David J. González,
Business Development Manager, Multi-Client, Mexico
View from the Top

CGG: Taking PEMEX and Privates to Reservoir Success

By Peter Appleby | Thu, 08/06/2020 - 09:27

Q: How will COVID-19 change the long-term working processes of CGG in Mexico?

A: CGG has two main priorities today: the wellbeing of our staff, along with that of the communities within which we work, and the commitments that we make to our clients. We are continuing to take all possible steps to minimize COVID-19’s impact on our people and our business. In 2019, we made significant progress towards our transition to an asset-light strategy. One of the goals was to help the company become more resilient to challenging market conditions. This led to our exit from the seismic data acquisition market and our entry into a strategic partnership for marine seismic acquisition services with Shearwater GeoServices. As a result, we were well positioned for what became a very challenging market in 2020 based on the COVID pandemic. Our business is now focused on three main segments: Geoscience, Multi-Client Data and Equipment. Through our geoscience services, our exceptional people deliver highly specialized services backed by the latest technologies to our clients in Mexico and around the world. Of course, no one knows when the crisis caused by COVID-19 will end. So far, we have maintained business continuity for all our clients, continuing to provide excellent results with no reduction in services. For this, we received positive feedback from our clients.


Q: How has your exit from data acquisition changed the services the company now provides?

A:  With our new asset-light model we continue to conduct multi-client surveys, while subcontracting the data acquisition to other companies. We enjoy excellent relationships with these data acquisition service companies that own vessels and to whom we also continue to sell our Sercel geophysical equipment. In Geoscience, we continue to capitalize on our combination of global presence, regional understanding and local knowledge to deliver unmatched solutions for all types of geoscience challenges, based on our subsurface imaging, multi-physics imaging, satellite mapping, data management, and reservoir & geology expertise.


Q: How has CGG strengthened its three business groups for a stronger service provision?

A: CGG streamlined each of its three core business groups.  We set clear objectives aligned with our vision of becoming the geoscience partner of choice for the E&P companies in Mexico.  We do this by delivering our products and services to the dozens of international companies operating in different environments and basins in Mexico. In Multi-Client, we offer a comprehensive portfolio of multi-disciplinary, multi-client products, including the most technologically advanced seismic data library in the world’s key locations. In Geoscience, our multi-disciplinary teams provide outstanding service and unique solutions based on our latest technologies to tackle the complex challenges faced in natural resource exploration and development in basins in different regions of the world. Our equipment business, represented by Sercel, offers a full spectrum of systems, sensors and sources for seismic acquisition and downhole monitoring. This equipment is deployed in the world’s most challenging environments onshore, offshore, downhole and on the seabed.


Q: Can the COVID-19 impact be turned into an opportunity for CGG?

A: COVID-19 is a major global crisis and it is difficult to predict how the situation will evolve. We are in constant contact with our clients and know that in North America oil and gas producers have cut capital spending, at the time of writing, by about 30% on average, and reduced their exploration budgets by more. We also know that this reduction will last for several budget cycles, not just for 2020 but also into 2021 at least, as the market remains flat. Many NOC’s suffer from slow procedures, complex bureaucracies and rigid hierarchies, which have an impact on decision-making, but the coronavirus has forced many of them to break through these rigid systems and act quickly and decisively. On the plus side, we know that the technology and insight that CGG provides are fundamental to our clients’ success. Our digitalization strategy, based on collaboration with industry-leading platforms and environments, enables our clients to make faster and better decisions, by efficiently integrating our data, technology and services into their own digitalization solution. They can capitalize on our cloud technology to review and take delivery of either their proprietary data that we have processed for them or when they purchase our multi-disciplinary, multi-client products. CGG GeoSoftware is also taking advantage of the digital opportunities presented to our industry, and have enabled their products to run in the cloud and are progressing the benefits of flexibility and compute power scalability that it offers.


Q: How has CGG’s relationship with PEMEX developed over the last year and how is CGG extending services to the private sector in Mexico?

A:  Very recently, the Mexican Government changed its priorities. Rather than focusing on the 2.6MMb/d production goal by the end of 2026, it is now focused on increasing reserves. Our capabilities available to support this goal are second to none.  We have talked to different teams in different companies, not only in PEMEX. Although PEMEX has reduced its budget and closed new fields that it was previously trying to bring into development, it will need to maintain production and increase reserves. This requires exploration, and is precisely where CGG can help. We specialize in offering risk analysis studies that will help the company to explore the subsurface. Because we are long-term partners, we know what works for the NOC and can demonstrate our value proposition through the high-end technologies we have that will meet their needs, and by presenting papers and reports from successful case studies around the world. CGG has strong business relationships with private companies all over the world, and we leverage these relationships here in Mexico. CGG is constantly engaging with companies operating in Mexico. Our teams schedule regular meetings with their E&P staff to keep abreast of their exploration & production challenges, and we develop solutions specifically designed for their individual needs.   


Q: PEMEX is a long-term CGG client. How does PEMEX approach innovative technologies and digitalization?

A: Although I cannot of course comment on their strategy, PEMEX have seen the benefits of digitalization over the last few years, but the digital revolution is still in its very early stages in Mexico. Innovations such as artificial intelligence and machine learning will change the way PEMEX and other oil and gas companies work in substantial ways.

In the E&P industry in Mexico, improvements in safety and productivity will result from digitalizing both technical and nontechnical work in a way that automates 60 to 90 percent of routine work. This means improved safety both because fewer people will be at risk and because automation reduces the risk of human error.

Nevertheless, IOCs and NOCs have already started to use these new technologies although there are not yet many data scientists, statisticians, and machine-learning specialists working in Mexico. However, I expect that, in ten years’ time, PEMEX and other oil and gas companies operating in Mexico will be employing more PhD-level data scientists than geologists.


Q: What are CGG’s differentiators in the Mexican market?

A: CGG turns geophysical data into actionable information. Our subsurface imaging centers in Villahermosa and Houston apply novel methods and specialty algorithms to get the most out of potential field, borehole seismic and surface seismic data. Technologies such as TLFWI, Least-Squares Migration, Orthorhombic RTM and reservoir technologies are powerful differentiators that set CGG apart from the competition and are successfully applied in many projects in Mexico. Since 2015 and after Mexico’s Energy Reform was passed, many international companies started operating in Mexican basins, from the Perdido Fold Belt in the north, the Mexican Ridges offshore Veracruz State to Cuenca Salina del Istmo in the Campeche Bay. To image the complexities of some of these basins, several companies awarded processing projects to CGG. They recognized that complex geological areas call for the expertise and computing power of a leading imaging company, such as CGG, to make a difference in resolving difficult imaging challenges. The results speak for themselves, when you see how we can image such geological complexity with technologies such as TLFWI, Least-Squares Migration and others.


CGG is a global geoscience technology leader, providing a comprehensive range of data, products, services and equipment that supports the discovery and responsible management of the Earth’s natural resources to clients around the world and in Mexico. A long-term partner of PEMEX, CGG focuses on bringing cutting-edge technologies to support its client’s E&P objectives.

Peter Appleby Peter Appleby Journalist and Industry Analyst