The Canadian Seismic Data Brokerage Business

In November 2004, Barry Korchinski sat down with Carmen Swalwell and Ron Larson of the RECORDER for a discussion about the evolution of seismic data brokerage in Canada. Mr. Korchinski is something of a CSEG notable: CSEG President in 1995, and recipient of the Meritorious Service Award. He has been involved with the brokerage business for a fairly long and continuous period and we sought his opinions on that basis. There are other people with a similarly lengthy involvement. The following short article summarizes the RECORDER’s conversation with Mr. Korchinski. It should be noted that the information in this article is based on one person’s memory, prompted by questions from two people without significant knowledge of the topic! None the less, it provides a sense of flavor concerning the development of the seismic data brokerage business. Dates are admittedly approximate, as are the details of the stories and anecdotes. Readers with first hand knowledge of the events are encouraged to contact RECORDER editors for supplemental publication.

The Accidental Profession

The conversation began, as conversations will, at the beginning with Barry outlining how he got into the seismic world. It was another example of what might be called “the accidental profession”, events conspiring to bring somebody quite unexpectedly into the realm of commercial geophysics. It was a cold Saturday afternoon in January 1967, and 4th year U of S Engineering Physics student Barry Korchinski was cleaning the house, after the “usual” Friday night party. The phone rings. It’s former classmate, Paul Skakun who joined Chevron the year before: “Are you coming out to work for us”? At that time, jobs for graduates were easy to come by, and Barry was mulling over 6 or 7 job offers in different industries (the Chevron offer was the only one in geophysics). Without thinking too deeply, Barry blurts out, “I guess so,” and just like that, a career begins. In 1975, on the verge of a third (this time, unwelcome) stint in Houston, Barry sees an ad for a geophysicist, from Wes Rabey of Sigma Explorations (CSEG President 1973, CSEG Meritorious Service Award) in the sports section of the paper. Intrigued by the curious placement of the ad, he called Wes. Wes spoke the magic words, “Let’s talk,” and just like that, a career changes direction. Mr. Korchinski continued at Sigma until his retirement as president in 2001. His initial assignment at Sigma shows the interconnectedness of the small geophysics community: promoting Seislog studies for a partnership between Wes Rabey (Sigma) and Roy Lindseth (Teknica) (see the separate article in this issue on CSEG Awards).

In the Beginning

After our initial discussion about careers and Seislog, we asked Barry if Sigma was the first brokerage company. The answer is a bit complicated; “first” is difficult to quantify because there were companies doing “brokerage”, but in a different form than it exists today. Of companies that have recognition today, certainly Sigma and Kary are notable in that they both arrived on the scene in the 1960s. Sigma was incorporated in 1966, and Kary Data a bit later.

In brokerage terms, it appears that most of the 1960s were characterized by what could be called “direct transactions” on a mile-for-mile basis between the owners of seismic data. In Barry’s words, “The guy at Chevron would call the guy at Imperial and say, ‘Hey, I’ve got a geophysicist here who needs some data in such-and-such area, and I know you’ve got some data up there.’ And they talked about a deal and then they’d trade it mile-for-mile if it was in the same area, or trade it one mile for two miles if it was foothills and plains data. Then they’d go have a drink.” The trading was typically “in kind” rather than a cash transaction.

Mr. Korchinski believed that while this direct “owner to owner” trading was prevalent, it was not logical that many “brokers” would emerge. He recalls hearing of only one – Exploration Data Exchange, headed by Harold Ashley. They acted as facilitators to oil companies in trading data on a record-for-record or mile-for-mile basis and would charge the companies a fee for services. In the mid 1960s, Wes Rabey (who started as a geophysicist in 1945 for Imperial Oil, and in 1950 formed Accurate Geophysical Ltd.) decided that he could be a seismic data broker, but use money as an exchange, rather than trading data for data. This would simplify transactions and have the added benefit of allowing the ‘little guy’ to get data, as small companies were at a disadvantage before that, in that they had little or no data to trade. Wes was told by just about everyone that it wouldn’t work because ‘We don’t do business that way’, but soon, most companies jumped on board the new brokerage model.

By about 1970, in addition to Kary Data and Sigma, the industry sees Jim Silye (ex-Calgary Stampeder player and owner, former Member of Parliament, and current elected Senator-nominee) and his partners with Western Seismic Exchange. Gay Allen, longtime member of the brokerage business, writes in her 1998 RECORDER self-profile “[1] In the spring of 1970 I became the first employee of Western Seismic Exchange – we were all ex CDP (Howard Gibson, Bob Morris, Jim Silye and Ron Nickle). We were the fourth brokerage company in town.”

Mr. Korchinski had a very specific comment about those days: “I wasn’t there.” All of the comments about that period of time in this article should be considered as anecdotes, at least once removed form their source – and unverified by the authors of this article. (Again, corrective input, if required is solicited, perhaps in the form of letters to the Editor.)

Group Shoot World

The conversation then detoured to group shoots and spec shoots. Barry recalls Wes Rabey telling him that he conducted the first group shoot in Canada in 1952. At that time, Wes was running Accurate Geophysical. He had only one crew contracted and two with nothing to do. He perceived a need for “regional” seismic coverage, so he proposed the idle crews would record a “correlation” shoot in Alberta. This consisted of one record (1320 foot E-W split spread) every 2 miles along every east-west road allowance, thereby resulting in an extremely sparse 3-D picture of the sub surface. In addition, a 300 foot hole would be drilled at every township corner to calibrate and confirm weathering corrections. Wes priced the shoot so that he would break even with seven participants. He was able to line up only six, but went ahead anyway, trusting that it was valuable data and other companies would eventually come around. They did.

In the mid 1960s there was further significant effort in the spec shoot world. Roger Angus was remembered for a large-scale effort in Rainbow / Zama that coincided with the major discoveries in those areas. There was also some brief discussion of the databank concept that enjoyed some success for a while.

The 1970s and Alberta Geophysical Incentives

So, by the early 1970s there were several seismic data brokers operating in Calgary. The days of direct trading were pretty much over, at least as the dominant form of seismic data transfer. What really kick-started the brokerage business (and the group shoot/spec shoot business) was the Alberta Geophysical Incentive Credit Program, the “GIC”. In 1973, Wes Rabey was president of the CSEG. At that bleak time for the Canadian oil industry, the provincial government had introduced “drilling credits” in an attempt to keep the industry from dying. Wes headed a committee to convince the Alberta Government that it should further increase exploration activity (causing more oil and gas discoveries – which, in turn would result in more royalties being collected by the provincial government) by providing cash or royalty incentives to shoot seismic data – after all, it was the people with the seismic data that told the drilling people w h e re to drill. The lobbying was successful and the GIC program started in 1974. Oil and gas producers were paid by royalty deductions and seismic companies were paid cash, having no royalty payments to reduce. One of Barry’s recollections about the early GIC days is that while he was at Chevron, one of the province-wide incentive lines (starting near Lloydminster and going west) showed a remarkable anomaly west of Drayton Valley and the West Pembina pinnacle play was born. It is one example of how the Government, really the people of Alberta, got repaid many times over for their investment in the incentive program. Mr. Korchinski recalls that in the early stages of the pinnacle play at Chevron, the ideas were kind of floating around, being openly discussed. Then it was determined that they were in possession of “hot stuff”. Then, “Overnight, you couldn’t even get on that floor, everything was locked up, nobody talked and it went totally secret while they bought land.”

After our diversion into Chevron’s Pembina success, our conversation returned to brokerage and the incentive program. The way the program worked was that a company got paid either in cash or by royalty reduction and then had to release that data 3 years later at an artificially low price (which spawned yet more exploration, which led to more production, which resulted in more royalties for the provincial government….you get the picture). The prices for the first several years were $300/mile in the plains, $600/mile in the green area, and $900/mile in the Foothills area. Later, the numbers were converted to kilometres. After that, the prices slowly escalated in the years to come over that GIC program and the hold period became 5 years at one point, so there were two years where no data came out.

The Canadian Geophysical Brokers Association

The significance for the brokerage business is that there is all of a sudden, with the first phase of the program, a lot of incentive data that must be released. Again, Barry’s recollection: “So in 1977 the Government said ‘All this data is going to be released – what are we going to do?’ By this time, there were quite a few brokers, ready to pounce at this opportunity. The Government said ‘We are not going to deal with all you guys coming in every Monday morning – we’ll go nuts, go back, figure it out and have some kind of one-window concept. Come through that one window, we’ll give you the data released that week.” That is where the Canadian Geophysical Brokers Association (CGBA) comes in.

The CGBA had been organized several years earlier for the purpose of putting on a Golf Tournament. They invited a couple of representatives from every oil company as well as from every brokerage. The tournaments were usually in Turner Valley. Everyone got on the bus, which was amply stocked with beer and meat pies from the Bon Ton Meat Market.

The Government decided that this official sounding organization could solve their logistics problem with the GIC data. They had meetings with the CGBA, and informed the membership that – “You will send one representative to gather the newly-released incentive data every week,” – and so the brokers did.

This emergent group realized they needed a method to show where the data was in order to sell it. Their brainchild was the plat system. No accessible CAD systems were available in 1977, so they hired a draftsperson (Vern Collins at Collin’s Geodraft Services) to make base maps. There was one big base map of Alberta with tiny lines, and individual page size plats at 1:250,000.

There was a great deal of activity in the brokers association, before the oil price crash of 1986, and the associated attrition in the industry. The group grew in size to approximately 20 members (* see the lists at the end of this article). During the expansion, primarily because of the extent of the initial effort and expense to generate the coverage maps, there was much discussion, even some rancor, about how much newcomers should pay to join, what their rights were and so on. It is probably sufficient to say that the discussions were earnest and intense.

At this point, we summarized our discussions as follows: “The industry went from record-for-record trading directly between companies in the 50s to the slightly facilitated version in the 60s. Group shoots came up in a big way in the 60s with Rainbow and then in the late 60s and early 70s there are a few brokerage firms started, but the thing that really made it fly was GIC, Alberta Geophysical Incentive.”

The 1980s

The last GIC data came on the market in the late 1980s. After that, there was another program called GAP and “the people could make some hay out of that but it was just a temporary thing. By 1989, all of that had gone away and we were shooting without incentives. In the meantime, brokerages continued because the incentive data was still largely available. There was still a lot of momentum.” None the less, the oil price problem of the 1980s ended up causing some attrition in the brokerage community.

Today

Skipping ahead to the events of the recent past, there has been a notable consolidation in the industry, best shown perhaps at Divestco, and the various brokerage firms that it has absorbed such as Rocky Mountain Data , Seisview, and the brokerage arm of Request.

We briefly discussed what some people term the big box data stores, Olympic and Pulse, and how their presence has changed the brokerage business. Our discussion converged on the opinion that brokerage itself has not changed that much, but the seismic data world has changed “big time”.

While it is easily argued the brokerage world has, in fact, changed dramatically, our discussion looked mainly at how brokerage is conducted. At the very start of our conversation we suggested to Mr. Korchinski that there had probably been many changes in the brokerage business. We think he was a bit amused at our surprise when he suggested that there really hadn’t been that much in the way of substantive change. “The basic premise of seismic data brokerage is still the same. The person who needs data calls (or emails), because you are the gobetween and you have maps. Maps, of course, are all on-line now and clients can look at them on their computers if they want to, various data bases and all that, but basically you go over there with your brief case, you pull out the data, you show it to him and hope that he will buy it. If a sale is made, the data gets sent over in a little more sophisticated manner than it used to, with CD’s and DVD’s and digitized chaining notes and so on, but not a lot.” It is hard to argue with that assessment!

Barry went on to say, “I remember when companies were saying things like – ‘you can burn all our sections’ by such and such a date and the date was 1998. It was going to be ‘push button’, and everything would be done on-line. The reason that hasn’t happened, in my opinion, is because it is not a big enough deal. When the whole of the United States wants to order groceries or clothing on-line, for example, that’s huge, that’s a big, big, deal. Seismic is not, it’s really very little, in comparison. It’s still a cottage industry even if you tossed the most optimistic number out. I remember, one year I estimated that an industry-wide total of one hundred million dollars of seismic got traded in Canada. That’s a relatively small number in the over-all scheme of things.”

New Brokers

We concluded our time together with a few moments discussing new brokers. There are perhaps more barriers to entry than there once were; mapping systems are required and they need to either be developed or subscribed to. On the other hand, much of the entry to the business is the way it has always been. The model is a simple one. Although today’s new broker is typically more qualified in terms of education and experience, the training program is still largely apprenticing with an experienced broker. In Barry’s words: “That’s the way we trained people in 1975 when I got to Sigma – ‘Go sit beside Barry Johnson, he’ll tell you what to do’. Then it was – ‘Sit beside Tim’ and now it’s ‘Sit beside Launey or Trent’, you know, some of the guys who are 30-something.”

After a few rueful moments trying to recollect what ’30-something’ was like, we stopped rolling tape and returned to our offices. The authors and the RECORDER would like to thank Barry Korchinski for his time. The authors remind readers that this is not an exhaustive history by any means and that we have done little in the way of ‘fact checking’. Errors or omissions are certainly not meant to slight anybody. We welcome our readers’ input for follow-up publication.

* Historical documents of the CGBA list the members as follows:

1979: Canexco Surveys, Choma Surveys, Geo-Seis, Geo-Trades, Interco, Kary Data, Petroseis, Probe, Sigma, Sikorski, Western Seismic, White Data.

1988: Choma Surveys, Conseis, Falcon, Frontier, Geo-Search, Geo- Trades, Kary Data, Petroseis, Prime Brokerage, Probe, Sigma, Sikorski, Trade Data, Varidata, Western Seismic, White Data.