer acquisition market.  Currently, the majority of customers do occupy this space.  On the other hand, WGs exit could send high-end customers to seek such technologies from other seismic acquisition companies.  Will there be enough demand for wide-tow vessels towing only innovative broadband streamer technology?  Polarcus and Shearwater GeoServices (SG) will fight for the lower end, but new high capacity vessels entering the market will now be a threat for all pure-play players.  I still believe that the broadband streamer developer’s chartering of two high-capacity seismic streamer vessels following Dolphin Geophysical’s demise was because of the threat of wide-tow price competition.   Broadband acquisition is more operationally expensive.  Wide-tow is how to stay cost competitive with high-end equipment or innovative geometries.

The commoditized marine seismic streamer acquisition market will be a lowest-price wins game for the foreseeable future.  Clearly, WG/Schlumberger is betting on the added-value component of the market attached to raw data acquisition: data processing, imaging, and analysis.  WG does not see the money-making opportunities in acquiring high-end raw data.  It was somewhat surprising, as a former data processing geophysicist, to see a marine seismic data acquisition leader restructure-out their data imaging division.  Enhanced data processing and imaging is, of course, a huge value-added aspect of any proprietary streamer or data acquisition technology.  Some players made calculations and decisions about the market and waited until only recently to down size their operational marine seismic streamer vessel fleets, when other players, such as WG and CGG, did so in early 2015.  Being a pioneer means blazing your own course to follow.  There is obviously no single reason for Schlumberger exiting the onshore and offshore seismic acquisition market.  Recently, the Amazon Warrior halted acquisition due to protests from activists, such as Greenpeace, against the use of seismic air guns and their impact on marine life and cetaceans.  In the USA, the President Trump administration has relaxed restrictions for exploration and development offshore.  Many states and officials do not agree with these policies, and likewise, there are USA activists preparing to fight opening up their offshore waters, many adjacent to tourist laden beaches, to offshore O&G exploration and development.  A company the size of Schlumberger is obviously a big target for such protests.  And when the business unit at the forefront of the controversy is also not generating revenue, an exit from such market conditions is even easier to reconcile.  What is certain is that WGs exit from marine acquisition will impact the market in some measurable way.  It is time for a new business model for data acquisition services.  Perhaps WGs exit as a seismic acquisition service provider will force such a conversation sooner than later.

You change your business plan to anticipate and adapt to changes in the marketplace. ~ Jon Feltheimer

If we have data, let’s look at data. If all we have are opinions, let’s go with mine. ~ Jim Barksdale


The Longer and Lower Wave of the Marine Seismic Streamer Market

The Longer and Lower Wave of the Marine Seismic Streamer Market

Content Revised 13 November 2013 by Request of Company to Remove their Named Reference

What is in store in 2018 for the Marine Seismic Streamer Market?

The industry has changed drastically over the last few years. The oil companies demand competitive and flexible solutions and the providers that can offer that in the most cost efficient way will capture market share. ~ Irene Waage Basili, CEO Shearwater GeoServices

Flexible capacity is the new euphemism which has been conceived to explain the main problem in the marine seismic streamer market sector.  It translates to seismic streamer vessel over-capacity.  This was the topic of my first blog post, The Seismic Vessel Over-Capacity Problem (5-May-2015)Flexible capacity is really seismic vessels equipped to explore on short notice, but currently without solid order books to keep them in operation.  While people may be waiting for a resurgence in oil prices from its plunge in mid-2014, there will be no parallel improvement in the marine seismic streamer sector.  While oil prices may encourage exploration, such an infusion of capital for exploration will be spread out, for one thing.   When oil prices do rise again, customers will have an entirely new field of marine (and land) geophysical exploration options which did not exists when oil prices were higher.  Innovation that reduces costs will always be in fashion.  Also, the flexible and stacked capacity is almost equal to the current active operating capacity.  I believe that this vessel capacity will be absorbed into the market before any substantial price increase for marine seismic streamer services is realized.   Just as innovation and technology spurred competition in the hey-day of oil prices exceeding $100 USD /bbl, the same spirit of competition is adjusting to the current market.  Like the Iguana’s of the Galapagos adaptation to their perilous environment, the longer and lower slump in exploration has changed the marine seismic market completely and created new demands, risks, and opportunities for service providers.  It is not just about vessel capacity, but a paradigm shift in how to optimize the entire value chain from acquisition to imaging.  Only technology that delivers the needs of customers will prosper.  Some historically stalwart technology and techniques may no longer be in fashion for the current marine seismic streamer market.

Matters of the marine seismic sector have been monitored and written about since 2015 through website blog articles.  I began working in the marine seismic industry in 1997 and these blogs represent my impressions of the industry.  Also, follow @MarineSeismicPM Twitter™ feeds for offshore and seismic news. The blogs have mostly concentrated on the marine seismic streamer market.  This market sector is analyzed as an indicator of the overall health of the deep water offshore oil and gas industry.  Marine geophysical data acquisition is the first step in any offshore project (concession) development.  Within these blog articles, pure play marine seismic streamer service providers, Polarcus and Dolphin Geophysical / Shearwater GeoServices have dominated the most analysis.  However, more diversified companies, such as Schlumberger’s WesternGeco (WG) and CGG also significantly impact the marine seismic streamer market.  WG and CGG had operated the largest marine seismic streamer vessel fleets prior to the mid-2014 collapse in oil prices.  The global marine seismic streamer vessel fleet has been substantially reduced from its mid-2014 levels.  Within the most recent blog article post, The End of Wide-Tow Streamer Seismic?, it was noted that one major marine seismic company has actually maintained the largest operational marine seismic streamer vessel fleets since the collapse.  When overly ambitious Dolphin Geophysical (Dolphin) was pushed into insolvency and unable to maintain their Sanco Shipping (Sanco) charters of wide tow Sanco Swift and Sanco Sword, a similarly ambitious competitor took over the Dolphin charters, as well, preparing for a marine seismic streamer market resurgence.

What seems evidently clear to most all oil and gas market observers is that past marine seismic business models simply do not apply in this new market reality.  Even those with many years of experience in the marine seismic streamer sector didn’t foresee an impending collapse or its repercussions.  At the same time, while the price of oil may be a key incentive for marine geophysical exploration, success has never been a guarantee for providers of offshore geophysical services, even when oil prices were high.  While this current downturn may have turned out to be longer and lower than many anticipated, one major player, especially, seems to have been behind the eight ball in their strategy following the collapse.   Vessels are expensive to operate and that is why vessel utilization numbers impact earnings for vessel owner/operators.  This is also why vessels are taken out of operation and stacked.  Keeping vessels equipped for operations is much more expensive than storing at a dock.   The largest marine seismic streamer fleets prior to the collapse in oil prices were operated by CGG and Schlumberger’s WesternGeco (WG).  WG introduced new build Amazon-class vessels into the fledgling market.  CGG bought the marine seismic streamer business from Fugro Geoscience in late 2012 and gained capacity that way.  WG does not publicly disclose which vessels are operating. CGG now operates five (5) streamer vessels according to the most recent Q3 2017 report.  (CGG’s website displays four (4).)   One pure-play player had ordered four (4) humongous new build vesselsThe first two were put into operation prior to the collapse in oil prices.  They did delay the delivery of their final two new-builds.  What also perplexed some was management’s decision to also assume the Sanco Shipping vessel charters of now insolvent competitor Dolphin Geophysical.  This positioned the company to have the largest operating marine seismic streamer fleet.  Apparently, company executives were planning for resurgence in demand that never arrived.   The main point is that CGG and WG had reduced their fleets significantly long before their competitors decision to reduce their operating fleet to six (6) streamer vessels was announced during their Q3 2017 financials.  For a more complete view of vessel operations, Searcher Seismic’s SeisIntel™ application does track the global seismic streamer fleet activity.

With 4 vessels in the global spot market, it is important to strategically manage the vessel schedule and the global distribution. ~ Duncan Eley, Polarcus CEO, Q3 2017 Earnings Presentation


Even with all the effort which has been made by the industry, there are still too many vessels for the volume of activity which is being offered. ~ Jean-Georges Malcor, CEO CGG (Q3 2017)

Prior to the seismic streamer market disintegration, Polarcus and Dolphin Geophysical (Dolphin) operated relatively small seismic streamer fleets.  Both Polarcus and Dolphin competed exclusively in the marine seismic streamer market.  Dolphin was a relative new-comer to the market and also was anticipating growth opportunities.  Dolphin especially was affected by the dramatic decline in oil prices which halted deep water exploration programs.  In a growth market of opportunities, operating small fleets was actually a commercial disadvantage in terms of servicing global demand.  It costs money to move vessels to projects in what is termed transit costs.  Currently, the operating marine seismic streamer fleets competing in this market are more in parity such that no one service provider can really offer global coverage.  However, while the global marine seismic streamer vessel fleet has been greatly reduced in number, the vessels which remain in operation to service the global marine seismic streamer market are bigger and capable of towing more streamers.  The two humongous new-builds, Sanco Sword, and the two Amazon class vessels, all with greater towing capacity, were introduced into the market up through the beginning of 2017.  So, the number of geophysical equipment instruments in the water acquiring data has actually not fallen as drastically as the number of operating vessels.  In the current market, a global fleet which has new wide-tow streamer vessels actually benefits customers economically much more than it does the vessel owners.  The real impact on the market is that the current global fleet can complete surveys faster because it is composed of larger vessels.   But, this is only part of the picture.

Marine seismic streamer vessels are the principal asset and liability of marine seismic streamer data acquisition companies.  When Dolphin went into insolvency a competitor assumed its Sanco charters.  However, Dolphin had also been chartering vessels from GC Reiber Shipping (GC).  Vessel owner GC created a geophysical seismic streamer company,  Shearwater GeoServices (SG), from Dolphin’s remnant geophysical data acquisition and processing capability and talent.   In a robust market, vessels operate to generate revenue.  However, reducing the number of vessels operating is a way to reduce losses, since idle vessels cost money.  Vessels with no crew but with equipment are the flexible capacity.  Polarcus has bare-back charter leases on two of its vessels, but in certain respects maintained its fleet pretty well in through the downturn and posted some impressive vessel utilization rates.  SG essentially is back into Dolphin’s niche, minus the Sanco vessels but operating the Polar Empress.  One fleet dominates the wide-tow category with its four humongous vessels.  However, while Polarcus and SG fleets are still not capable of towing the same number of streamers, Polarcus and Dolphin/SG have actually managed to have towed some of the largest areal streamer spreads.  Initially, Dolphin achieved this through increasing the distance between streamers.  However, Polarcus and SG now offer wide-spreads with improved cross line sampling through their Polarcus’ XArray™ and SGs FlexiSource™ acquisition techniques.  This is a significant development that seems to attract customers in a low-cost maximum coverage environment.

Those aware of geophysical seismic data processing importance in the seismic data value chain know that whenever marginal data is acquired, it becomes the job of data processing techniques to remove unwanted signal (noise) and extract as much value as possible from the data.  Vessels are considerably more expensive to operate than computer systems applying complex algorithms.  Not so long ago, marine seismic streamer companies had to negotiate expensive time-sharing arrangements between vessels acquiring seismic data proximate to each other.  The air gun source from another survey could impact the signal being used to acquire data.  This seismic interference caused problems in further data processing and imaging which form the maps used in drilling for oil.   More capable computers applying complex algorithms can now be used to separate-out such seismic interference.  More importantly, taken to the next level, similar algorithms are now being applied to remove overlapping air gun source data from subsequent survey shots.  The common convention for seismic streamer data acquisition has been to use a dual-source, flip-flop, technique for efficiency.  The flip-flop method allows continuous data acquisition by allowing air pressure to develop for the next shot; shot àrecharge àshot.  However, being able to acquire simultaneous source data reduces the data acquisition time.  It also affects the source-receiver midpoint geometry and record length.  These parameters are what define the point being imaged.  Smaller vessels can tow fewer streamers but space them wider.  So, while the wide-tow pioneer holds the record for the most equipment being towed, Polarcus holds the record for towing the largest areal spread.

I think it’s pretty evident that the shallow water is going to come back a lot quicker compared to I would say an overall ramp in deep water activity. ~ Paal Kibsgaard, Chairman and CEO Schlumberger (Q3 2017)

I’d just like to mention that the reason why the winter season is going to be still — that’s our view, still difficult for the data acquisition business, is that we are still operating in the market which is over supplied. Even with all the effort which has been made by the industry, there are still too many vessels for the volume of activity which is being offered. ~ Jean-Georges Malcor, CEO CGG (Q3 2017)

Increasing the number of sources reduces data acquisition time and also the amount of equipment to manage during a project.  Acquiring seismic data with multiple air gun sources and fewer seismic streamers changes traditional geometry requirements.  It also places more importance on post-acquisition data processing needed to clean the data and also the forward processing algorithms applied for the new geometry.  This is significant, in my view.  In 2007 a major step-changing dual-sensor streamer was introduced into the market.   This broadband streamer technology became a commercial 3D acquisition offering in 2009.  This streamer is able to acquire dual-sensor (conventional hydrophone + particle velocity sensor) data, as is done with (older) seabed seismic acquisition techniques.  (These day’s seabed seismic nodes acquire mostly 4-component data.)  By combining dual-sensor data, broadband data is acquired.  WG introduced their 4-component streamer, IsoMetrix™, in 2013.  Other companies have now also developed and introduced multi-sensor streamer technology into the market.  These are amazing technologies and several articles have been written about the imaging possibilities possible from data acquired using multiple sensors.  The same can be said for advances in sea bed seismic technologies and techniques.  But, this articles focus is on the current marine seismic streamer market where near-term costs, and not necessarily the full downstream potential realized from their data, is prioritized.  Multi-component streamers, or even streamer depth manipulation acquisition techniques using single sensor (hydrophone) streamers, are operationally more expensive and demanding than single-sensor streamer acquisition  Having a large spread of multi-sensor streamers operating optimally requires attention and maintenance in-sea.  Multi-sensor streamers need to be kept clean, and this is additional risk exposure for all stakeholders.  Without debating data quality issues, multi-source techniques with reduced streamer exposure for wide spreads is another win for customers in need of cost saving operation strategies.  However, the problem still remains that towing large areal spreads is not as beneficial for surveyors as it is for customers who do not have to worry about keeping their vessel fleets working.

So, there still remains a marine seismic streamer vessel over-capacity problem for a combination of reasons.   In the current environment, cost is the priority because there is no immediate profit-making incentive.  Marine seismic streamer vessels are expensive to operate.  So, acquiring data must be as efficient as possible.  But, what exactly does efficient mean in this current market?    Fewer opportunities mean fewer vessels are needed.  More expensive vessels are completing survey more quickly for modest profit margins.  The marine seismic business is as competitive as any and has seen providers of these services come and go throughout the years.  Before the collapse, the oil price marker for deep water field exploration and development seemed to be set within the sector for oil prices needing to be above $70 USD / bbl.  But, geophysical exploration costs are a relatively small percentage of overall deep water field development.  On the other hand, carrying out geophysical exploration is a first-phase commitment made by operators of offshore leases.  Based on these dynamics, investment in deep water assets will be minimized until any substantive spending can show a positive return.  For this reason, deep water exploration will likely be one of the last oil and gas markets to return to growth.   This places pure-play providers of deep water geophysical exploration services, such as seismic streamer, in a precarious position.  The successful business model for marine seismic streamer data acquisition and processing in the future still remains unclear.  Obviously, the number of profit bearing opportunities is more when oil prices are higher than the base development cost threshold.  On the other hand, with oil priced below the base development cost threshold, there is essentially no near-term profit making incentives for frontier exploration.

The main incentive for operators to explore is concession commitments and to possess risk-opportunity data for analysis.  There may be profit making opportunities further down the line, in terms of what development costs are relative to projections for sustained oil prices.  However, even if the threshold oil price of $70 USD / bbl moves lower, oil from deep water assets will remain among the most expensive to develop.  Oil will need to be priced above the threshold for a sustained period before there is any real growth in demand for deep water seismic streamer exploration.  Also, when cost is a priority over time, an older and less expensive vessel operating longer can be competitive.  Finally, to top it off, even if the threshold price of oil has headed down because of improved processes and technology, deep water field development will continue to be some of the most expensive.  When oil is sustained over the threshold, then the market will first absorb the flexible and stacked capacity before there is any substantial increase in vessel utilization rates.  Bear in mind, the different marine seismic streamer service providers have varied commercial commitments and structures also.  So, a profitable project for one service provider may not be a profitable project for another.  The appetite for cost-efficient and time-efficient acquisition will not be lost by customers.  The diversity in what is offered to customers in combining both novel acquisition techniques with innovative data processing and imaging solutions will provide customers with an abundance of choices.  The marine seismic streamer sector will remain soft.  Currently, there still remains too much global marine seismic streamer vessel capacity in operation.  Because of the variety of solutions available, vessel utilization will not necessarily be distributed proportionally to the different service providers.  It will be driven on the near term cost value to customers.  The marine seismic streamer market may have passed the lowest point of the trough.  However, marine seismic streamer service providers will never see the kind of activity that existed before mid-2014.  Both the problems and solutions are very different now.

There is a lot of seasonality in the vessel market. So obviously, Q1 and Q4, is usually a very good period to pick up a vessel. ~ Kristian Kuvaas Johansen, TGS-NOPEC CEO (Q3 2017)

Speculative markets have always been vulnerable to illusion. But seeing the folly in markets provides no clear advantage in forecasting outcomes, because changes in the force of the illusion are difficult to predict. ~ Robert J. Shiller

The End of Wide-Tow Streamer Seismic?

Content Revised 13 November 2013 by Request of Company to Remove their Named Reference

Horse sense is the thing a horse has which keeps it from betting on people. ~ W. C. Fields

You cannot beat a roulette table unless you steal money from it. ~ Albert Einstein

In some East Asian cultures the number “four” is considered unlucky.  Whether a number is considered lucky or unlucky can depend on whether the number’s name sounds similar to other words with positive or negative meanings. In Japanese, the word for the number “four” sounds similar to the word for “death.”   Never do things in fours.  But, if you do, change the sound.  Instead the fourth floor, be floor 3A.  Perspective is everything.  The geophysical exploration service sector is known to be cyclic, and so perhaps market prediction is more like a game of roulette than straight poker.  Many marine seismic streamer acquisition companies have placed their bet on wide-tow and invested in expensive new-build seismic streamer vessel programs.  The real question is, knowing what we know now, is wide-tow streamer acquisition still a sound bet when the final count is made?

Anyone in the oil exploration business knows that even when applying the latest technologies and methods a little extra luck can’t be a bad thing, especially when the game is cyclic exploration roulette.  The predominance of the wide-tow streamer seismic acquisition model is established.   The industry has always bet on wide-tow marine seismic streamer acquisition, and vessel streamer tow capacity has steadily increased over the years.  Since the collapse in oil prices in mid-2014, once again explorers have had to confront the unpredictability in oil prices and sow losses from such bets.  Dolphin Geophysical entered the marine seismic streamer market in 2011 with the same heady optimism.  They entered into a charter agreement with Sanco Shipping ASA to take delivery of wide-tow capable Sanco Swift in 2013, as well as Sanco Sword in 2014.  Schlumberger’s WesternGeco also added Amazon Warrior in 2014 and Amazon Conquerer in 2015.  And CGG grew its fleet in 2012 through acquiring the Fugro Geoscience streamer fleet as Fugro decided to abandon this market sector.  Dolphin Geophysical folded in late 2015 and WesternGeco and CGG dramatically reduced their fleets following the crash in oil prices.  Most marine seismic streamer players were also betting on the wide-tow business model and planned their expansions and new build programs accordingly prior to the decline in oil prices mid-2014.  However, one player stands alone in only minimally reducing their fleet and even toking on new charters.

Table 1

Table 2

How wonderful that we have met with a paradox. Now we have some hope of making progress. ~ Niels Bohr


In the realm of ideas everything depends on enthusiasm… in the real world all rests on perseverance. ~ Johann Wolfgang von Goethe

The demand for seismic streamer acquisition broadband data was ushered into the market through remarkably engineering multi-sensor cables historically applied in seabed seismic operations into towed streamers.  But, multi-sensor streamers – towed cables – broadband is but one acquisition approach.  Other innovative geophysical exploration companies developed their own broadband seismic streamer acquisition techniques to serve the new demand for broadband.  The market would not allow a single proprietor solution.  The competitive market wants choice for acceptable solutions.  Advances in operational streamer control and positioning systems have also seen levels of innovation which usher in the practicality of refined traditional approaches to achieve seismic streamer broadband acquisition.  The traditional seismic experiment that has defined the market, and more importantly what customers request in the form of tenders, has remained less flexible than the innovative environment they are immersed in.  New ideas are often curtailed by the procurement bureaucracy which holds onto traditional solutions to solve new problems.  This is discussed with the blog post, Upstream Exploration and the Paradox of Choice (10-May-2015).  Crisis always upends norms, for better or worse.  Innovations in marine seismic data processing and imaging technology has also unleashed new approaches and possibilities.  Innovations outside the traditional boundaries of market sectors have now encroached on the market share of marine seismic streamer acquisition.  Most notably, this is seen in the improvements and innovations in seabed seismic.

The economics of marine seismic streamer wide-tow are easy enough to understand.  The principal cost of a marine seismic survey has traditionally been tied directly to the cost of operating the marine seismic (streamer) vessels.  There are often support vessels also employed to support the technical data acquisition operations.  This cost is colloquially referred to as the project “day rate” for operations.  Marine seismic streamer vessels must be powerful enough to tow both the seismic source arrays and instrumented cables – streamers – at the same time.  This is what makes marine seismic streamer acquisition so time efficient.  Narrow azimuth marine seismic streamer employs a single vessel in operations.  These streamer spreads cover a large area.  The larger the area, the more data that can be acquired in less time with a wider the spread.  So, the reasoning goes, if the vessel is operating, tow as many streamers as possible as long as the operation cost for the vessel remains is less than the earned efficiency benefit of time or money to the customer.  This is market dynamic written about in the blog post, Marine Seismic Streamer Time and Money 2016 (6-Oct-2016)This business model can be called the reduced vessel utilization model.  If most of the cost is due to vessel operation, then reducing the use of the vessel will reduce project cost.  This model implies an operational cost base balance (similar vessel cost base) and a growth market that also prioritizes time savings.

Seabed seismic operations have traditionally involved multiple vessels, at least one vessel for the seismic source (high-pressure air guns) and another to lay cables and record data.  The operations also were more time consuming.  Seabed seismic has not had the same limitations of bandwidth which towed streamer seismic has had.  (The frequency loss in streamer seismic is a product of the depth under the water surface which streamers are towed.)  Seabed seismic has acquired multi-sensor broadband data for a long time.  Seabed seismic data has not had the same issues of azimuth and offset limitations which narrow azimuth seismic streamer acquisition has because of the inherent geometric limitations of towing source and streamers together.  In seabed seismic, the sensors are stationary and the source moves.  Years ago, seabed seismic was mostly ocean bottom cable (OBC) operations.  Long cables were laid on the seabed and then retrieved following passes of the source vessel.  Nowadays, the seismic sensors can be detached from cables.  Individual nodes can be placed by smaller autonomous underwater vehicles (AUVs).  As day rates have moved upward for wide-tow streamer acquisition, much in part to the cost of operating the larger and elaborately equipped vessels, day rates and efficiency gains in seabed seismic operations are not as comparatively expensive as they once were.  Simply, seabed seismic is encroaching on the marine seismic streamer market share.

Cutting prices or putting things on sale is not sustainable business strategy. ~ Howard Schultz

When you start losing market share, it’s really tough to gain it back; you need the product portfolio and presence in many markets. ~ Hans Vestberg

The first seismic vessel I worked on was the 4-streamer Western Atlas (1998)The first ocean bottom cable vessel that I worked on was the Dickerson Tide offshore India (~2000)Neither of these vessels had a swimming pool.  To be fair, the wide-tow seismic streamer vessel did not have a swimming pool either.  But, the living conditions on that vessel were several grades above both the Dickerson Tide and Western Atlas.  I have never been on a Titan class vessel.  But, from swimming pools to ball courts, living conditions for rotation work assignments are likely much more comfortable and healthier than my first offshore experiences in the business.  Wide-tow streamer acquisition is most advantageous for large rectangular shaped survey areas with no obstructions.  Frontier areas.  Finding the technical experts to work on long projects offshore is made easier when living conditions are of a high standard.  Even this view is indicative of an expanding market in need of the most experienced professionals.  Those days are behind and not every survey is in such a frontier area.  Many explorers are interested in smaller surveys over mature fields with vessel traffic and offshore structure obstructions all around.  In these areas, wide-tow streamer acquisition is prohibitive because the spread must maintain a safe distance from these obstructions.  Project survey areas must be large enough so that streamers and their accompanying equipment doesn’t have to be deployed and retrieved too frequently.  So wide-tow marine acquisition is not always well suited for multiple smaller sized surveys.  In general, wide-tow capable vessels are more expensive to operate.  They are most profitable when operating at capacity.  This is where the time and cost efficiencies are realized.

The reduced vessel utilization model is customer focused and not vessel operator focused.  The benefit of completing surveys more quickly mostly benefits the customer.  At the end of the day, unused capacity is expensive and unsustainable in a normal competitive market.  Vessel utilization is sometimes shared publicly by vessel operators.  The real issue is capacity utilization as it relates to the cost base of the operating assets.  If 100 streamers need to be deployed at $10,000 USD a day to break even, then 80 streamers would need to be deployed at $12,500 USD a day to break even.  With only 50 streamers deployed, the break even rate would be $20,000 USD a day.  When margins are low and if the market is only paying $13,000 a day, the ramifications are that the operator will lose money.  Also, if the operational costs do not cover the financing commitments, which may actually be used to facilitate an artificially low operational cost base, the vessel utilization model is not sustainable.  The main problem with wide-tow marine seismic is that the bet was placed long before the wheels of the market began spinning.  The investment for large wide-tow capable vessels was determined before mid-2014 and no one – seismic vessel operators or license operators – could even predict the market which those vessels would enter.  License operators cannot afford to engage in frivolous exploration spending.  License operators also cannot really afford a future without a viable marine seismic exploration industry.  But, that does not mean that a pre-2014 global fleet has to return.  Technology always determines options.  The question is whether wide-tow seismic will deliver the solutions to license operator exploration problems?

Markets are shaped by the decisions made by the management of the principal market players.  The company with the largest marine seismic streamer fleet is betting on strong demand for wide-tow streamer seismic data acquisition.  It is clear that most marine seismic streamer vessel operators miscalculated their bets over two-years ago with their investments in new builds and subsequent stacking several vessels.  The industry once again was caught flat-footed when oil prices collapsed mid-2014.  The operational streamer count has not changed as much as the vessel count has since before the crash.  This is because seismic acquisition companies retain their largest and most productive and efficient vessels.  The wide-tow model still dominates the marine seismic streamer business model.

The volatility and uncertainty in the geophysical exploration sector driven by oil prices makes even more sense when people consider the high risk toleration of explorers and pioneers.  Such risk taking compels the industry to repeatedly pay the price of rash decision making driven by an uncertain market.  The main drawback from such risk taking is its impact on the health and safety of employees.  The unpredictable cyclic oil exploration market is exacerbated by the unpredicatable and chaotic responses made during volatile market conditionss.  These conditions  feed on each other.  In the end, the rise or fall of the marine seismic streamer sector will depend mostly on the decisions made by the leaders of companies within that market.  It is their intelligent decisions and steady leadership which determines enterprise performance.

The gambling known as business looks with austere disfavor upon the business known as gambling. ~ Ambrose Bierce

Resilience is all about being able to overcome the unexpected. Sustainability is about survival. The goal of resilience is to thrive. ~ Jamais Cascio


Riding the Wave of Uncertainty in the Marine Seismic Value Chain

Content Revised 13 November 2013 by Request of Company to Remove their Named Reference

What Will Customers of Marine Seismic Value Most in 2017?

Today the whole business is too much about procurement. It is very, very difficult today in the current circumstances to be in a position where we can value the technology, where we can value the innovation. At the end of the day [the] best value for money in the current circumstances means best prices, full stop. ~ Jean-Georges Malcor, CGG CEO

Opportunity arises for the prepared mind ~ Louis Pasteur (chemist and microbiologist)

In the recent article, CGG CEO: It’s All About Price , Jean-Georges Malcor assesses the current upstream O&G market environment for geoscience services.  When service company executives talk of price thresholds as the main determinant of customer choice, it points to a commoditized market environment for products or services.  In my blog post, Upstream Exploration and the Paradox of Choice (12-May-2015), I discussed the dilemma of O&G operator procurement practices which seek standardized solutions from multiple service providers.  When comparing apples to apples, choice can be reduced to just lowest price.  Reducing the complexities of project requirements through standardization of products and services is simpler, for one thing.  However, it also is a way of providing a level playing field for service providers to compete and reducing opportunities of favoritism.  Technological solutions become commoditized while operational health and safety, quality, and turn-around time become the differentiators.  The value differentiator from innovative technical solutions is lost within this procurement standardization processes.

In the past two years since the collapse in oil prices, service providers have been coming to terms with a prolonged period of time with oil prices below $70 USD/bbl.  The $70 USD/bbl price was the industries tacit price limit required to support profitable deep water project exploration and development.  Recent hedge fund predictions forecast oil rising to $70 USD/bbl by the end of 2017, as mid-November 2016 crude oil market prices were around $43 USD/bbl.  Norway’s Petroleum and Energy Ministry has recognized and become concerned over this new market reality as international companies are considering leaving Norway and selling assets to smaller, less financially resilient, oil explorers and private equity firms.  This has brought a warning to international companies that they may remain liable for the close down costs of assets in the event that new owners are not be able to handle operation expenses.  Oil and gas exploration and development market is well known for its ups and downs.  For the past two years, the industry has been trying to assess what kind of downturn this is.  Notwithstanding the geopolitics and technology differences that define each peak and slump in the O&G market, companies are coming to the realization of a prolonged period of low oil prices seems in the horizon perhaps more similar to the downturn and oil glut which occurred in the 1980s.

There was robust exploration and development following the OPEC instigated crisis in the 1970s, where there was over-supply and then a subsequent collapse in oil prices.   Between 1973-74 the real price of crude oil more than tripled. After declining slightly in 1975-78, it doubled again between 1979-80.  However, between 1981-85 the price of oil declined nearly 40% and then collapsed by nearly 50% during the first half of 1986.  This compares to the more recent crisis where international crude oil benchmark Brent fell 76% from June 19, 2014, when it traded at $115.06, to January 20, 2016, when it closed at $27.88.  The inflation adjusted average cost for the of oil from Q1 1974 through Q2 2015 has been calculated to be $53.12 USD/bbl.  However, if one studies a graph of oil prices over this period, because of oil price volatility, actual prices rarely match this average.  Nevertheless, the $53 USD/bbl historical average price is still ~25% lower than the $70 USD/bbl threshold thought to be needed for much of the commercially viable deep water field development.  Expensive areas to develop in both Asia and Africa will likely especially be affected in the near term.  This market environment therefore indicates that the industry must operate much differently going forward.  A paradigm change from the current business model is needed and this starts with how O&G companies assess their needs and value exploration and development in such a way to leverage innovation instead of standardizing it. 

There are four principles to understand about differentiation and the buying factors that go beyond price: They always exist; they have economic value; they vary by customer; and they change with time, because yesterday’s differentiators can be tomorrow’s commodity. ~ Dick Kallage, Differentiating in a commoditized market

Standardization leads to rigidity, and rigidity causes things to break. ~ Bill James

Rig counts are sensitive to price changes and generally excellent indicators of future oil production and general market health.  Operating rigs often represents how confident oil and gas operators feel about the exploration environment.  Rig count is also used to gauge activity levels for oil field service companies.  Global deep water drilling demand has experienced year-on-year decline since 2013, creating an oversupply of floating drilling assets and unparalleled idling and stacking.  This coincides in some ways with marine geophysical exploration, mainly seismic, which most often proceeds to mitigate risks for more expensive drilling campaigns.  During the Q1 2016, twenty-six (26) were stacked.  Almost one-hundred (100) have been stacked in the past 12-months.  About half of the stacked rigs are older and would have most likely been taken out of operation indefinitely.  However, about 40% of the stacked rigs are amongst the newest and commanded the highest rates.  For the past 18-months, my blog has been evaluating the 3D marine seismic streamer fleet as a measure of the health within the marine geophysical exploration sector.  Similar to rig count, many streamer vessels have been stacked since the downturn in oil prices mid-2014.  While the differences are many between rigs and vessels, the marine seismic 3D sector has also been stacking older vessels.  However, as a global fleet, the newer vessels capable of wide tow have been retained.  In my most recent blog, Marine Seismic Streamer Time and Money 2016 , I propose that the preference of customers hiring wide-tow capable vessels, which can complete surveys more quickly, is now more dependent on the day-rate whereby time constraints are less rigid in a sluggish and vessel over-capacity market.  Widest tow may not be lowest cost per square kilometer acquisition for newer and more expensive to operate vessels because time savings is not commanding the same premium it did in a robust exploration environment.

Malcor suggests that the last period of time the market was favorable was in 2012.  I disagree somewhat.  Fugro’s acquisition by CGG in early 2013 points to this fact.  Fugro had actually established a niche market in high-risk frontier exploration markets, such as east Africa.  Exploration opportunities had been on the decline to the extent that other players understood that they needed to compete in these high-risk arenas to keep vessels busy.  In 2010, new player, Dolphin Geophysical, entered the 3D marine seismic streamer market with the belief that this was a growing market.  Unfortunately, Dolphin Geophysical became insolvent December 2015.  Dolphin Geophysical entered into the low-cost end of the market.  They chartered their vessels from GC Reiber and just prior to their demise had agreed to charter two high-capacity vessels from Sanco Shipping ASA (Sanco).  In hindsight, Dolphin Geophysical was perhaps too ambitious in their growth predictions.  Like the industry, they did not foresee the collapse in oil prices mid-2014.  Dolphin Geophysical’s two Sanco charters were taken over by a competitor.  GC Reiber continued to operate their vessels through a Dolphin Geophysical affiliate.  Recently, GC Reiber joined with Rasmussengruppen AS to create Shearwater GeoServices.  This is an interesting marriage.  Rasmussengruppen AS operates tankers and marine transportation services.  In a current marine geophysical exploration market with razor thin margins, approaching cost savings from the vessel operations and support side makes sense.  Fuel and supplies are always issues for operating a seismic fleet. In fact, it is these costs which are the most expensive part of services offered to customers, as is related in day-rates.  Shearwater GeoServices will be focused on cost of data acquisition operations.  They will likely work to expand their data processing and imaging capabilities.  Clearly, there are geoscientists available to support this initiative in the current environment.  If Shearwater GeoServices can be a low-cost provider of data acquisition services, this may make them especially appealing in such a price-sensitive market.

One seismic streamer vessel operator has continued to grow their operational streamer capacity from pre-collapse levels.  While they have stacked older vessels, this has been done while taking on high-capacity charters and the construction of new builds.  Schlumberger’s marine seismic component, WesternGeco, commissioned two new build Amazon Class vessels that also entered the market in the depressed conditions.  No market player was without some form of optimism.  Both CGG and WesternGeco stacked multiple vessels.  Polarcus once commanded one of the smaller 3D seismic streamer fleets and has stacked only one of their 3D streamer vessels.  This is how the marine seismic streamer market players have panned out the past two years.  New builds have entered the market, but mostly vessels have been stacked reducing operational streamer vessels, and to a lesser extent, operational streamer numbers.  This is because by in large newer vessels were built to tow more streamers.  However, the time efficiency advantage decreases as the number of nominal tow capacity increases.  In other words, the benefit of towing 10-streamers over 8-streamers is essentially 25% reduction in time.  Towing 12-streamers over 10-streamers provides a 20% reduction in project time.  In a price-sensitive market environment, seismic company vessel cost base needs to be within the project time benefit range in cost savings.  It’s all about the cost to survey an area.  Broadband? Which kind?  Value enhancing differentiators are especially difficult to market for proprietary contract surveys which are often put out to tender with standardized guidelines used for awarding work.

Business is other people’s money. ~ Delphine de Girardin

Their new label became “private equity,” a name that turns the facts upside-down: A purchase of a business by these firms almost invariably results in dramatic reductions in the equity portion of the acquiree’s capital structure compared to that previously existing. ~ Warren Buffet on the evils of private equity.

Successful marine geophysical exploration, and subsequent drilling operations, showcase unparalleled scientific, engineering, technical, and operational prowess, to be sure.  However, as a business enterprise, geophysical exploration’s effective use of complex science and technology is constrained by the same principles as any company providing goods and/or services to customers.  This means it does not really matter whether the enterprise is involved in providing paperclips or satellite components.  Enterprises need to generate profit.  The question is how can the same equipment and business model paradigms generate profit after a substantial decline in the price of the target commodity?  In this respect, the success of marine geophysical exploration pursuits rests more so on the value that banks, private equity, and investors place into such pursuits.  The elegance and intricate use of science and technology is often lost in the complexity assembled within hedge funds and international tax schemes.  Dolphin Geophysical’s insolvency provided an equipment bargain opportunity for Polarcus.  It also resulted in TGS-Nopec and other players are expanding their multiclient data offerings.  CGG SA also told investors earlier this month that they are considering plans to restructure debt.  However, none of these financial maneuvers fundamentally change the marine geophysical exploration market itself, so much as help geophysical exploration companies continue another day or financial quarter.  The uncertainty for all new-builds is will they be able to generate the margins needed to accommodate their debt in only two years?  This would require a significantly more favorable market for marine seismic streamer services.

Since financiers may be dictating exploration terms as much as geoscientists, the market seems to favor the lowest cost base to deliver the stated requirements to fulfill base license terms and conditions.  There is no incentive to explore for $70 USD/bbl oil when Brent Crude is trading at less than $50 USD/bbl.  The cost of oil is the main driver for exploration budgets of operators.  In spite of the amazing data acquisition and processing / imaging technologies which have been developed in the past few years, the near-term future would seem to favor service providers with the lowest cost base and final price to accommodate the minimum contractual license commitments which operators have agreed to.  Even renegotiating contract terms and postponing exploration until a significant increase in return is foreseen may be the answer.  As a geophysicist who is enthralled by new technologies and used to prepare tenders for marine seismic/EM data acquisition and processing, I see a market that will not provide reasonable returns on the research, development (R&D), and deployment of such technologies lasting for some time.  The market does not seem to favor service providers getting their due return on R&D technologies, such as multi-sensor streamers such as WesternGeco’s IsoMetrix™ and even improved dual-sensor broadband streamer technology.  On the other hand, Polarcus XArray™ technology which effectively reduces operational exposure of equipment (extra source and reduced deployed streamers) while reducing acquisition time would be desirable in a cost sensitive environment.  This is how I see the market.  Geophysical service providers will be most effective if they can reduce the base cost of operations at the front-end of the value chain.  However, this places most pressure on enterprises which have invested heavily on new vessels and technologies that mostly accentuate their data acquisition focused products and services.  At the core is what solutions operators allow service providers to propose, especially within the proprietary contract side of the business.  Operators need to improve their procurement processes to better leverage service companies innovative solutions.  Simple and easy solutions may not be the best answer.

Even if oil does go to over $70 USD/bbl, this will not immediately impact vessel day rates significantly.   There is a lot of unused – stacked – capacity which would be able to enter the market when conditions change.  Essentially, an entire extra global fleet of marine seismic vessels are currently stacked.  They are stacked for a reason. If the vessels are sold or leased, then they could potentially enter the market as low-cost competition.  Obviously, the charter rates were not negligible to Dolphin Geophysical and are part of the reason why Sanco terminated the charters due to non-payment prior to Dolphin Geophysical’s insolvency filing.  Shearwater GeoServices, as a vessel owner, can enter the low-cost end of the market.  This is how Dolphin Geophysical started too.  Since most geophysical companies have significantly reduced fleets, the advantage of global fleet placement of vessels to reduce transit costs from job-to-job is more equalized amongst the different companies.  The problem with technology too is that it changes rapidly.  But, more relevant is that in a cost sensitive environment where vessel utilization is of principal importance, it is difficult to find customers to pay for much beyond the vessel cost base.  Acquisition or operation based data improvement is more expensive than post-acquisition data processing that may also enhance the quality and grade of acquired data.  With so much streamer vessel capacity currently idle, there will be no immediate or significant change in day rates for a period of time, perhaps even beyond 2020.  Any dramatic change in oil prices would initially absorb stacked vessels, especially the newer ones, back into the market.  Cost will continue to be the driver until there are prolonged oil prices above the $70 USD / bbl threshold.  My belief is that the cost constraint supersedes the time constraint in this market.  The main cost saving to O&G operators will come from lower cost-base vessels utilized in more operationally innovative and efficient ways.  Operational efficiency in acquiring data for less cost is how banker-led data acquisition will manage the plunge in oil prices.

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency. ~ Bill Gates

I think, particularly in our tech industry, this is an industry that has violent innovation and then commoditization, and it’s a cycle of innovation/commoditization. ~ Ginni Rometty

Marine Seismic Streamer Time and Money 2016


Content Revised 13 November 2013 by Request of Company to Remove their Named Reference

How the Market Has Changed and Where it is Headed After Q3 2016

If You Got the Money I’ve Got The Time ~ Willie Nelson Song

Today’s scientists have substituted mathematics for experiments, and they wander off through equation after equation, and eventually build a structure which has no relation to reality. ~ Nikola Tesla

In project management lexicon, there are three constraints which combine to determine the priorities, trajectory, and success of a project.  The triple constraint triangle legs are time, cost, and scope.  This triangle is also referred to as the project management triangle.  (Actually, the names of the legs of the can differ, as well.)  Fundamentally, however, the axiom holds that only two of the three constraints can be achieved for a given project.  If the requirement for the project is a high standard completed quickly, then the cost will be more.  If the requirement for the project is a fast time of completion and a low cost, then the scope or deliverable will be compromised.  Finally, if the scope requirement is high quality for low cost, the project will take longer.  This is predicated on the understanding that the constraints are fixed toward the goal and optimization to meet the scope requirements which fluctuates for each project.  The customer defines the priority of these constraints and because of this all grades of value creation are produced to satisfy the variety of customer priorities and capitalize on the current market.  The collapse in oil prices and their anticipated, albeit prolonged, resurgence has fundamentally changed customer priorities and how their interests are best served.  This is clearly the case with the marine seismic streamer market which is defined through the planning and execution of projects where equipment and personnel resources migrate from one project to meet one set of requirements and then to another project with different ones.  The market has changed dramatically and therefore so has the time and money equation.

Since oil prices plummeted in mid-2014, the current operating global marine seismic streamer fleet has been continually adjusting in pursuit of market stabilization.  Market stabilization would mean a global fleet of seismic vessels that would satisfy the global demand for offshore operator’s projects.  In such a market, operators would require enough seismic streamer survey services to keep vessels busy and allow service providers to make a profit.  (The industry is still awaiting this mythical balanced market.)  Truth is that dynamic markets driven by competition and innovation are always in flux.  Competition within the markets introduce new strategies and technologies, as well as new players.  The oil and gas industry is defined by boom and busts cycles.  A major collapse in the industry happened in the early-mid 1980s in the US.  However, there was not a substantial marine seismic fleet then.  Again, around 1999, there was also another down-cycle that affected marine seismic streamer vessel utilization.  So, the marine seismic streamer market has seen companies come and go.  In the past, companies have often absorbed vessels through mergers or acquisitions of fleets.  This had meant that the global fleet continued to increase overall while the number and names of service providers changed.  Technology improved, capability to drill in deeper water corresponded with more and larger survey sizes.  New vessels were introduced that could tow more streamer capacity and therefore complete surveys more quickly.  While oil prices topped over $100 USD / bbl in the expanding market, the low-threshold of $70 USD/bbl  was considered acceptable for growth.  Oil prices have remained well below $70 USD /bbl for over 18 months.

The market for marine seismic streamer surveys was expanding, which provided the incentive for new players and/or vessels to compete.  In this market environment, there was demand for marine seismic streamer services.  Also, new players and vessels were introduced which then provided operator’s more choices.  My first blog was posted 15-May-2015 and was titled The Seismic Vessel Over-Capacity Problem (originally posted on LinkedIn™ Pulse).  The article explains that too many marine seismic streamer vessels had entered the market which had already been changing prior to the collapse in oil prices in mid-2014.  Some market correction was inevitable when the rate of expansion and opportunities reduced.  New companies, as well as the established players, introduced new vessels, methodologies, and technologies.  However, in spite of the capital investments and improvements in capabilities and efficiency the profit margins for services decreased.  The time-cost equation for the pre-collapse market was built on a continuous areal increase in demand for marine seismic streamer services where time was the prioritized constraint.  The main expense for these services is the vessel day rate.  Essentially, all terms and conditions pivot around how many days a vessel will be needed to complete the project.  In this environment, increasing the vessel streamer tow-capacity meant that more area could be surveyed in less time.  However, there are different ways of looking at this.  The table below shows a rough estimate performance improvement with added streamers.  From Table 1, a vessel towing 10-streamers compared to a vessel capable of towing 14-streamers could  complete a survey in about 71% of the time.   Time is money.


In the future, instead of striving to be right at a high cost, it will be more appropriate to be flexible and plural at a lower cost. If you cannot accurately predict the future then you must flexibly be prepared to deal with various possible futures. ~ Edward de Bono

Obviously, the highest type of efficiency is that which can utilize existing material to the best advantage. ~ Jawaharlal Nehru

Another incentive to completing a project more quickly, of course, is that there is reduced exposure-time risks from delays.  There are some geographic areas where there are defined windows that only allow successful operations to acquire quality data that can be used for imaging the subsurface.  This may be because of weather, currents, or marine life migrations, to name a few.  Regardless, when streamers are operating, the equipment needs to be monitored and maintained.  Ideally, seismic streamer operations want to have customers paying for their vessels and streamers as many days as possible.  The geographic location of one project to the next is important because it costs both time and money to move vessels, equipment, and other resources from one location to another and start new projects.  This transit time is expensive, especially in a low profit margin environment.  Vessels are using fuel but mostly are not operating as seismic data acquisition platforms, which is their value-creation function.  In the expanding market, service providers fleet size mattered.  To reduce the expense of vessel transits project campaigns could be planned regionally.  For instance, there are always anticipated migrations southward from northern climes, such as the North Sea, to projects in the warmer and milder south each year.  Because of the extra cost due to transits, the expanding market also made it more difficult for companies operating smaller fleets to compete because of the costs incurred going to new projects.  A series of short duration projects would most affect service provider’s through additional transit costs. 

Offshore operators may not admit it now, but service providers were actually optimizing both the project time constraint and cost constraint prior to the decline in oil prices.  This was due to the hyper-competition brought about by the vessel streamer capacity that was being added into 2014.  In fact, several companies, including, WesternGeco (WG), and Dolphin Geophysical (Dolphin) all added high-capacity vessels into their operational fleets following the collapse in oil prices mid-2014.  (CGG had also acquired relatively new capacity through their acquisition of Fugro Geoscience prior to the collapse.)  Table 1 shows that the project time benefit from towing 12-streamers rather than 10-streamers (20%) is more than the respective gains of towing 14-streamers rather than 12-streamers (16.7%), and the actual gains are even less for 16-streamers versus 14-streamers (14.3%).   The new-builds added to the global fleet were high-capacity vessels, but each addition of two-streamers tow capability yields less efficiency benefit.  In a low-margin pricing environment tow-capacity offered a pricing buffer.  If the table is considered as cost rather than project time, then a vessel capable of towing 14-streamers had a 16% cost buffer over a 12-streamer vessel to work with.  Of course, there were increased operational costs with added streamers as well.  Aside from just the actual cost of the streamers themselves, the cost of peripheral positioning equipment which accompanies the streamers is significant.  Operating and maintaining larger spreads with a variety of specialized equipment adds costs.  Operationally, wide spreads require vessels with a lot of power to tow many streamers and also larger deflectors to maintain the width and separation of individual streamers during the project.  The main cost for marine seismic streamer operation are the vessels themselves.

The increase in the global fleet’s vessel streamer tow capability effectively reduced the duration of projects for customers.  However, the net-benefit of the additional tow-capacity is reduced as the number of towed streamers increases, especially when considering the cost of new streamer along with all of the required peripheral equipment.  The net-benefit is also reduced because of the operational and maintenance issues, but perhaps this is balanced out by less environmental exposure risks, especially in the realm of health and safety.  It is the equipped vessel which commands the rate.  This equipment includes the streamers themselves along with the positioning – navigation – equipment.  The seismic and positioning data needed for processing and imaging the subsurface is the customer deliverable.  This is what’s acquired with the vessel and other equipment.  As streamer-spreads have become wider and longer, equipment improvements in maintaining streamer and source positioning, along with the way such copious amounts of data are recorded and stored, have been simultaneously developed and improved.  The objective for all of these improvements is to acquire data which will provide information to direct drilling campaigns.  It’s about the data.  To this end, another problem that is exacerbated with towing wider spreads is the loss of near-offset data.  Seismic data is imaged by the mid-point between the seismic source (i.e., air guns) and the seismic sensors within the streamers.  As the extent of the seismic streamer spreads got wider, this mid-point increased as well thus losing the ability to image well between the source and front-end receivers, or near-offset data, needed for the imaging of shallow targets.  Also, in congested areas, fields with infrastructure such as drilling platforms, larger spreads may be problematic for maneuvering the vessel and streamers.

When our maps do not fit the territory, when we act as if our inferences are factual knowledge, we prepare ourselves for a world that isn’t there. If this happens often enough, the inevitable result is frustration and an ever-increasing tendency to warp the territory to fit our maps. We see what we want to see, and the more we see it, the more likely we are to reinforce this distorted perception, in the familiar circular and spiral feedback pattern. ~ Professor Harry L. Weinberg

Knowing where things are, and why, is essential to rational decision making ~ Jack Dangermond, Environmental Systems Research Institute (ESRI)


Time efficiency has paralleled cost efficiency in the marine seismic streamer acquisition market, thus incentivizing adding new-builds capable of wide-tow/large spreads.  In an expanding market with limited vessels, service providers could charge a time premium on their wide-tow capable vessels.  However, in an over-capacity market with several wide-tow capable vessels to choose from, cost efficiency is prioritized.  Cost efficiency boils down to the value of time versus the savings in costs.  If vessel cost base paralleled the project time gains in Table 1.0, then customers would be willing to pay 16% more in vessel costs for a completing the project 16% faster.  This would make time neutral, which may happen with a short project.  Since the collapse in oil prices mid-2014, cost has certainly become the more dominant constraint for most customers.  New vessels are expensive.  In reality, there is no parallel between cost and time, not even within a single seismic service provider, much less between competitors.  Cost base is essentially cost of operating a vessel.  Newer vessels likely cost more than older vessels.

One seismic players high-end price for a new-build (2013) high-capacity vessel capable of towing 18-streamers at 100 meter separation was in the neighborhood of $285 USD million.  The same company also signed a lease-back agreement for and older 10-streamer vessel for $80 USD million.  Table 1 shows that older vessel would take approximently 1.8 the amount of time to complete a project, but the cost (base) of the high-capacity new-build is about 3.56 the amount of the older vessel.  These new-builds were contracted when the market was expanding whereas the older vessel was leased-back following the plunge.  So, do the vessels that were contracted to be built in an expanding market still hold the same value after the collapse?  Probably not.  Nevertheless, vessels were purchased on the high-side of the curve.

After the market collapsed, service providers began to take the older and less expensive vessels out of the market and cold-stacked them.  They did not sell-them (and flood the market with low-cost competition).   Dolphin was the newest player into the expanding seismic market and the first to enter into insolvency after the crash.  Dolphin was expanding and had leased two new vessels, Sanco Sword and Sanco Swift, from Sanco Shipping ASA (Sanco).  Polarcus was able to purchase the streamer package from insolvent Dolphin for a song.  Cost is a priority.  Even though there are many fewer vessels in operation than there were at the start of 2014, several tabled projects have been due to prior license agreement commitments.  Offshore operators do not want to throw money away and likely want the “best data” that they can™.  However, as I wrote about in, Upstream Exploration and the Paradox of Choice, many strides have been made in both the acquisition and processing/imaging of seismic data.  The main milestone, in my view, has been the commoditization of broadband marine seismic streamer data.  Most of the innovative acquisition techniques are accompanied with designed processing and imaging.  In the world of competitive bidding, commoditization of requirements comes at the expense of differentiation such that cost remains a priority.   Even though service provider’s have reduced their fleet sizes, there remain limited deep water projects planned.  There needs to be a sustained period with oil prices over $70 USD/bbl for any real jump-start demand for marine seismic streamer surveys.  The global fleet had been growing faster than the rate of opportunities into 2014.   The fleet will continue to grow until Ramform Hyperion begins operations Q1 2017.  Streamer capacity utilization will be the most important performance indicator for service provider’s.  In a mixed fleet of 2D/3D and varied streamer tow capacity, vessel utilization alone is not enough to benchmark performance.  For instance, a 2D vessel working and a 12-streamer vessel stationary could be described as 50% vessel utilization.  The only benefit of a wide-tow vessel is if it is towing its maximum capable capacity.  If a vessel does not achieve that, then it is under-performing and not using its performance buffer.  A better indicator of fleet performance would be fleet streamer capacity utilization as mostly reflected by the use of the high-end and wide-tow fleet – the newer and more expensive vessels capable of towing more streamers.

Since cost is such a priority and so much of marine seismic streamer acquisition is directly related to the large streamer vessel, there is more interest in other marine seismic acquisition techniques, such as ocean bottom cable and nodes.  This reality has influenced an already staggering marine seismic market.  However, if time no longer is a premium or priority, these methods offer alternatives especially in areas where the operational time advantage is not as beneficial, especially congested areas.  More bang for the buck is what is needed.  Polarcus’ XArray™ reduces streamers and adds a source which reduces the tow-weight and drag from streamers for one thing.  The principle of reciprocity ensures that the point images between source and streamer receiver is the same as the point streamer receiver and source.  The ability to remove subsequent shot data in processing allows for additional sources with reasonably spaced shot intervals.  CGG can utilize less expensive older vessels to tow the source in the middle of the spread and accompany the streamer vessel in their TopSeis™ technique to help image near offsets.  So, there continue to be many new offerings for customers to consider.  However, many operators are skeptical of tendering new technologies in general because of the risk.  Strong EM pulses have been known to disable or destroy electronic systems.  This is what I studied in college.  Towed EM, which acquires data simultaneous to seismic data, would have fundamentally different electronic geophysical and positioning measurement systems operating at the same time.  What noise or interference one system imposes on the other would need to be evaluated.  Gravity data has already routinely been acquired with seismic.  Introducing multiple seismic sensors, now 4C with WG IsoMetrix™, into a towed streamer has showed the benefits of broadband data.  At the same time, each sensor introduces new types of noise, maintenance, and data processing issues.  Solving the same issues between EM and seismic means multiple geophysical data sets simultaneously and shows great promise.  In the expanding market, many new methods and technologies were developed.  The challenge in a cost sensitive environment is to employ the new technologies in an effective way to reduce the cost and risks to offshore operators because few will want to take additional risks with so much market uncertainty in the horizon already.

History in its broadest aspect is a record of man’s migrations from one environment to another. ~ Ellsworth Huntington

 There are three types of innovations that affect jobs and capital: empowering innovations, sustaining innovations and efficiency innovations. ~ Clayton M. Christensen

Waiting for the Rainbow in the Marine Seismic Streamer Market (3-August-2016)


Content Revised 13 November 2013 by Request of Company to Remove their Named Reference

Innovation, Differentiation and the Future of the Marine Seismic Streamer Market

Ah, I’d love to wear a rainbow every day, And tell the world that everything’s OK, But I’ll try to carry off a little darkness on my back, ‘Till things are brighter, I’m the Man In Black. ~ Johnny Cash, Man in Black

Reason is the natural order of truth; but imagination is the organ of meaning. ~ C. S. Lewis

An oil and gas operator company’s SVP of Exploration visits a convention where there are two geophysical service contractors.  Employees from one service contractor always tell the truth, and members of the other service contractor always lie.  The SVP enters at the doorway of the venue and needs to know how to navigate to avoid the service contractor that will provide a very costly and high risk project.  Of course, the SVP wants to choose the contractor that will allow the operator to plan a very efficient project that the operator company needs to be successful.  The operator’s future viability is at stake and rests upon the projects outcome.  At the entrance is a representative of each service contractor, but the SVP cannot tell which contractor each belongs to.  What question should the SVP ask to find the path to project success?  The SVP only needs to talk to one of the service contractor representatives.  What is important is that the SVP phrases a question such that the response will be the same from both service company representatives: a question that incorporates how a representative of the service company not answering would respond to the same question.  The SVP could ask one of the service company representatives: which way would the other service company representative tell the SVP to go to get to the booth of the honest service company?  If the SVP queries the representative from the honest service company, the representative would reply the other service company would tell you to go to the booth on the left.  If the SVP queries the representative from the dishonest service company, the representative would reply that the representative from the other service company would also tell the SVP to go to the booth on the left.  The SVP knows to visit the booth on the right, where the honest service company representatives are.  The key to risk mitigation is asking the right questions more so than just accepting the answers to the questions themselves. (Some readers may recognize the O & G operator company focused story as a rendition of the classic Island with Truth-tellers logic problem.) 

From reading the recent article, Seismic Specialists Sense Light at the End of the Tunnel combined with another article (not related to the marine seismic industry), Optimists and Pessimists, I considered how to frame an analysis of the current marine seismic market.  Optimism and pessimism are risk-based views that are both subjective and contextual.  Optimism and pessimism should both be fact-based views.  What may seem dangerous to one decision-maker may be viewed as an opportunity for another.  The substantive facts of the situation can be the same, but the viewpoint is different based on the separate realities and perspective of decision-makers.  Optimists see opportunity where pessimists don’t.  When the traditional market is not revealing opportunity, optimists will look to change that reality through some kind of market disruption. There is power in positive thinking, but the importance of thinking – strategy and planning – cannot be understated.  True optimism or pessimism must be grounded in reality and the strategic vision to navigate through that reality.  Hollow predictions based wholly on hope or despair are more lottery than strategic vision.

Within the article, Seismic Specialists Sense Light at the End of the Tunnel, the CEOs share their views on the future of the marine seismic streamer market These two companies have also been the focus of marine seismic streamer market analysis which I have written and posted on LinkedIn™ over the past year.  Both are pure play marine seismic streamer data acquisition and processing service providers with the same customer base, in many respects.  However, since the dramatic drop in oil prices the marine seismic streamer fleet has been decimated.  The majority of the reductions have come from the companies that once commanded the largest fleets.  CGG and Schlumberger’s WesternGeco (WG) significantly reduced their presence in the marine seismic streamer market and made the largest slashes to their fleets.  However, both still do continue to operate smaller fleets of marine seismic streamer vessels.  Dolphin Group ASA (Dolphin) collapsed into insolvency.  Dolphin had operated chartered vessels from GC Reiber and Sanco Shipping ASA.  Dolphin Geophysical is now a subsidiary of vessel owner GC Reiber.  BGP had operated a modest seismic streamer fleet in comparison prior to the price collapse.  They have maintained their fleet, but also like Schlumberger and CGG had been more diversified beyond marine seismic streamer services.  Marine seismic streamer vessels are expensive to operate and maintain.  The decline in oil projects precipitated by the decline in oil prices reduced the number of deep water exploration projects substantially.  This impacted the companies with the larger fleets especially hard.

The Global 3D Marine Seismic Streamer Fleet

While it is true that both serve the same customer base, there is no simple apple-to-apple comparison between these two companies.  While trust is an essential criteria for any SVP of Exploration (fictional or real) to consider when contracting a service provider, there are different solutions being offered to solve the operator’s particular problem which includes several specific components of consideration.  There is no simple binary – true/false – answer in choosing between two principal companies to solve a complex problem.  Add to this that there are several alternative solutions available.  For simplicity, however, these two companies can provide different perspectives of the marine seismic streamer market to extrapolate from.  The stark differences in how these two companies approach this current market are first apparent from looking at their fleets and different operational strategies.  The classic delta-shaped hull of the Ramform design, which defines one fleet, contrasts with the X-bow™ design of the the other fleet.  The one design looks made for wide-tow operations.  The back decks are equipped with many streamer reels.  (Actually, these reels mostly are to accommodate HD3D acquisition.)  In HD3D acquisition more closely spaced streamers are towed for a denser dataset.  Wide-tow acquisition is more so facilitated through the use of “doors” which are towed to the port and starboard of the streamer spread to maintain its width.  Polarcus actually has operated the widest, and largest by area, spread.  Polarcus’ Xarray™ solves the data density equation through employing fewer streamers and adding more sources.  Interference from the more closely spaced shots are removed through data processing.

Efficiency innovations arise in industries that already exist. They provide existing goods and services at much lower costs. They are not empowering. Efficiency innovators become the low cost providers within an existing framework. ~ Clayton Christensen

Progress is measured by the degree of differentiation within a society. ~ Herbert Read

Operating more streamers in the water has been at the crux of the marine seismic streamer operational efficiency equation.  Maintaining the proper relationship between source and receiver requires additional technology to maintain the geometry of the streamer spread.  Marine seismic spread positioning – navigation – has also developed over the years.  More streamers in operation also require more in-sea equipment to control the spread.  This additional equipment must be monitored and maintained during acquisition, along with the streamers themselves.  Prior to 2007, streamers contained single-component hydrophone receivers.  Two-component dual-sensor receiver changed this norm.  The combined attributes of the hydrophone and particle-velocity sensor is what ushered in the broadband revolution.  The reflected energy from the air-water interface cancels signal creating a notch (ghost-notch) of lost frequency content.  The ghost-notch is depth-dependent, but occurs at different bandwidths for different type sensors.  In response to the development of dual-sensor towed streamer technology, other contractors developed depth-varying hydrophone-only solutions employing the improved streamer control equipment.  Data processing techniques to accommodate the new geometries were also created with the improvements in computer power and algorithms. Now there are four-component streamers (WG/IsoMetrix™) in the market.  More equipment in the water has created more noise to affect the streamer sensors.  Multiple sensor streamers are especially sensitive to a greater range of signal-impacting noise and therefore streamers must be kept clean and free of foul/barnacles.  Larger spreads also require more fuel usage due to the added drag from more equipment.  Less equipment to manage in the water also can reduce HSEQ exposure risks.  Polarcus is reducing in-sea equipment and fuel usage and forwarding environmentally conscious efficiency.  Traditional players maintain traditional geometries and data-rich (two-component) datasets.  This demonstrates fundamentally differently solutions to solve customer problems.

There was over-capacity in the marine seismic streamer market prior to the collapse in oil prices.  However, profit margins were competitively lower than service companies would have wanted them to be to operate their expensive fleets.  Because of the expense of operating marine seismic streamer vessels, the survey vessels themselves became larger and capable of towing more streamers.  This translated into acquiring more geophysical data within less time.  The cost savings of operating an expensive vessel for less time could be passed onto customers.  This proved to be a winning solution when the price of oil was around $100 USD/bbl and there were a pipeline of exploration projects.  However, the equilibrium that the marine seismic streamer sector has been seeking for is there to be an ample number of projects being tendered or data sets required to keep the operational global marine seismic streamer fleet busy working for profit.  When oil prices declined, so did the required projects.  There were not enough projects to occupy a large global fleet which led to seismic streamer vessel owners cold-stacking (de-rigging and parking) vessels to balance the vessel supply with the declining demand for surveys.  There are less surveys in the pipe-line, while at the same time seismic streamer companies are asked to complete surveys more quickly.  This has led to innovations pressing the thresholds of operational capability, but also financial losses.  Completing projects quickly simple means there needs to be more jobs in the pipe-line for balance.  This has not happened.

Cold stacking high-capacity marine seismic streamer vessels and keeping them out of the market is not the same dynamic as if the vessels were not actually built and capable of operating within weeks.  There is so much flex-capacity in the market right now that it makes the supply side of the market elastic.  There will for some time be personnel that can be on-lined relatively quickly.  People who have worked five-week on/off vessel rotations for years do not forget what they once had mastered in months.  It can take months or years to design and bring a new-build into the market.  (CGG averted this waiting window through acquiring Fugro’s fleet.  In fact, much vessel capacity has been acquired through purchase of companies that had originally contracted for the new builds.)  Dolphin had only recently chartered high-capacity new builds before the price collapse and their subsequent insolvency.  WG had also introduced Amazon Class new builds into the market.  But, most notably, four high-capacity marine seismic streamer vessel new-builds were introduced into a more balmy and bright market outlook.  Several players introduced new builds into the marine seismic streamer market following the oil price collapse.  There remains a lot of idle capacity.

Confidence isn’t optimism or pessimism, and it’s not a character attribute. It’s the expectation of a positive outcome. ~ Rosabeth Moss Kanter

Pessimism and optimism are slammed up against each other in my records, the tension between them is where it’s all at. It’s what lights the fire. ~ Bruce Springsteen

The caution for a balanced market can be phrased in this way: when the market does turn the corner, there will likely not be a long a period of low survey vessel supply to allow higher price margins for a long enough period of time to recoup the substantial losses that have been incurred following the collapse in oil prices. (Sorry to be the man in black.)  On the demand side things are also not looking too positive, as there doesn’t appear to be much movement toward the magic market equilibrium either.  However, I believe that this business model has become less advantageous in a low project demand and high vessel supply environment that has defined the market since the collapse.  Further, the operating capacity has been reduced through the cold-stacking of some relatively new and high-capacity vessels.  These vessels are just looking for the right conditions to be re-introduced into the market.  Many of these vessels are specialty built for seismic data acquisition and can therefore be re-introduced and also meet stringent customer HSEQ requirements.  When money can be made from the vessels in dock, they will compete the current global fleet.  When the profit margins are very low or non-existent and simply minimizing losses, of course there is no reason to commission the vessels into operation.  Only when profits are again achievable will there be an incentive to re-introduce the idle capacity.  But, that point is not universal.  The cost-base for profit of one company may be very different for that of another.

On the project supply side of the equation, the overall O & G industry is awaiting stabilization in oil prices for a reasonable continual time-frame.  Oil prices dipped below $40 USD/bbl for the first time since April 2016.  Exploration has always been tied to oil prices during previous cycles.  Most exploration and field development in offshore-deepwater projects recently has been tied to prior offshore license commitments.  The oil majors have posted losses.  Their new reality is explained within Here’s How Exxon Mobil, Royal Dutch Shell, BP Are Affected by Low Oil Prices The article predicts that a recovery is not anywhere near.  The main customers of marine seismic streamer services are looking to cut costs and benefit from the synergies of acquisitions and merges.  In the past, companies have been able to offset losses in the upstream segment through increased activity in downstream segment.  But, there is an oil glut that has oil-tankers filled with crude waiting for some destination to offload the stuff!  The incentive for exploration under these circumstances is not too great.  When capacity is in stable demand, projects can be planned and tendered well in advance.  But, when prices are unstable and there is enough marine seismic streamer vessel capacity waiting for projects, operators do not need to tender and commit to projects too early.  In the past, depending on requirements, projects would be tendered 3-6 months in advance.  Now, there is less lead time coupled with uncertainty if there will even be a project tendered.  For the marine seismic streamer market to come into balance would require more projects to be planned for the upcoming Q3/Q4 2016 period compared to the Q1/Q2 2016 period.

As for the prediction of seismic specialists who also happen to be CEOs, the view of the market must be one that entices the investment of both capital and patience.  On the other hand, this analysis arrives from the viewpoint of an objective consultant who knows the industry but is not beholden to be a cheer-leader either.  The marine seismic streamer market has endured a tempest.  The destruction is visible in its wake: stacked vessel capacity, losses and debt, and disenfranchised workers.  There will be no quick or easy return to how the market was before mid-2014, just as the new-roof will never look entirely as the old roof did before the storm blew it away.  The market dynamic is forever different moving forward.  Both the business model requirements and technological solutions have changed.  Only prices need to stabilize within a reasonable (but, what’s reasonable?) range for over a quarter to be useful in the corporate planning world.  Demand for projects will be the bear-minimum until then.  On the other hand, operators will need to consider the variety of technologies and balance them with long-term objectives.  Oil companies also being short on capital will make them favor low cost-base service providers.  Marine seismic service providers will need to show the value that will be realized and change the view of the cost-base formula.  I predict a slow rise in oil prices which will translate on almost stable demand.  But, since new vessels are still being introduced, it will equate to slightly less demand for the global fleet.  The main concern for service providers will remain vessel utilization rates which will be stressed due to customer’s favoring operational efficiency with derivative being lower cost to them.  There is sun and a rainbow, but the clean-up is only just beginning.  As for which contractor the SVP of Exploration should choose?  Simple, the one that demonstrates trust.

After every storm the sun will smile; for every problem there is a solution, and the soul’s indefeasible duty is to be of good cheer. ~ William R. Alger

When did the future switch from being a promise to a threat? ~ Chuck Palahniuk 

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