Irian Sitorus Pane – General Manager, Quest Geophysical Asia, Indonesia
The general manager of one of Indonesia’s more versatile geophysical and seismic study outfits discusses the stiff competition in a local market somewhat insulated by the drop in oil price and why the smart money is on operating in the ‘transition zone.’
It’s the 10th anniversary of Quest, can you give us a sense of the milestones the company has achieved since its founding?
Our biggest milestone in these ten years has been the move to the transition zone. Before we only conducted on-shore operations, but in 2014 we were able to work in the transition zone offshore for the first time. Since then we’re trying to expand internationally into India and perhaps also Vietnam, where we have started bidding for a few contracts.
Coming from Elnusa, which is a local powerhouse in the geophysical realm, how is it to work for a smaller, but perhaps more versatile company?
In Elnusa, I was required to go through a lot of people to make decisions. The managerial structure was very cumbersome and hierarchical and it could take a long time to get approval. In Quest the chain of command is much flatter which makes us much more agile and responsive as an outfit. There is only one person above me to report to, so I can explain the course of action which I feel is right and then the end decision is made very quickly. This gives us a far greater flexibility in responding to situations and opportunities, and is of course more pleasant for me as well.
What are some of the main projects Quest is undertaking now?
We just finished a large project in Kaimana, with working in the seismic transition zone I mentioned. Currently we have a small project using gensets, which are engine generators, to provide power supplies to the well. We’re simultaneously working in seismic acquisition and in power supply to wells. We are also looking to extend our data processing capabilities. Of those, I would say that seismic acquisition is the priority as there is a lot of offshore potential in Indonesia. Where we see a niche is in the shallows between the land and the deep-water resources. Indonesia only possesses around 20 percent data coverage of that zone, so Quest has made it its business to try to fill that need and map these areas more completely and accurately. Although there is a lot of activity in deep-water, it requires a hefty capital to conduct the seismic studies so we leave that to the larger players.
Finally, we are just starting to move towards Enhanced Oil Recovery (EOR). The problem in Indonesia is that the country possesses a lot of wells, but we can currently only recover around 60 percent of the oil from them. EOR could boost that significantly and thus prove very profitable.
Indonesia has a long-standing problem in productivity declines, which is not just about exploration but also due to not being able to extract more from existing wells as you mentioned. What capabilities do you have, or are you looking to acquire to present a solution to this?
We will combine seismic with EOR techniques. Once you know the exact type of well, you can conduct a very efficient type of EOR. Harnessing seismic study techniques, we can very accurately map the subsurface of the well, which allows us to recover much more of the oil than is possible even with standard EOR if you try to go in without those accurate maps.
It seems that you are very much at the center of a shift which is occurring at a global scale, where in the past geophysics was all about finding where the oil is, whereas now it’s much more about asset optimization. Do you agree?
Most definitely. This becomes ever more the case as oil companies start to try and develop unconventionals. In many cases you know where the reserves are, but it is about finding the sweet spots, the precision points, where it will be best to drill. We are at the forefront of this shift, and I think it is, as you said, representative of what is happening in the wider world. We have examples in Indonesia of giant fields comprising 30 wells or more that produced well for 20 years after which production dropped off dramatically. However for many of these legacy fields the percentage of extraction has been a mere 30 to40 percent. With our finely tuned technologies, we can know exactly what is happening in the subsurface, allowing us to assess the exact condition of the wells and enabling our clients to prolong the lifespan of these legacy fields.
So the core function of the geophysicist is changing. This is already happening in the Middle-East, where companies are conducting high-density seismic studies (10,000 channels) allowing them to observe the condition of wells after 20 years of production. Combining this with EOR allows them to deliver another 40 percent or so out of the well.
We’ve established that being a small company allows you to remain nimble and react quickly, but in terms of technology and competition, how do you keep yourself at the forefront of the industry?
In terms of technology, we are all deploying the same sorts of technologies, bought from Sercel for example. But the geophysics market is very crowded in Indonesia. We have prestige international and national brands such as CGG, PGS, Elnusa as well as smaller specialists such as Tesla which focus exclusively on a single function such as the data processing side. Our advantage comes from our profound knowledge of the local market. We are very good at managing the government, the local partners, all the way down to the regional level. At the end of the day having this sort of rapport proves key. Having these connections at a regional level allows us to work more efficiently, using well-managed indigenous sub-contractors which allow us to offer very competitive prices.
How is the Indonesian geophysics market at the moment? Globally it is a very difficult time for the sector, but when we talked to Tesla, they said that because the geophysical market is so tightly managed here and so very heavily regulated by the state that the local sector remains fairly insulated from the effect of the oil price slump. Is Indonesia’s geophysics market more a question of business as usual rather than crisis management?
There has certainly been a prolonged slowdown in seismic acquisition. This is because exploration doesn’t directly make money, and the belt-tightening is being felt most strongly in that area as a result. But for the processing centers we are ironically seeing an increase in demand. That is an area which is relatively inexpensive, but does offer returns. It is a good example of today’s straitened times in which many oil companies are trying to achieve more with less. There is a lot of potential for our techniques to make businesses more efficient and optimize their performance so we can, to a certain extent, piggyback upon the new industry-wide willingness to concentrate upon efficiency gains.
In terms of human capital, how do you go about finding the best geophysicists and attracting them to Quest?
That is not a problem for us right now. As you said, it is a difficult time for the industry globally and many capable people have been laid off. Because of that we are attracting skilled personnel from all over the world to apply for contracts with us. We have had applications from South America, China, and the Middle East so it’s a good moment for companies like ours to harness that expertise out there and upgrade our human capital base.