“Follow your data from start to finish...”

[Satinder]: Jim, let’s begin by asking you about your educational qualifications and work experience.

Sure, like a lot of guys in Calgary I am actually a Geological Engineer. I went to the University of Manitoba and graduated in 1982. Interestingly enough, the intent was to be a Hydroelectric Dam Design Engineer, but the Manitoba Government in all their wisdom got rid of a lot of the projects that our company was working on, which left me with no job and encouraged me to come to Calgary and to start out in the Oil & Gas business. So I hired on with Hudson Bay in 1982 however I never worked a day there because we were bought by Dome. I was traveling in Europe and actually found out on a suspension bridge in Germany that I had been bought by Dome. I ran into the sister of a guy that I had gone to University with and she informed me that Dome had purchased Hudson Bay. They were in the process of going bankrupt and that I probably should phone home and see if I still had a job. Luckily I did and it was an interesting way to start a career. It sort of put into perspective I think the ups and downs of our business and it has kept me from being a little too cocky through the years.

After that I moved to a series of small companies, Enron was the first one; they had just bought Andex. From Enron I went to Pan Continental Oil and at this point you start to see what goes on in our industry. We were bought by Inverness, so I had a job change without a job change, stayed at Inverness for about 5 years and then moved to Summit Resources to work with a geologist that I had worked with at Dome. I stayed at Summit for about 5 years and moved to Petromet. Petromet was I guess an interesting stop in my career in that it lasted a little shorter than I expected and I think anybody can read what he or she want into that. But on the bright side, I ended up at Apache after that and I have been here for 5 years and it has been tremendous. It ended up being good for everybody I think. Certainly good for me. It has been very good here. So that brings us to the present.

[Ron]: So you got exposed in this merry-go-round before actually starting in the industry, which is kind of unusual?

Well, I don’t know whether it is unusual or whether it is usual. I think at this point every company that I have worked for in the past has now been purchased and no longer exists. The current company is to date the exception, but who knows, even the company that bought Dome, Amoco, is no longer around, it is now BP Amoco and it really shows how volatile and fluid our industry can be.

[Ron]: Nobody is safe anymore.

I don’t know so much if nobody is safe. Certainly, right now everybody is employed that wants to be. It’s more that there is maybe a little less certainty that you are going to start your career and 35 years later you are going to retire with a pension and 5 gold watches having stayed at the same company your entire career. That, I don’t think, even if it was your intent, would happen now. That has been the real change in our industry.

[Satinder]: Are you happy with the way your career has shaped up or would you have done anything differently?

No, I wouldn’t do anything differently at all actually. It’s been a great career. I have always told everyone that as a geophysicist I’ve got the best job in the world, it’s exciting, you get to take an idea and walk it right through to a conclusion, the drilling of a well. You are traveling to interesting places, you are working on high profile, sometimes-expensive projects and for the most part – and this is almost a quote from Bill Richards – “for the most part it’s somebody else’s money. You are not actually taking money out your bank account and testing your ideas, you get to use somebody else’s. Now the intent is that you use it wisely, but for the most part, it’s not actually out of your pocket. I don’t know if you should quote me on that or not?

[Satinder]: No that’s okay. It is a general statement you are making.

That actually comes from – there was a book written about Dome Petroleum and the quote in the front of the book is a quote from Bill Richards, it goes something along the lines – “ We weren’t really that successful, but the important thing is that we did it with other peoples money.” Change the success part and it would be a great quote!

[Ron]: What was the name of the book, wasn’t it Other People’s Money?

Other People’s Money, ya, The Banks, the Government and Dome. Great book.

[Ron]: Did you ever see Jack’s pitch for the Beaufort?

No never got the chance.

[Ron]: That was a thing of beauty.

No, I got to listen to Jack Gallagher’s pitch to not sell the company at the end which was a very emotional day for everyone as we watched the guy who formed the company stand up and plead with the Board of Directors not to sell the company.

[Satinder]: Most of your experience has been focused on interpretation of data. So I would like to ask you, apart from the obvious differences, like we went from 2D to 3D, from paper sections to workstations, how in fact seismic interpretation changed over the years when you first started at Dome Petroleum to where you are now?

Well, you know what, the obvious that you maybe want to include is probably one of the greatest changes that I don’t think people notice right now. When we interpreted on paper for the most part you would plot out an entire section, you would lay it out and you would look at the entire section end-to-end and top to bottom. Now, since we work on computers, we work on screens, and I notice this with the newer geophysicists coming up, that they seldom look at the entire section at one time. They tend to have 200 milli-seconds of data blown up on the screen, usually a color amplitude display with a wiggle of some sort on top of it and about 50 shot points of data, and they are focused in on interpreting that little piece of data and then they move along, and move along and interpret the section. What they miss is the ability to describe, to see the big picture. We tend to lose some of the keys that you would see in a basinal setting, we tend to, I think, focus too much on a single zone whereas 20 years ago, or 30 years ago, any time before we started doing it predominantly on screens, the whole section would be laid out in front of you and even if you were interpreting the Leduc, if there was something up in the Colony you would see it and you would probably flag it, note it, put a circle around it, go ask your geologist about it, because it was something interesting that caught your eye and that’s really, that’s I think the biggest change and I am not sure it’s a good change that I see going on. You lose the obvious – there is not as much paper flying around, we do things quicker. Maybe that’s another thing. We certainly interpret way more data than we used to. You can go through an entire 3D now, you can interpret a 30 sq. mile 3D in a day. There is absolutely no way you could do that even probably 15 years ago, 10 years ago you could, 15 not a chance, you couldn’t do a 5 sq mile 3D in a day.

[Satinder]: Yes, I think that’s a very valid point.

Ya, that’s the biggest change I think I have seen in how we interpret data.

[Satinder]: In the bigger picture, what technologies do you think have changed in our industry over the last say 10 years?

As far as our industry goes, really two things have made the largest impact, there is the obvious, the flat screen and tremendous PC that sits under my desk which is the equivalent of a super computer 20 years ago, plus the advances in processing – absolutely the algorithms, again tied back to the speed of the machines, the things that we can do with processing today compared to what we could do 20 years ago is startling and you see it when you re- process data, because you haven’t changed the acquisition parameters at all and yet the product that you get out is definitely of higher quality, so it’s really obvious that it’s the processing algorithms that are doing that, but also our acquisition equipment is light years ahead of where it’s ever been. We record more data of higher fidelity than ever before. In fact, Ron will attest to the fact that there is new stuff coming out in the 3C world all the time. Plus I think we will see cable-less systems in the very near future.

[Ron]: Yes, that remains to be seen, – I was going to ask something though here, this is kind of related to Satinder’s first comment – how is it that you spent most of your time in interpreting, which is true, I mean you have spent most of your time as an interpreter but you are also what I call maybe a pretty fair hand in the acquisition world – How tightly are those linked and how did you get good at acquisition?

Okay, that’s a good question. A lot of times, you are forced when you go to small companies, to become a Jack-of-all trades. Most of the bigger firms in town will have an Acquisition Department, they may even have an Internal Processing Department and you can get geophysicists that become somewhat specialized. When you go to small companies, you become more of a generalist and I think if you find things that you do are interesting, you tend to try and learn more about it. I find the processing side of what we do interesting, I don’t think I would be a very good processor, but I really enjoy discussing what we are doing with the Processing Company and try to maybe learn more about the intent of what the program does as opposed to how do I work it. So that’s on the processing side, I think that’s kept me fairly involved with what goes on. The acquisition side of it, to really answer Ron’s question, you can’t process or interpret data unless it is properly acquired. That is gauge one. And anybody in our business that doesn’t pay attention to how the data is being acquired I think is doing a disservice to themselves. So because of that I’ve probably spent a lot of time and energy paying attention to what the crews are doing, how they are doing it, how can we make it better. One of the big pushes at Apache is do more and do it for less money if possible. Well, you have to start with the acquisition and I think as a company we are pretty good at doing things for probably less than industry average without losing quality. So really, to answer your question Ron, I think the acquisition side of it is vital and I like going to the field, I have always enjoyed working with field crews, it’s good to get out of the office and it’s good to understand what problems are out there when you are back here looking at those 200 milliseconds of data on the screen, you realize some of the things that were out in the field that have infected your data here instead of just looking at it and going “Wow, that’s a really noisy spot” without realizing that there is a 200 meter deep river channel right there.

[Ron]: You get an end-to-end look what’s in those data.

Yes, I think you need to be able to follow your data from start to finish to really understand it, to know what the limitations are as you try to interpret it.

[Ron]: John Boyd is telling us the most important thing we can do is get good numbers in the field.

John is a wise man.

[Satinder]: You have been working as a geophysical advisor for this company and now you are working as a manager, so obviously that is a leadership position. So my first question is, do you see yourself as a leader, and number two, what qualities are required for being an effective leader?

Do I see myself as a leader? I guess so. I have never been asked that before. I think, maybe I’ll answer the second one first.

The qualities that I think make a good leader are – you have to be able to listen to the guys that are working for you and you have to be able to maybe distill what their problems are and find ways to help them do what they do easier and better. I don’t think you should be telling them what to do, you should be finding ways to make their jobs simpler and if you can do that, in a nutshell, you are good. You are a good boss, you are a good manager, and you are a good leader. If you are constantly trying to impose your will on them, it’s a recipe for disaster.

So to go back to the start, I am learning to be a good leader. I am fairly strong willed, so it’s an interesting task to learn how to listen properly and how to look for possible solutions without telling people what I think they should do because there is no guarantee I am right. It’s just my opinion. But sometimes, depending on how you tell somebody your opinion, they certainly can take it to be – that’s what they should do – and I think to be a good leader, you have to stay away from that as much as possible.

[Satinder]: You put it in a very nice way, Jim. What have been your most difficult or challenging projects that you have worked on?

That actually would go way back to working at Dome Petroleum where they put a new group of us into West Pembina. We hadn’t really had much success drilling for the Nisku and to be fair, they hadn’t really given, I think, the previous team a lot of time to come up with or prove out the new ideas that they had. We went in there with the ‘management’ perception that really the play wasn’t working, we weren’t even sure we had the cash to pursue the play but turned it around and had some very successful drilling and some pretty good working success in the area. Easily the largest wells in my career were in the West Pembina Basin chasing the gas along the bank edge and I am pretty sure Amoco/ BP still has somewhere in their ‘vault’ a map that we built that covered the entire West Pembina Basin from Foothills right up to the North East end of the basin. The last time I heard it was in a vault somewhere in the Amoco building.

[Ron]: They probably don’t know where it is.

[Satinder]: Oh, I am sure they know where it is.

[Ron]: But does anyone have permission to take it out? You said something interesting in there. I sat in at a few of these interviews with Satinder – a lot of times when people will talk about their most difficult project, it will be a strictly technical thing, but this sounds like a combination of technical issues, process, working with or against culture, if you know what I mean?

Ya, one of the biggest hurdles that people face in our industry is previous perception, built-in biases, there is a tremendous number of smart people that work in the Oil & Gas Industry and I have always said that any time you have an idea, there are probably four or five other guys in town that are having that idea at exactly the same time. If you think what you are doing is really, really unique, I am not so sure about that. The brainpower out there is fabulous. What tends to be more of a hindrance, I see to people, is there will be a preconceived notion that the idea, the concept, the play is too difficult. “We can’t see that.” “We don’t have the resources.” “I did that 10 years ago and it didn’t work.” That’s that manager I don’t want to be. I believe that the information is on the section, it is in the data. It’s up to the interpreter to look at the data and if you think about what the name is “interpreter” you are supposed to interpret the data and discover what the data is telling you about that particular zone. Can you see it directly? No, maybe not. Can you see it indirectly? Maybe so. Does it affect something either above or underneath – there are always clues in there and so many of the things that we do nowadays, AVO, all the different stacks that we try, it all boils back to the data. None of these processes will work unless the information is already there. Somewhere in there is the answer and it’s up to that, again, “interpreter” to interpret what the data is telling him and relate that back to what you are looking for. If you do that properly, more often than not you’ll be successful.

[Satinder]: What personal and professional vision are you working towards?

Personal and professional vision – My personal vision? Oh, probably sailing around the world and I don’t know whether that would be all in one chunk or in small pieces, but I think you have to challenge yourself and that would be a pretty good challenge.

Professionally, going back to your previous question about “am I happy with my career, would I change anything?” I am okay with professionally where things are going as long as I think I am still growing. If I stay a manager/interpreter I am all right with that. If I move further up the management level, I am okay with that I think, as long as you are growing, it’s fine.

[Satinder]: Do you think the geophysicists of today need to have more business skills, apart from the technical skills, that will help them?

Absolutely. Working, certainly in today’s environment, you can’t just be an anomaly picker. You have to be able to relate what you are working on back to what your shareholders are looking for. And really, your shareholders are looking for a rate of return and they are looking for a profit. So if you don’t have a firm grip on the business side of our business, you are probably going to lose money for your company because you are going to pursue things that esoterically may be very interesting, but realistically are not going to make money for your company and our business is so intense right now that you really need to understand what you are working with and what you are working towards, both as an exploration play and as a business as a whole. You have to be able to relate what you do to your reservoir engineer to the guys that run the numbers and you have to understand when they come back to you with the numbers, what do they mean?

[Satinder]: So do you think an MBA type of a degree would help or do you think that can be learned as you grow up the ladder?

I don’t think an MBA is absolutely necessary. The business side, certainly that a geophysicist is involved in, is not so much the actual financial numbers of things, I would describe it as more “what kind of a play can you put together to farm in, say, on another company”. You have to understand a little bit about the business metrics to be able to craft a deal that will work. You have to be able to work with your landman on the crafting of that deal, so you really need to understand the whole range of it. Would an MBA help? I am not sure, I don’t have one.

[Ron]: The absence of one doesn’t seem to be hurting you.

No, no I am doing all right so far.

[Ron]: There is another aspect to that I wanted to ask you about too and that was kind of the big business scope of things. There is a more specific thing and I know you are fairly good at it and that’s understanding the drivers that make your contractors go. Their business drivers and understanding contracts, because I know you are fairly good at that, would you suggest to youngsters, younger geophysicists than us, that they get conversant with contracts and that kind of language?

Absolutely, we used to do things for the most part as a handshake deal. The handshake deal is somewhat gone. It is still done to a certain degree, but more and more now we sign contracts with our contractors that are mostly written by lawyers, and this is not a disparaging comment against lawyers, but they can be somewhat circular and you really need to be able to understand the contract and be able to read it to apply it, not just for the advantage of your company, but for the advantage of what you are trying to do. What Ron is talking about, understanding the metrics of the contractors, as a geophysicist the last thing I want to do is go out, shoot some data, declare it a tremendous success, we did it cheaper than ever before and bankrupt the company because we forced them to work with a set of numbers that just don’t work. Probably the smallest increase in cost in our industry has been in the seismic end of it. We do more now for about the same price and that tells me that in general the contractors are working with a smaller margin. You have to be able to sit down with them and come to a reasonable agreement on what makes sense and I know there are going to be 30+ contractors out there that are going to read that and head for Apache. I would caution that earlier on I said that we take pride in doing it better and cheaper than anybody out there! I think you need to understand the metrics of what they are working with so that when somebody sends you a bid, you understand whether that bid is reasonable or whether that bid is – shall we say – padded.

[Ron]: Now the contractors are making noise.

I am searching for a word there.

[Ron]: Everyone has got to make a living and people have to understand that.

Ya, I think the geophysical industry as a whole, is pretty good at looking after itself, certainly in Canada, nobody in our industry, I don’t believe, is either trying to really sell a bill of goods on one side or the other. I think right now, today, in our economic environment people to the greatest extent are working together to try to make the data better and allow more data to be shot at a reasonable price.

[Satinder]: Some of the geophysicists believe that exploration in the Canadian Basin is not challenging enough because it is all flat geology and so do you agree with that?

No, I would say that 500 milli-second closed structures aren’t very challenging. The Western Canadian Basin, as it becomes more and more mature, actually is becoming more challenging. We are looking for smaller zones, we are looking for tighter gas sands. Tight gas sands are very, very difficult seismically, as opposed to porous gas filled channels, those are fairly simple. Our basin is actually getting more challenging and harder to interpret and if you look at what is going on right now, we have a tremendous acceleration in drilling activity which means on an activity level it’s also getting harder. We are having to come up with more ideas in a smaller, effectively a smaller sandbox. So I would say the challenges are greater.

[Satinder]: The Western Canadian Sedimentary Basin is becoming mature, as we all know and so other areas are being looked into, like the Foothills, the Disturbed Belt, Deep Basin tight gas sands, Deep Devonian Carbonate plays etc. So my first question is “What do you see in the future for WCSB, and where all is Apache focusing as far as exploration in these areas is concerned?

The future, I think the future is still the whole basin in my mind. We have our standard plays that we have worked for years, either the Swan Hills or the Slave Point, or the Leduc and those are the big-ticket items, but if you actually look at where the majority of oil and gas is in the basin, it’s not in those zones. You tend to get some very large fields, but in fact the largest conventional oil field in Canada is not in any of our carbonate reef fields, it is actually in the Cardium. So I think as our technology improves and we can resolve some of the thinner zones, that’s the future. Most of the really big ones I believe have been found. Do I think there is another Ladyfern style play out there? Probably, because that particular style of play is difficult to find and it’s also difficult to amass a large enough land base to chase that kind of play. That in itself makes it difficult. You wouldn’t want to chase a Ladyfern owing one section of land with somebody else owning 200 sections of land around you. If you can’t make the deal, chances are even if you thought you were right, you won’t drill the well. That is another challenge in there.

As far as Apache goes, Apache basically will explore anywhere. If we think it’s a good idea, we will chase it. We chase sands from the Blue Sky Sands up North, quite shallow, 400 – 500 meters, right down to deep basin carbonates. We really will chase anything. We are active up in the Northwest Territories, the only thing that Apache Canada doesn’t do is East Coast offshore, although we have looked at it and if we thought there was something that fit our particular business model out there, we’d do that too.

[Satinder]: So I’ll check off Canada, so where all is Apache active?

Apache has offices in the Central U.S. We have a Gulf Coast Office, we are active in Argentina, Australia, China, North Sea and Egypt. We were also active in Poland but right now that particular office is sort of in limbo.

The main areas would be the Mid Continent U.S., Canada, Australia and Egypt. Those are our big focus areas right now. Plus the North Sea is coming on strong as we get a foothold there.

[Satinder]: Good. Apache is known for adopting the latest and new technology in exploration, we have seen this over the years and not only has this resulted in successes for the company but it has given it an edge over others. Where do you get these new technology ideas and how do you get the research done for that?

We have a Research Group down in Houston that we work with and it’s a combination of the staff in Canada or the other project areas and the guys in Houston, be it looking at new processing technology, new acquisition technology. We will pull in experts from anywhere if we have an idea that we want to pursue. It’s really a willingness to look at new things. That’s it quite simply. There is no magic here. You just have to be willing to look at something different and then decide whether it’s useful or not. We look at a lot of things that are not necessarily really useful and some of them seemed quite silly at the time, but occasionally they will then lead to something else that is useful.

[Satinder]: Is Apache Canada pursuing unconventional resource exploration also?

Right now currently I believe we are still the largest producer of coal bed methane in Canada, so yes, we are big in the unconventional end of things. We are looking at shale gas, we really haven’t found anywhere to pursue that right now but we are looking, and we are looking at some of the standard somewhat unconventional plays, like tight gas sand in the Deep Basin. Right now that’s I think the gist of our unconventional exploration that I can talk about.

[Satinder]: What are your other interests?

My other interests? Well for anybody who knows me in the Industry, I curl a lot. I have been pretty active in the curling side of our Industry for several years and am on the Doodlespiel committee. I love to sail, that’s something that I try to do as much as possible. I could say that maybe I collect wine. I probably have more wine than I can drink in my basement, so I guess I collect it. I love to cook, and generally anything outdoors, traveling, I am very interested in history, archaeology. That’s probably why Greece is one of my favorite countries to visit, because it has it all, the beaches –

[Satinder]: You have partly answered this question, do you volunteer for professional societies or conduct courses or something like that?

Yes, I have served on the Doodlespiel Committee for a few years now and I think the best thing that you can do is give something back. Really, it’s not that hard and it might be a little bit time consuming, but it’s really not that difficult, and I guess without going into detail, I write the odd article, and I will leave it at that for anybody who can decipher what that meant.

[Satinder]: How do you like the RECORDER and do you have any suggestions for its improvement?

I like the RECORDER. I think it gets better every year. I think the best thing that the RECORDER has done, is blended a mix of being a technical magazine and a little bit of a society information magazine. There are some very good technical articles in there but there are also things like Tracing the Industry which is more along a personal side and that makes the entire package more readable and it allows people who maybe aren’t even in the geophysical industry on the technical side per se to pick it up, read it, get value out of it and maybe some enjoyment. I would like to see, if possible, more historical play style of articles, similar to something along the lines of some of the Poster Sessions or some of the Sessions that we have at the Convention where somebody will do a paper on a particular play and give a bit of a historical write-up on that particular prospect with the blessing of their company, of course.

[Ron]: Something like – How Chevron found West Pembina, The Real Story, kind of stuff.

Ya, those sorts of things, how long did Shell really map Ladyfern before it got drilled? I think there is some very interesting historical knowledge that is still out there and if the stories don’t get told they are going to get lost. If they get told and they get put into the RECORDER then they will be archived forever. Somewhere in the future somebody will gather up 2000 RECORDERS and collate that.

[Satinder]: Okay, that’s good information for us. What is your message for new entrants in our Industry?

New entrants in the Industry – don’t worry about the apparent volatility in the Industry. It’s a very dynamic industry and it will sometimes appear on the surface that the whole thing could fly apart at any moment. I think our Industry is pretty solid. I think geophysically we are entering into an unprecedented period of job growth, there is a shortage and there is a whole bunch of guys like Ron and myself that might be around for another 10 years, but after that who knows and we need people to come into the Industry and stay in the Industry and going back to what I talked about earlier, I would encourage anybody that is new and starting out to make sure they look at the big picture.

[Satinder]: We have a number of trained geophysicists coming into Canada, into Calgary; how do you encourage people who come from other countries who don’t have the experience in WCSB. What do you do to encourage them to pick up a job – to start on maybe at a modest level and then move on?

That’s is a hugely difficult question, because most companies, like Apache, want experienced people. Everybody in town wants experienced people. I believe it is two-fold. I think the companies need to be willing to hire junior staff and it can either be junior staff locally educated just out of U of C, or it can be somebody coming from overseas looking to find a job with no experience in our basin. In my mind that puts them in a similar category to junior staff because you are going to have to spend some time educating the person about our basin. We currently are trying to move our, I guess, our age level to a slightly younger level at Apache Canada. We are hiring some junior geophysicists plus on the geology side we have some summer students working for us this year, which is almost the first time we have ever done that. For the people coming over, what they need to do is – take a job in the Industry. Even if it isn’t the first job that you maybe want to do, if there is a job available at a processing company, not necessarily an Oil & Gas company, take it as a way in. If the person wants to be an interpreter, because I think there are some people now who are specializing in processing and they are tremendous at it, but if you want to be an interpreter, take a job at a processing shop. Get your professional standing and spend a couple of years at the processing shop learning the basics. You will see the data, you will get exposed to the geology if you interact with your geophysicists and after a couple of years doing that, your resume now reads completely different and you are able to send the resume to an Apache or PetroCanada, or any company in town and the perception is completely different. The hardest thing is the person who lands in Calgary with a geophysics degree, having never, ever worked in our basin. That’s an incredibly difficult task to find a job and I would suggest if they don’t get lucky, because timing is everything, I would say make sure you get employed in a related field and keep your goal in mind and use the related field to move towards where you want to be.

[Satinder]: Yes, that explains it. One last question. Was there anything that you expected me to ask and I didn’t ask?

No, no I don’t think so. I think that was pretty comprehensive, it was good fun! I enjoyed it immensely.

[Satinder]: Jim, thank you for giving us this opportunity. We appreciate it.

It was a pleasure.