An interview with Dave Cottle

[Satinder]: Dave, tell us about your early education and professional experience.

I went to school at UBC and graduated in 1982 in Geological Engineering. After working at Amoco for 14 years, I spent 3 years at Rigel and moved to Talisman 2 years ago when they purchased Rigel. I worked my first three years as a production engineer and then started in geophysics.

[Satinder]: Why did you switch over from engineering to geophysics?

In a nutshell, I found the work too much like plumbing. Seriously though, while there is a lot of engineering work that involves geoscience, after having worked for a while I thought that the opportunity to try geophysics was too good to miss. Several different elements appealed to me: exploration, discovery, learning, and working in a field where there is a lot of uncertainty. It turned out to be a good decision for me.

[Satinder]: What sorts of projects have you worked on?

I spent my first couple of years processing and doing technical projects, and then started interpretation in development. I got to work with knowledgeable people on a lot of different plays in a short time in development: Keg River, Zama, Slave Point, Leduc, and Wabamun in the Devonian and most of the Cretaceous Mannville plays that came with the Dome merger. After that I moved to the Triassic foothills group as those plays, and prestack depth migration, were emerging in the late eighties.

An opportunity came to spend a year at Amoco’s research centre in Tulsa and I spent that time on projects related to AVO, rock properties, and prestack depth migration of mode converted waves. When I returned to Canada, I worked on deep Swan Hills plays at the time large 3D’s were becoming popular. After a time looking at Cretaceous foothills plays, I worked in the exploration planning and economics group and finally on a Nisku development team.

I moved to Rigel in 1997 and worked on the Peace River Arch until we were acquired by Talisman late in 1999. Then it was off to the southern foothills, northern plains, and the NWT.

[Satinder]: In your experience, was it more satisfying doing research or working on assignments that entailed seismic exploration and planning? Why?

I really enjoyed the projects I was a part of in Tulsa and was very fortunate to work with some great people with a depth of knowledge that’s rarely seen. The path I’ve chosen is definitely not that of a specialist or a researcher. I enjoy variety and definitely prefer exploration. I like to see a lot of plays and try to bring what I’ve learned in the past to each new play. Technology is something that interests me a great deal but in the sense of how and when to use it rather than for its own sake. The time I spent in planning and economics was fascinating for me. I got to see so many plays and how they worked as well as gaining perspective and skills that I use all the time.

[Oliver]: In your opinion, how much seismic exploration is being carried out in the Canadian foothills? Are these areas really proving to be prospective?

A lot of exploration is being done in the foothills these days by any measure. Historically, the foothills have been a very active exploration area, and are now more so for at least a couple of reasons. Some of the larger US firms have moved into Canada or increased their presence through corporate acquisitions. They’re tending to put a strong emphasis on foothills plays. Also, the large budgets resulting from recent high prices have increased the activity of companies already working foothills and encouraged some new entries to the plays. Certainly landsales this year have been especially competitive and rigs have been in short supply.

With regard to prospectivity, I’d say that the foothills plays are near the top of the list. They’ve been very good for Talisman over the years and there’s no shortage of existing plays to expand, new areas to enter and new play concepts to test. That said, it’s definitely not for companies that don’t have realistic expectations, a long attention span, good technical people, and deep pockets. Everything is expensive and costs can easily escalate beyond any hope of an economic return. The plays are also a very demanding in both technical and operational terms. All these factors make foothills plays very difficult for companies trying to make a new entry.

[Oliver]: What technology/techniques do you implement to make your interpretation in the foothills more accurate?

Firstly, I try to work closely with my geologists and make sure that my interpretations are as well constrained as they can be. Balancing sections is a given. In purely geophysical terms my view is that the basics are key and that each area has its own characteristics that require different tools. Certainly the least that I’d consider getting away with would be prestack time migration and a good knowledge of the velocities and potential anisotropic qualities above the zone of interest. Qualitatively, this allows an assessment of whether the additional effort of prestack depth migration or anisotropic prestack depth migration is necessary.

[Oliver]: Foothills data presents one of the greatest imaging challenges to seismic processors. What do think is an accurate way of imaging the subsurface in the foothills?

Number one is to get good data in the field. The importance of acquisition design and execution can’t be overstated. Talisman has a longstanding relationship with Veritas that has generally served us both well. Over the years we’ve acquired what we believe is better data at lower costs compared to the industry average. Good acquisition is something that can never be taken for granted and is probably underestimated in terms of its impact on imaging.

There are many tools that can be used to help imaging and they change constantly. I believe the trick is to concentrate on all the elements that make a difference. I don’t think there’s any one way to get the “best” image and I won’t try to explain my thoughts on processing techniques. The importance of the individuals doing the work is something worth emphasizing. As an example, after the merger with Dome, Amoco had a large number of people that processed data in house. Year after year, there were two guys that always produced superior results on the same data, with the same software as everyone else.

[Satinder]: Depth migration requires accurate velocity models or else it is not so effective. How do you get that accuracy in the velocity in the foothills data? For good knowledge of velocity you need some kind of control like well data. In virgin areas the control is limited and so you do have problems.

Simplistically it comes down to iteration and experience. Given a particular dataset in an area, it’s obviously very important to get a good statics solution. Among the options, tomographic approaches to producing a very shallow velocity model have recently produced some good results. When looking past the near surface, shallow velocities are usually easily picked to an acceptable level of accuracy by velocity model iteration and examination of the resulting image and gathers. As depth increases, the leverage from moveout decreases and experience with what velocities are actually applicable becomes more of an issue. That’s where experience and well control become critical. Similarly, the effects of anisotropy can be significant.

[Oliver]: Peace River Arch is a well-known and prospective area. How much exploration has Talisman done there?

The arch is a core area for Talisman and has been for many years. It accounts for about a quarter of our Canadian gas production and slightly less in terms of boe. Both the Rigel and especially the Petromet acquisitions had major Arch components.

[Oliver]: Isn’t seismic exploration expensive in the foothills? Do you think it is still profitable to explore and drill in the foothills. What prompts companies to carry out exploration there? Does the government offer incentives?

Foothills exploration is definitely expensive and definitely profitable for companies that have the expertise and don’t fool themselves about the risks or reserves potential. Companies go to the foothills looking for large reserves and relatively good deliverabilities. The government has a 2 year royalty holiday that’s worth about $2MM per well.

[Oliver]: Are there any specific trends emerging from foothills exploration?

Horizontal drilling is probably well beyond emerging but has had a huge impact on exploration. The technology is still advancing and leading to record horizontal lengths at increasing depths. All other things being equal, I think that improved drilling technology and increased drilling experience in the foothills are contributing to greater success. Of course, that doesn’t prevent the occasional train wreck.

Wells are also getting deeper as they do in most maturing plays. There is no shortage of deeper targets or new areas to enter in the foothills that may be further away from infrastructure. The issue companies always have to struggle with in new targets or areas is finding a balance between risk, cost, and reward.

[Oliver]: Historically, Shell, Husky, Talisman and a few others have been active in the foothills. What other companies are operating in the Canadian foothills?

Petro-Canada, Canadian 88, Suncor, and to a degree Mobil have been active. More recently Anadarko/Anderson and Murphy have been very active.

[Oliver]: The acquisition of Canadian companies by US-based companies has coincided with increasing land costs. What are the factors at play here?

Land prices in several areas have certainly gone to extreme levels. I am not sure if you can point directly to any single cause but between increased interest and record product prices last year the result is obvious. It will be interesting to see how the land game plays out. Some companies must have a very optimistic view of future pricing and the risk on some plays to justify the prices they are paying.

[Oliver]: Is Talisman also pursuing any unconventional resource exploration?

Yes. Coalbed methane, tight gas, and heavy oil are all resources that are too large to ignore and will have their time. There are also a lot of factors that bear on choosing the right time to become heavily involved in unconventional resources. Based on his track record, I think our president, Dr. Buckee will get it right.

[Satinder]: Talisman was in the news sometime back for continuing to carry out exploration in Sudan. What is the situation there now and is the international pressure on Talisman off somewhat?

Sudan continues to be a big issue for Talisman. Speaking for myself and not for Talisman, I’ll probably offer too much information. That’s quite a switch since my initial reaction was to say very little out of a sense of frustration with the whole issue. I’ve followed the news related to Sudan closely and seen a great deal of reporting that was obviously and disturbingly biased to fit various agendas. It’s not easy to get objective information about Sudan. I’m afraid there’s just no short or easy way to explain the situation in Sudan and I wouldn’t hazard to guess the reaction of Talisman’s critics. I do believe that if Talisman leaves Sudan, that the people of Sudan will be the worse for it. A company less concerned about public opinion would quickly fill our shoes and the oil production would be unaffected.

Since Talisman invested in the GNPOC in Sudan three years ago it has made a positive difference through a number of initiatives. Starting with the 2,000 jobs that the project provides, it’s worth noting that they are subject to strict health, safety, and environmental standards and that vocational training is provided with the goal of having Sudanese account for 90% of the workforce by 2007. Training is also being used to increase the ability of the southern Sudanese to participate in and benefit from the development.

Community development assistance has been a high priority for Talisman. Medical assistance so far includes a hospital, five clinics, medical staff, free medical and dental care to hundreds of people daily, vaccination of more than 15,000 people, a travelling medical unit, and an ambulance service. Educational programs have resulted in the building and equipping of four schools in the concession and supplying eight more along the pipeline route. Water wells have been drilled or repaired in 32 communities, and dugouts provided for cattle. Talisman and its individual employees support many charities, an orphanage, and an artificial limb clinic. Many Talisman employees volunteer their time in support of community groups. Emergency aid was provided when about 60,000 people were driven from their homes by fighting and fled to Bentiu on the edge of the GNPOC concession.

On the social/political front Talisman has provided financial support for peace initiatives and continuously advocates an end to hostilities. Talisman was instrumental in the adoption of a code of ethics by the GNPOC consortium, similar to the International Code of Ethics for Canadian Business, something I wouldn’t have believed was possible.

Finally, Talisman employs a full-time human rights monitor in Sudan to monitor human rights in the concession area and ensure that our operations are in compliance with both the International Code of Ethics for Canadian Business and Talisman’s corporate business policies and practices. An independent external audit on the subject is conducted and made public each year.

As I said, if Talisman leaves someone else will enter, and I just don’t see how that’s going to help anybody in Sudan.

[Satinder]: Where else around the world is Talisman actively exploring?

Internationally, Talisman explores in the North Sea, Indonesia, Sudan, the United States, Algeria, Trinidad and Colombia. The recent Lundin acquisition increased our North Sea assets and added some in Malaysia, Vietnam, and Papua New Guinea.

[Satinder]: What have been your inspiring goals that have brought you where you are today?

I can’t say that I’ve had what I’d call inspiring goals in my career and I have a hard time explaining my motivations. I get satisfaction from the process of exploration more than the results. Of course it’s the results that count, but what I really enjoy is making a positive difference in a project in whatever form that takes. While it’s nice to drill great wells and not so fun to drill duds I’m motivated by things on a much shorter time scale.

[Satinder]: So basically you are drawing inspiration from day to day work and forging ahead.

Yes. If exploration is like a big puzzle, I’m happy if can add some excellent pieces every day.

[Oliver]: So you would basically describe yourself as operating on a fairly even keel, not getting too high or low?

I try to stay level. If other people are up that’s great and I enjoy that, and if they’re down then maybe they can benefit the same way from me. Exploration is such a game of risk that I try not to worry too much about the failures as long I’m satisfied that I assessed the play correctly. Similarly, if I happen to be part of a successful play, I try not to take much credit since a lot of it is chance.

[Oliver]: Now I’ll ask Satinder’s favourite question, Dave, what do you do in your free time?

I spend a lot of time with my 10-year-old son, and enjoy too wide a variety of activities. The short list for the winter will be Tai Chi and snowboarding.

[Oliver]: What sort of difference in corporate culture did you notice when you switched from Amoco to Rigel and Talisman?

The difference in cultures has been huge. At Amoco the culture was very process focused. Every two or three years there would be some sort of corporate reorganization, resizing, or examination of how the company was operating. These things were done by large groups of people and even when the results were positive, they came at a great cost.

Rigel switched to Business Units shortly after I arrived to work in the Peace River Arch. The experience of working with teams of geologists, geophysicists, landmen, engineers, and management all focused on the same goals was very positive. Maybe the size of the group was just right, but it was great to have a good plan, constantly updated, and to be able to make key decisions on a moment’s notice. When decisions needed to be made, you just collected the right people, talked things over and decided.

[Oliver]: When was that?

From 1997 through 1999.

[Oliver]: Then at Talisman, how is it going?

It’s going great! Talisman is full of very skilled and experienced people that work hard and know what they need to accomplish. We’re well funded, have lots of opportunities, and have good management that is supportive and doesn’t hesitate to move quickly on a good thing when they see it.

[Satinder]: What would you advise young geophysicists entering the industry?

Try to work for a successful company with people who are very good at what they do. Formal training at university or on the job, while very important, imparts only a small fraction of what an individual needs to learn to become successful. With industry demographics biased toward individuals with many years of experience, people entering the industry now have a great, if potentially short, opportunity to learn from these people. The saying, “Learn about hornets from others,” applies.

[Oliver]: What sort of hornets did you learn from in your career?

Most hornets seem to be related to assumptions we make that we are unaware of. They’re so common that they often have sayings that go with them. I’ll use the ubiquitous company X for a couple of examples about companies, but the same thing seems to apply to individuals.

After initial success on a play, company X changes its view of risks and rewards only to find out that, “All that glitters isn’t gold,” and loses its shirt on the play - three different times! Company X finds a great opportunity that’s a real stretch but gets nailed by a price dip and learns, “Not to put all its eggs in one basket.” Unfortunately, the problem always seems to be recognizing a hornet you’ve heard about but never seen.