Input/Output, Seismic shift

Manufacturing in Action, Source : The Manufacturer US

With state-of-the-art technology, a third-party partner managing its supply chain, and the biggest order in history for seismic equipment, Input/Output is quaking the foundation of petroleum exploration, Gary Toushek discovers

There’s a whole lotta shakin’ goin’ on at Houston-based Input/Output (I/O). The seismic imaging solutions company provides not only industry-leading equipment that enables petroleum exploration contractors and geoscientists to identify and measure geologic formations that indicate nearby oil or natural gas, onshore or offshore; it also offers customers full-scope exploration solutions, encompassing the design and planning of seismic surveys, hardware and software provision, and the processing of the acquired seismic data using traditional 3D, time-lapse 4D, or full-wave multi-component technology. Its toolkit includes solutions for land, marine, and shallow transition areas, such as shoreline, swamps, marsh, and jungle.

I/O has come a long way from its establishment in 1968, when Aubra Tilley began a firm to develop and manufacture seismic equipment for the petroleum industry. Initially the company sold components that enhanced and complemented the seismic acquisition systems of companies such as Texas Instruments, Sercel, and GeoScience, but as technology improved and computers played a larger role in oil & gas exploration, I/O began to develop its own sophisticated products for explorationists and contractors.

In 1988, I/O introduced System One, a land seismic acquisition system capable of recording more than 8,000 channels of data; it suddenly made 3D seismic surveys cost-effective on land and dramatically increased exploration drilling success ratios, producing far more effective field drilling and development programs for oil and gas companies. Evolution of its acquisition system line continued, other product lines were added, especially to service the marine acquisition sector, and in 2004 I/O acquired GX Technology and Concept Systems Ltd., which provided it with market-leading subsidiaries in the areas of advanced seismic data processing and seismic software.

“Today our corporate thrust is to become a full-scope solutions provider,” says Gordon Smith, vice president of operations of I/O’s land imaging systems division. “We offer up-front services in terms of consultation for a customer’s projects, hardware and software to do the seismic surveys, as well as data processing services to do the analysis of the data the customer has captured.”

In late 2005, I/O released its revolutionary FireFly product, the world’s first cableless system for full-wave land acquisition. Full-wave is a seismic survey where single-point multi-component sensors are deployed in a wide-azimuth design to record the full seismic wave field with high accuracy; maximum frequency bandwidth is captured that, when processed using advanced techniques, delivers a higher-resolution image of the subsurface. FireFly combines technologies such as Bluetooth, GPS, and radio frequency to provide comprehensive results while offering contractors flexibility and safe operations in the field.

“With FireFly, you can now plan differently; you don’t need a grid approach to the topology you’re dealing with,” says Smith, “and you can be a lot more sensitive to the topology. For example, a 55-meter cable weighs about 50 pounds, and a few thousand cables are usually strung to set up a grid such that the entire spread might weigh

50 tons or more. With a cableless system, you don’t need to laboriously haul all that weight around; you don’t need trucks driving around the environment, so it’s an eco-friendly, green approach. Moreover, you’re capturing a better image of the subsurface, much in the same way that high-definition TV provides a better image of a movie or television program. In our case, however, it’s not just for enjoyment purposes; the better image might save an oil & gas company $100 million on a poorly placed well.”

The first prototype study was done for BP at a major gas-producing asset in Wyoming. Deployment occurred via helicopter, with a helo bag containing six FireFly units and associated components lowered to a location determined by GPS; then the FireFly units locked into their own GPS coordinates, and the study was done with only people on the ground. No caravan of vehicles or tons of equipment disturbing the landscape, thus eliminating the logistics of heavy, labor-intensive activity. “Using this system cost-justifies the use of a helicopter to get people quickly to a location to perform the seismic study more efficiently. It’s also health and safety–focused, a big issue with oil companies.”

When he arrived at I/O nearly a year ago, one of Smith’s priorities was to get material spending under control, since component parts are a large portion of a product’s cost. The company outsources all its production to seven major contract manufacturers (CMs) in the US and overseas, all of them ISO compliant or certified and lean/Six Sigma oriented. He instituted the concept of using a third-party materials management organization, Global Sustainment and Component Solutions, Inc. (GSCS), to augment I/O’s purchasing group and manage the entire supply chain—sourcing and buying material, having it delivered to the CMs, and having the final product delivered to customers.

So far GSCS has set up arrangements with the two largest CMs (that make ground electronics), and the system is working well. “I’m purchasing materials through GSCS, which is using my buying power, and at the same time I’m using their buying power because they perform this function for other clients, so we get the benefit of larger volume buys, as well as the relationships with big suppliers. And I have the advantage of a single point of contact with them.” Smith considers GSCS an alternative to expanding his purchasing department, plus it performs affiliated functions such as tracking obsolete parts and end-of-life items, as well as other services. He admits it was an innovative approach that required careful evaluation, but he’s confident that it’s a dedicated relationship, and together they have already achieved some significant cost reductions. “We have an opportunity to take advantage of this approach, pipelining materials into regional manufacturing and assembly sites in China, India, Russia, and former Soviet countries [currently I/O’s major markets] for finished goods.”

I/O recently landed its biggest contract to date, a $60 million order from Oil and Natural Gas Corporation Ltd., the national oil company of India. That order aside, Smith says, “We’re driving to our forecast based on the status of the petroleum and energy industry; currently we’re in an activity up-cycle, and our targets are to continually reduce cost while maintaining quality, so that we can grow market share. If the petroleum cycle gets leaner, we still want a bigger piece of that market. We’re a half-billion-dollar company on track to a billion dollars within three years.”

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