How a fracking boom startup is planning to survive climate change era

In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.

By 2013, when Microseismic was selected for the inaugural CNBC Disruptor 50 list, it was pretty far from the “start” in startup, already in its tenth year as a company. And that preceding decade had been one during which the company, which performs subsurface monitoring using passive seismic technology, had grown up amid the boom in U.S. oilfield hydraulic fracturing, better known as fracking, and which by 2013, was about to go bust in a major way.

When the company and its founder and CEO Peter Duncan had first raised money from investors in 2003, the idea wasn’t to ride the shale boom. Helping energy companies perform environmentally sensitive geological exploration was a core focus, with its approach more like a stethoscope, Duncan says, compared to the conventional technology of the time, seismic vibrators, which he says worked more like an ultrasound. But of all the things the company put on the list of uses for its seismic technology when it was raising money, “frac monitoring was at the bottom,” Duncan said. “We’re not going to do that,” he recalls saying. “A big red X.” 

For one, there were other players already in the market, and the dominant oil services companies, including Halliburton and Baker Hughes, were buying up firms doing science similar to Microseismic – Halliburton already owned seismic mapping company Pinnacle Technologies.

And in a way, Duncan thought the science wasn’t a good match for the blunt process of oil and gas drilling. “You drill a wellbore to produce oil and gas, not to put fancy science experiments down,” he said.

But the shale gas boom, and the market, sent a different message. “They told us to do frac monitoring, and it became more valuable to clients as they started drilling long horizontal wells that could no longer be sensed or monitored with a single down hole,” Duncan said, and Microseismic was building the equivalent of a big dish microphone up on the surface. 

Its approach made Microseismic a dominant force in frac monitoring services – for a time.

“The nature of the world has changed,” Duncan said. 

The Covid downturn in 2020 capped close to a decade of a bear market for oil and culminated in the negative spot prices in the oil market in May 2020. Microseismic, which had become too dependent on the shale boom, had to lay off staff and had creditors circling it. “Quite a catastrophe,” Duncan said.

And while the world has changed again, and Russia’s war in Ukraine has led to renewed focus on domestic energy supply, the oil business isn’t going back to its reckless drilling ways. Oil and gas was changing from a growth business to a value business, and oil company management were much more focused on fiscal discipline. This included decisions on where to replace reserves rather than just try to increase reserve growth…