Craig Slawson of Slawson Exploration Company Inc. was gracious enough to grant an interview that provides great insight on the Bakken region. Craig and Todd Slawson, along with other family run the exploration arm of the Slawson companies. It underscores some of the challenges for O&G companies operating in the region. Enjoy and look for more interviews to come:
How did your family get started in oil & gas and ultimately see the potential in the Bakken region?
Answer: Our father started the business in 1957 as a young geologist out of KU hunting for Mississippian age pools in central, then western Kansas. Initial successes led to expansion and ongoing integration within the industry to a culmination of 800 employees, 9 rigs (KS and deep Anadarko), largest crude purchasing/transport in KS, extensive radio towers, and essentially became the most dominate wildcatter in most of the basins we played (Powder, Williston, KS, Anadarko, Sacramento and some Gulf Coast).
Our secret sauce was tenacity, patience and applied “proven” technology as a “fast follower”. We stayed in core basins through thick and thin, applying cutting edge technologies as risk reduction tools to convert exploration plays to exploitation provinces. Thus was the case with 3D AVO in the Sac basin turbidites, the Bakken Shale in the late 80’s (3rd Rockies operator to drill a H test) and now in associated reservoirs within the Bakken sequence as well as other regions. As is often the case we “found” the Bakken when looking for other formations but in the right area for a Bakken “bailout” at a time when others just started to deploy horizontal technologies from Texas. Thus Slawson jumped in very early, learned by drilling and tweaking ourselves versus using conventional wisdom. We understood what made this work and from there focused on exploration of other adjacent provinces, specifically the Richland County area – which also had “accidental” vertical production. In 1991 we amassed some 40,000 acres in options to attempt this region but with crude selling in the teens we gave up after 50 showings. Finally in 2003 one of the other operators hit near this area and were able to quickly capitalize once again on our previous work.
As one of the smaller players in the Bakken province(s) we still see places we can employ our unique traits. The Bakken is more complicated than most realize. And the ever-evolving drilling and completion technologies will continue to lesson some of the complications but one must know where to drill and why – which subset strata and why – direction and the optimal length laterally and which completion technique will optimize the exploitation. By my count thus far there are 8 different provinces. The industry has mastered maybe 4. Potential remains in the remaining areas/formations and in refining what we have already mastered with latest techniques.
Being “on the ground” in the Bakken region, do you see any trends occurring in terms of uptick in drilling, heightened interest etc?
Answer: We do see many trends evolving in both testing other geologic concepts and in the ever-evolving drilling/completion techniques that will help us both better develop and better exploit some of the lesser productive yields. BEXP’s expansion and deployment of closer stage frac spacing from early attempts in Mountrail is one trend. We just successfully deployed a record 36 stage frac on a 8000’ lateral thus now yielding a ~200’ frac spacing. I believe some of Canada’s work is now ~150’ spacing. And as the gas-prone Gulf Coast companies attempt to morph to oil given the ongoing gas supply pressure they are starting to enter the province – we have seen this trend all too many times.
Are you seeing improved deployment times (time to get drill online and producing) in the region and if so, is the improved technology around horizontal drilling making the difference?
Answer: In general the infrastructure is improving such that there is currently a good balance of completion vendors, drilling rigs and oil/gas egress from the state (some tightness of course in all areas if things heat up further). The past two winters have not been kind to operations but this goes with the territory and gives others pause.
What are some on the technical and personnel challenges you’ve faced in growing the business in the Bakken region?
Answer: Challenges have been many and varied. First in acquiring leases at fair prices commensurate with the risk/reward. Drilling rig shortages, crew shortages, tubular shortages, pipeline egress capacity issues, then wildly fluctuating product prices which put EVERYTHING into a tailspin immediately after a boom cycle. Companies had just signed longer term commitments for rigs, pipe, egress infrastructure, etc and given the longer lead times in this industry, most cannot back peddle fast enough to accommodate swings like this and thus suffered. Slawson’s perseverance in this time prevailed and was able to take advantage of the early 09 recession to re-amass more acreage. We “doubled-down” because the market presented a buying opportunity in a relatively short term pricing issue that was artificially too high anyway.
: Is Slawson going to stay a private entity or do you potentially see a public offering in the future?
Answer: Slawson (SECI) is manically private and enjoys answering only to ourselves, right or wrong.
Thanks again to Craig for the great information