Mario Kieling, General Manager, TGS, Brazil
Mario Kieling, General Manager of TGS, Brazil, discusses the growth of the recently arrived branch of TGS in Brazil, what this company offers to the industry that others do not, and where he hopes to see the success of TGS in the near future.
TGS has commenced its first 3D survey in Brazil, a 5,000 km2 area Northeast of the Pao de Açúcar field offshore Brazil. What are the steps that were taken to obtain this contract? Where does this project stand at the moment?
TGS opened an office in Rio de Janeiro in 2011 with the ambition to start new multi-client projects. As joint owner (with WesternGeco) of the largest 2D multi-client seismic database in Brazil, TGS had access to high quality geoscience data in the Northeast Santos Basin and areas close to the Pão de Açúcar field in the Campos Basin. The company applied its extensive geophysical and geological interpretative expertise to identify areas with significant hydrocarbon potential including some exciting prospects in areas from 2,000 – 3,000 meters water depth in the Campos Basin. The Olho de Boi 3D survey is a result of this comprehensive geoscientific approach to multi-client project development.
Acquisition on this 5,000 km2 project will take about five months to complete. The data will then be processed by TGS’ imaging services team and be made available to clients to provide valuable data prior to the anticipated 2015 bidding round.
This survey is being undertaken jointly with Dolphin Geophysical. What strengths do both parties bring to the relationship?
TGS has been very successful over the years by following its asset light business model. Rather than owning vessels, the company contracts or partners with acquisition companies that have access to vessels capable of undertaking seismic surveys. Dolphin not only has access to acquisition vessels, but also has a proven reputation. The data will be acquired by Dolphin’s new vessel the Sanco Swift. In addition to the initial geoscientific work, TGS is also responsible for the final processing of the data.
Data processing of this survey will use TGS’ proprietary broadband processing technology, Clari-Fi™. What competitive advantages does this technology grant TGS? What other characteristics of the company put TGS ahead of its competitors in Brazil?
Data processing is a particular strength of TGS. Our proprietary broadband processing solution, Clari-Fi, uses an algorithm, which enhances the bandwidth of frequencies in the data, thus providing a uniquely clearer image. In the Campos Basin, further refinement of data is important because the potential hydrocarbon reserves are not just in deep water, they are also far beneath the seafloor.
In addition to data processing, TGS has a significant competitive advantage in Brazil due to the size of its existing jointly owned 2D data library and its internal geophysical and geological interpretation expertise. When combined with our asset-light model, this allows TGS to focus on delivering the very highest quality multi-client projects.
To what extent has the multi-client model, often promoted because clients can ‘share’ risk, been used in Brazil and how has the wider model fared, particularly because Petrobras and the Brazilian government have first shout at a substantial majority of the oil reserves (75 percent according to Forbes)?
The multi-client model in Brazil is very different than areas such as the North Sea or Gulf of Mexico where there are many more companies involved and a track record of regularly scheduled lease rounds.
Success in the Brazilian market depends on regular bid rounds with the participation of many exploration and production companies. 2013 has seen substantial bid round activity in Brazil following many years of no activity. Going forward, the industry expects a more regular, consistent approach to these bid rounds with the next round anticipated in 2015. Of course, continued exploration success will also drive industry interest in the region.
As you have mentioned, the 13th round of auctions is anticipated to occur in 2015. Are you already preparing for the auction, and if so what does that entail? Have any lessons been learned from the 2013 auctions?
At the moment TGS is of the opinion that a comprehensive seismic data set covering an area’s geology in depth is something that operators will need for exploration success. The question in the market is how soon. In the meantime, TGS will continue to expand the depth and quality of its data library in key areas in preparation of bid rounds. TGS will closely monitor the details of auctions as they evolve within the government.
TGS offers reservoir-monitoring services. What are factors influencing their installation?
TGS offers a permanent reservoir monitoring (“PRM”) solution based around novel fiber optic sensing technology, which provides operators with data through the life of an oil field. PRM provides oil companies with a better understanding of the reservoir and enables improved recovery of hydrocarbon reserves.
An oil company’s decision to install a PRM solution will take into account both the benefits to recovery and production rates, and the cost of the technology (equipment cost, installation cost and the cost of maintaining the system through the life of the field). This is still a very new technology and it will take time before oil companies commence wide scale adoption of PRM. We believe that there is very good potential for PRM in Brazil. Petrobras, for example, believes that PRM is a very useful tool and have recently installed a pilot fiber optic PRM system on the Jubarte field.
Why did TGS enter the Brazil market comparatively later than other multi-client seismic operators?
Originally we entered the Brazil market working with partners, including WesternGeco, on 2D projects. We have been looking into 3D opportunities for several years, but we wanted to exercise all due diligence to ensure we were making a high quality investment. TGS is now ready to proceed with 3D projects after thorough geologic assessment and foresight into lease round activities. We are excited about the Olho de Boi survey and expect that it will be of great use as a reference for future projects.
I understand you did extensive reprocessing of 2D data. With the expansion of 3D surveying in Brazil, what is predicted to happen to the level of demand for 2D data in the future?
Demand for 2D data offshore Brazil will remain. 2D data provides broader insight into regional geology at a lower cost than 3D. Also, reprocessing of 2D seismic data using the latest imaging technologies can provide a significant enhancement versus the original data, further extending the useful life of this data.
What prospects do you see for the surveying industry in the next few years? There certainly will be more work but also a great deal more competition. Do you foresee the number of acquisitions and mergers heating up?
We certainly believe that the long-term prospects for our industry are very good. As exploration for hydrocarbons moves to more challenging environments and more complex geologies, the need for high quality seismic data becomes even more important. In the shorter term, it is hard to predict the ups and downs in what has historically been a cyclical industry characterized by new entrants and mergers and acquisitions during up cycles and more testing characteristics during down cycles. The beauty of the asset light multi-client business model is that TGS is able to perform strongly across all the cycles.
How does Brazil contribute to TGS’ overall revenue levels?
While I cannot share specific details regarding TGS financial information, I can share that the legacy 2D data library has been critical to many industry clients in understanding the region’s hydrocarbon potential. TGS views Latin America, and certainly Brazil, as an area of significant potential growth.
Having worked with WesternGeco as a global account manager for Petrobras at your last position for almost three decades, how have you found moving between corporate cultures?
TGS and WesternGeco are both great companies, but of a different scale. My role within TGS enables me to address every element of the business. TGS’ focus on multi-client means that I can spend most of my time working to establish projects that will ultimately deliver the highest value data to multiple customers. TGS is building its foundation here in Brazil and I see significant growth opportunities in the future.