Marine seismic industry exploring energy transition arena

As the world continues its race to a net zero future, identifying potential carbon and hydrogen storage sites as well as deep-sea mineral deposits will be vital to meet emissions abatement targets for 2050 and beyond.

Existing and future marine seismic data can massively improve assessments of the seabed for offshore construction and installations of renewable energy infrastructure.

2020 has turned out to be a very difficult year for the marine seismic industry which is traditionally linked to offshore exploration of oil and gas.

Almost a year into its prediction, Rystad was again on point when it said that, when it comes to offshore contractors, marine seismic industry would take the heaviest blow from Covid-19 and oil price slump.

The hardest-hit area was the acquisition of new surveys and companies with their own fleet of seismic vessels.

Today, one of the largest seismic players Polarcus is practically dead in the water with its fleet up for sale, while Axxis Geo Solutions has filed for bankruptcy.

Other seismic companies have worked hard to implement cost-cutting measures which included layoffs, furloughs, cold stacking of vessels and general cost reductions, as well as refinancing options to stay afloat.

While the oil & gas industry is still the main supporter of seismic technology growth, long-term projections for seismic industry and fossil fuels remain limited pushing seismic companies to target other alternatives such as acquiring data for the above-mentioned potential carbon and hydrogen storage sites and also stepping into offshore wind and deep-sea minerals arenas.

Major seismic data acquisition players are trying to remain positive with claims that even the most optimistic scenarios of energy transition from fossil fuels will still keep them in business.

In 2013, when the industry was at its peak, there were 59 seismic vessels operating worldwide. Today there are 15-16 seismic vessels, meaning that the industry capacity has dramatically reduced.

The industry is still in shock with Polarcus news. However, in reality, seismic vessel owners face less competition now that Polarcus is out of the picture – at least in the short term.

Norway-based PGS and Shearwater remain the two bigshots in the industry, with some competition firms from China and Russia.

Recent market adjustments could work in their favor if exploration spending picks up.

PGS short-term focus remains firm on oil and gas as an important part of the energy mix as the global energy transition evolves.

“The energy transition will just strengthen the importance of the strategic choice we have taken on being the integrated service provider,” said Rune Olav Pedersen PGS CEO during the SpareBank 1 Markets 2021 Energy Conference.

If the oil price remains at current level PGS believes there is still relatively enough room to bounce back from where the industry is at the moment.

Shearwater has secured 47 vessel months and $374 million to its backlog in the last 6 months, all coming from fossil fuels industry.

Long-term picture for seismic demand will see an upward for reservoir monitoring and renewables such as carbon capture and storage (CCS), which needs seismic data according to PGS Pedersen.

Shearwater also sees CCS as new option for the company when it comes to 4D monitoring for production optimisation as it already delivered 7 survey on the Sleipner field.

“We have a position in CCS which we intend to grow actively as well as offshore wind and offshore mining. The company is still in the early stages on review how to position itself in these markets,” said Irene Basili, Shearwater CEO.

The energy transition is opening new business opportunities for seismic players.

Some asset-light seismic companies have already started adjusting for the long term and embracing the energy transition.

TGS is a little bit conservative on the fossil fuels outlook and also believes that a lot depends on the oil price.

Its recent launch of New Energy Solutions was very much triggered by the energy transition. The move should position TGS as one of the leading data providers for industries actively contributing to the reduction of greenhouse gas emissions, such as CCS, deep sea mining, geothermal energy, wind energy and solar energy.

The Oslo-listed company, which committed to carbon neutrality by 2030, expects some five-ten per cent in revenue generation from this new business over the next two-three years, according to Jan Schoolmeesters EVP operations.

Ocean bottom seismic company Magseis Fairfield is also beginning to explore new market opportunities outside of oil and gas. Its new subsidiary Magseis Renewables will target the long-term market plays for OBN solutions in offshore carbon capture and storage (CCS), windfarm placements, and mineral mining.

“Majority of our client has committed to energy transition,” says Carel Hooijkaas Magseis Fairfield CEO.

“Magseis is now entering the renewable space by unlocking new markets. The company is looking to diversify its revenue stream by growing its multi-client business and entering renewables.”

One of the first seismic companies to take the step in the new direction was SeaBird with the launch of Green Minerals.

The company aims to win licenses to survey, explore and produce marine minerals on the Norwegian Shelf, thereby capitalising on a NOK 700 billion worth of resource potential.

“We anticipate that Green Minerals will generate revenues of more than NOK 4 billion per year when the first production system is up and running,” SeaBird said in its latest financial report.

Apart from the obvious energy transition, seismic industry is facing another transition and that is moving from conventional data acquisition methods to ocean bottom seismic (OBS).

The energy transition puts new challenges on all energy related companies, but it also presents exciting opportunities for innovation, Basili said.

The challenge for this industry now is to develop concrete, viable strategies with substance and content to meet these new markets arising from the energy transition.

Hooijkas stressed that the market needs to improve and that the customers need seismic services going forward and they need a healthy industry to continue to provide solutions for the years to come.

All in all, energy transition for seismic industry could turn out to be positive in the long term despite the new lows it has delivered.

Those with secure financial ground will remain focused on their key market in short term, while gradually setting the stage for new plays in offshore energy arena.