i wonder how often this happensBut Bowles, in an interview last week, cited many pressures facing his company, including the struggle to maintain production and to fight off new state taxes.
Q. Tell me about the company's exploratory drilling this past winter.
A. We've just finished up our exploration program this year. We've claimed for some time that we're the No. 1 explorer in the state, and this past year wasn't anything different. We ended up participating in four exploration wells on the Slope, which is a good season. With those four wells, we probably spent a little over $40 million. Two of those wells were out in the National Petroleum Reserve-Alaska. We went 70 miles into NPR-A, the farthest we've ever gone with ice roads in any one season.
Q. So what did you find out there?
A. Well, we found a bunch of rock that we drilled through (laughing).
Q. Okaaay.
A. You may have to wait a year or two before you get the announcement on what happened there. Aside from the drilling, we participated in two seismic surveys this past winter in and around the Kuparuk field. We ended up capturing about 500 square miles of seismic data.
Q. Is that a lot?
A. It's a lot. It's huge. Much more than usual. It's $30 million worth of seismic.
Q. Why did you do it?
A. What we're looking for now is not only the big plays out in NPR-A but smaller oil development possibilities around Kuparuk. One big plus about doing seismic work in that area is you can develop prospects quickly. We may be drilling as soon as next year.
Q. Well, Kuparuk is a declining oil field but you've got big processing plants and pipelines there that I imagine you'd like to keep filled with oil.
A. That's right. Exactly.
Q. Conoco just came out with its first-quarter results and generally the numbers are very positive. I'm wondering, however, about the line showing that "exploration charges" in Alaska jumped from $17 million last year to $85 million this year. What's that about?
A. Since 2000, when we really started actively exploring NPR-A, we've spent well over $200 million. Some of those dollars found some successful potential developments, and some didn't. We've had some dry holes, and that's what you're seeing, some dry-hole write-offs.
Q. That suggests the risk of your business, I suppose.
A. You hit the nail right on the head. It's easy to point to $50 oil. But when you look at the risk and what we're spending that we never see a dollar return on, that's the sort of thing that's really missed a lot of times in our business. If all of our wells were successful, we would have been hugely successful, but we have a lot of activity that never goes anywhere.
Q. Not only that, if all of your wells were successful, I might start a little company myself.
A. (laughs) That's exactly what would happen. That's right.
hmmm..interesting
Wait...i thought oil fields last forever??Q. Your predecessor, Kevin Meyers, told me last year the company hoped just to hold its Alaska production steady. Any change in that outlook?
A. Maintaining flat production on a 20-year-old oil field is a monumental task. We'll continually reinvest just fight to maintain that flat oil production.
We've had a slight decline over time, and short of new field discoveries, it's hard to turn that around to any large degree. Right now, off the Slope, we're the top producer of oil. We're doing about 335,000 barrels a day. In Cook Inlet, we're the top gas producer, about 160 million cubic feet a day.