SPECIAL REPORT: Point of View-New SEG president takes business view of technology

Discussion of seismic technology with the new president of the Society of Exploration Geophysicists doesn't go far before business topics intervene.

The important threshold for any technology, says Mike Bahorich, Apache Corp. executive vice-president, exploration and production technology, is where it starts to make money.

Here's his assessment of four-component (4C) technology, which samples reflections of shear (laterally oscillating) waves as well as the more commonly used compressional (longitudinal) waves generated by a seismic impulse:

"It's a great idea. It's a great technology. We know that it works. But right now it's too expensive for most applications. And the reason it's too expensive is that we haven't seen enough innovation in the field acquisition side to bring the cost down."

For Bahorich, who has patented two technologies used extensively in petroleum geophysics, innovation is as much about profitable application as it is about invention.

Three dimensional (3D) seismic methods, for example, were "prohibitively expensive" when they were new. But innovation—including the development of field acquisition systems and powerful computers—lowered the cost.

"Bringing the cost down is one of the most important aspects of innovation," says Bahorich, who received the 1998 Virgil Kauffman Gold Medal from SEG for a technology he patented called Coherence Cube. The technology reveals stratigraphic features and highlights fault surfaces in a 3D data volume. Bahorich also patented interval-volume attribute mapping, a feature common on geoscience workstation software platforms.

R&D concern

The new SEG president worries about the industry's ability to sustain innovation. Research and development work has shifted from operating companies to geophysical contractors, for which business conditions remain, in Bahorich's words, "very difficult."

Unable to spend heavily on R&D, service contractors increasingly buy technology from small technology developers, which typically have trouble raising capital.

"The overall effect is going to make it even more challenging for innovation," Bahorich says.

But the need remains strong.

"Any technology that makes money, we want to be using," he says about Apache, which he joined as chief geophysicist in 1996 after working with Amoco Corp.

With experience in both types of company, Bahorich sees a difference between the approaches major and independent producers take toward technology. He describes the difference in terms of an S-shaped curve plotting a technology's value as a function of time: low at first, then rapidly rising to a plateau, where value remains constant until a higher-value technology emerges.

"The majors will often spend a bit of money on the part of the S curve where you know the technology is not going to make you money right then, in hopes it'll get up the curve later.

"What independents tend to do—certainly what we tend to do at Apache—is watch it very carefully, and the moment we feel like it makes money we get all over it."

Because technology follows this pattern, Bahorich notes, methods that will become profitable 3 years from now probably already exist.

"Technology S curves in our industry are long because it takes time to develop technology, to make it cheap enough that it's cost-effective."

Areas of advance

Bahorich cites point-receiver acquisition as an important area of seismic technology advance. New hardware allows for the recording of a seismic trace for each geophone; formerly, a single trace came from a group of electronically connected geophones.

The new system replaces traditional cables with a computer network and collects much more information than its forerunners could. Signal-to-noise ratios improve as a result, and, notes Bahorich, "It's going to bring down the cost per trace substantially."

Another area of rapid advance is imaging in difficult areas, where "the payoff can be very significant." Wave equation migration, for example, has improved the prestack depth migration methods geophysicists use to generate subsalt images. And tomographic imaging of the near surface for statics corrections, while mature as a technology, still provides "tremendous benefit."

Bahorich also cites visualization as a rapidly progressing frontier of geophysical technology.

"One of the big drivers is that the cost of storage, CPU cycles, and network transmission has been coming down an order of magnitude every 5 years," he says, pointing out that much of the visualization improvement comes from the video-game and medical industries.

The same trend—falling costs of data storage and transfer—has returned some data-processing steps to operators. Many of them in the early 1990s began to rely as much as possible on contractors for processing. They often didn't see data until after a step called stack, in which processors arithmetically combine traces, partly to reduce data loads.

"I think taking the data prior to stack is what's required in this day and age," Bahorich says. Operators, he explains, can improve seismic interpretation by creating several data volumes suited to different purposes. "Computing storage costs are so low compared to what they were 5 years ago that it's now very feasible."

Seismic careers

Despite current business challenges facing both contractors and operators, Bahorich calls the career outlook for young geophysicists "very good."

Part of the reason for his optimism is a retirement surge likely to begin in about 10 years, which will create management opportunities for geophysicists now beginning their careers.

"It's a good-paying field," Bahorich adds, because companies recognize more than ever the value of geophysics.

"The software and hardware tools are so much more powerful now than they were in the past that a talented geophysicist can accomplish a lot more work than was possible in the past—which has been recognized now with some very good salaries."

According to an SEG report, the worldwide median salary for geophysicists is $85,000/year. In the US, experienced geophysicists make $90,000-130,000/year.

Geophysics, Bahorich notes, "can help you pick the best drilling location. That's generally the key to profitability."

By improving operations, he explains, a company might trim "a few percent" off operating expenses.

"And that's great. But for the big swings of the bat, often geophysics plays a pivotal role.

"You drill a well and find $20 million worth of NPV (net present value) in a single well. Almost always, geophysics is involved in that."

Where does the SEG president get the business discipline he brings so consistently to technical subjects? The answer is straightforward.

"We're measured every year, and our bonuses are paid at Apache based on our results for that year. We try to employ technology and science that makes a positive benefit in a fairly short time frame because it rewards our shareholders and, to be honest"—he pauses and smiles—"we like to get bonuses."