Santiago Rivero
Vice President México
Sea & Land Global Group
View from the Top

Virtual Technology Saves Big on Exploration Costs

Wed, 01/21/2015 - 09:14

Q: As a provider of exploration technology, how has Sea & Land’s R&D focus evolved over time?

A: Sea & Land is an integrated service provider. Our business began when the company’s founder, Paddy Franks, decided to seek more efficient technologies for the exploration of hydrocarbons. Knowing the limitations and costs of the drilling processes, he identified several technologies based on electromagnetism. Currently, there are different technologies that use electromagnetism based on the same principle as seismic, which emits a wave and receives a signal that has to be interpreted to get an idea of what lies in the subsoil. Our technology is based solely on reading this data and has become our company’s flagship for two reasons. First, it has enormous potential because, even though it is not a new technology, it is not very common. Second, our technology can help minimize exploration costs.

Q: How can Sea & Land help address the most common exploration challenges for oil companies?

A: A company that wins a tender does not know for a fact if there will be hydrocarbons in the assigned area. First of all, our technology can identify large masses of hydrocarbons, either from a helicopter or a satellite, through what we call Air EDST. We highlight the location of the hydrocarbon reservoirs in a map, then we focus on the spots with the highest concentration of hydrocarbons and make a triangulation. During a second phase, our InGround EDST technology, also known as Virtual Drilling, allows us to identify and quantify the hydrocarbons. InGround EDST allows us to go down to a depth of 6,000m, identifying the types of rock found along the way as well as the location of masses of hydrocarbons, either gas or oil, while also providing a very close proximity of the oil’s API. In addition, by using virtual wells we can triangulate the information and quantify the amount of hydrocarbons in the subsurface.

Q: How do Sea & Land’s advanced remote sensing, nonseismic geophysical, and geochemical methods help to minimize exploration costs?

A: If we can save a company six months of exploration activity, then expenses will decrease considerably, allowing companies to start generating revenues sooner. The average cost of seismic surveys ranges from US$15,000-30,000 per linear kilometer, depending on the type of terrain. Our Air EDST technology costs US$15,000 per square kilometer. That is a significant difference in price. As for drilling operations, traditional technologies cost between US$1-5 million for onshore fields, and up to US$10-15 million in the case of offshore fields. For deepwater operations, the price increases significantly. Virtual drilling is significantly cheaper for both onshore and offshore operations than actual drilling activities.

Q: Why is virtual drilling technology not yet widely used?

A: The main reason is that this is not American technology. The US is remarkably good at marketing its technologies and other options tend to be one step behind in terms of market presence. Traditional technologies that have been used for longer have accuracy levels of approximately 30%. Our technology can have up to 98% accuracy, but companies that have been doing things in a certain way for 30 years tend to stick with familiar methods. However, a similar technology called SMGS has recently been introduced to PEMEX, which means Mexico is now familiar with virtual drilling. Over time, it will become more efficient and widespread. I estimate that in the next five years, 70% of the market will be using this technology.

Q: What challenges is the company facing to introduce this innovative technology to Mexico?

A: Over the past 30 years, PEMEX has been entrusted with conducting all exploration activities in Mexico. This barrier has now been broken and a competitive market ensures that players must continuously improve their game. We are in the process of certifying our technology in Mexico. Before CNH was created, the certification process for new technologies was less transparent and the steps were complicated. Today, those procedures have been clarified, although CNH stipulates that companies must have more than five years of experience in order to obtain the certification. Companies that have less than five years of experience may form alliances with players that have been in the market for over five years in order to obtain the certificates. This particular scenario would suit our situation. As integrators of technology solutions, we can bring these technologies into other markets like Russia, Ecuador, and Colombia, among others.

Q: What is the current market perception of Mexico as a destination for foreign exploration technology developers?

A: One of the most positive things about the opening of the sector is that PEMEX will not be our only client. All companies that win contracts in the bidding rounds are now potential customers. PEMEX will still be our main client, but we may also have Pacific Rubiales, Perforadora Mexico, or any consortia formed between IOCs and Mexican companies. The law also allows companies to claim onership over the collected data, so we are in the process of raising funds in order to carry out studies that we may sell later on.