Treasure Maps: Seismic Data in the Oil Patch and How to Protect It
Seismic data has long been considered highly-valuable in the oil and gas industry. So much so that people in the industry often call seismic data maps “treasure maps” because they “show you where the gold is” by identifying the best locations to drill in an oil or gas prospect. Seismic data owners often provide access to or share their seismic data when looking to collaborate or sell an oil and gas prospect. Seismic data owners encounter several issues when determining:
- Whether to share the seismic data;
— How to share the seismic data; and
— Who to share the seismic data with
Several legal issues arise when dealing with seismic data. First off, it is imperative to data owners that seismic data ordinarily qualifies as a trade secret and can be protected under trade secret laws. Trade secret protection can represent a powerful tool for owners of seismic data and protect their rights against those individuals or companies that may seek to obtain the seismic data without paying a licensing fee. These data thieves have long been involved in the oil patch. For example, there are stories of companies meeting at hotels and during a break one of the parties trying to download or save the seismic data for their own use without permission from the seismic data owner. Other stories include companies delivering compact disks to other companies with stolen or misappropriated seismic data. Thus, while whether to share the data to get a deal done doesn’t seem like much of a consideration, there is risk in sharing any seismic data with another entity.
How to share seismic data is another legal issue. Do you provide encrypted access? Do you allow read-only access to the data so that the other entity cannot download/save it? Do you have an agreement where the other party acknowledges the valuable nature of the data and not to use it outside the transaction? These are important considerations that preferably involve attorneys to help preserve the valuable asset that is seismic data.
The question of who to share it with is usually a product of having measures in place such that sharing the seismic data is not a concern. But who has access to the data should always be top of mind.
Are you not sure it matters? Vaquillas Energy Lopeno, Ltd. won a $4.9 million verdict in Texas state court for misappropriation of its seismic data, which was referred to as the treasure map. If you spent the money to obtain the data, please stay vigilant in protecting it from misappropriation by others. As we continue in this series we will discuss remedies, use of contract and other techniques for protection of seismic data.
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Originally published at Klemchuk LLP.