The Boom (44 page)

Why wouldn’t the industry adopt technologies that both protect the environment and boost its bottom line? The same reason that there are enormous flares of natural gas in North Dakota. The industry has wanted to move extremely quickly to drill the wells—to beat the ticking clock of lease obligations, to meet or exceed Wall Street’s earnings forecasts, and to begin generating a return on the money it invested in wells. In North Dakota, companies don’t want to wait for gas pipelines to be installed, not when it can begin to pump out valuable crude. And most don’t want to wait around if green completion equipment isn’t available.

It’s time to slow down. My father rewired the Farm—even if the inspector’s complaint was that the electrical boxes were a quarter inch too small. “If anything happened to those kids because of the wiring, I would never forgive myself,” he said. It might not have made any difference, but maybe it would have. When it comes to fracking, getting it right is important. And if we blow it, we’re never going to forgive ourselves.

So, as the animated country singer in the Dallas museum intoned, “Take the time to get it right. There’ll be gas tomorrow night.”

1. I have used the spelling
frack
and
fracking
throughout this book for two reasons. First, they are the preferred spelling of the
Wall Street Journal
and other major newspapers. Second, the spelling
fraced
simply doesn’t convey the clipped cadence of the word as it is pronounced by opponents and engineers.

Thanks and Acknowledgments

When I began reporting on the petroleum industry more than a decade ago, my knowledge about fossil fuels was limited. Gasoline came in three flavors: regular, premium, and superpremium. It had something to do with crude oil. I thought oil and gas was a low-tech business. I once naïvely asked a sales representative from a data storage company what he was doing at the world’s largest gathering of oil vendors. Computing power was for Silicon Valley, not Houston.

I owe an enormous debt to many people who over the years have shared their knowledge of the industry with me, so that I could understand the modern energy industry in all its glory and foibles. Countless petroleum engineers took time explaining the intricacies of how to find oil and gas, to drill a well, and to hydraulically fracture it. Their patience with my generalist’s understanding of science was a gift. Geologists provided informal seminars on the nature of hydrocarbon reservoirs and shale. Critics of fossil fuels also provided invaluable assistance to help me see the industry through their eyes. I hope that I repaid their time by accurately describing their work and views. All mistakes are mine.

Many oil companies regard reporters as pests to be managed. Marathon Oil was very generous to allow me to witness the fracking of the Irene Kovaloff. Thanks to the folks in the Dickinson field office for their willingness to throw their schedules to the wind.

My professional home during this time was the
Wall Street Journal
’s Texas bureau. I have been fortunate that the bureau has been peopled with a string of great editors and colleagues. I couldn’t begin to repay the support and guidance offered by Leslie Eaton. Before her, Jennifer Forsyth provided early encouragement. Karen Blumenthal, who suggested I try the energy beat back in 2002, deserves recognition and my sincere appreciation for teaching me, among other lessons, how to read a cash flow statement. Ben Casselman and Daniel Gilbert covered Chesapeake after me. Their reporting on and insights into the company were top-notch. Angel Gonzalez, who for years was our man in Houston, has been a valued coworker and friend. While never a Texan, Bhushan Bahree generously shared his sagacity derived from decades covering the world of oil. There are few editors as smart as Mike Williams, who served for a time as the paper’s energy czar.

Many thanks to the University of Texas for keeping its stacks open to the public, even those of us who married Aggies. I benefited tremendously from access to the collections of the Perry-Castañeda Library, the McKinney Engineering Library, the Walter Geology Library, and the Dolph Briscoe Center for American History. In addition, thanks to folks at the public libraries in Oklahoma City and Tulsa for their help, especially Sheri Perkins at the Tulsa City-County Library, who went above and beyond to find an old newspaper article I needed. Computers make so much information available, but sometimes nothing beats a well-maintained vertical file. Also deserving specific thanks are Mat Darby at the Briscoe Center and Rebecca Radford at the Kansas Geological Society & Library.

Many have earned my gratitude for their willingness to engage in meandering discussions of energy. At the top of this list is Professor Michael Webber of the University of Texas. Why he orders Mexican plates at a Brazilian restaurant is a mystery, but his deep understanding of energy isn’t.

To Elizabeth Gold, thanks for your sanity, wise counsel, funny stories, insights, observations, and vigilance keeping tabs on the Park Slope antifrack pamphleteers. For your main squeeze, Danny “Inspector” Felsenfeld, here’s another literary mention to add to your collection.

This book wouldn’t have been possible if David McCormick hadn’t seized upon my idea with gusto. Among his many contributions was steering it into the hands of Ben Loehnen, a most able editor.

Over the past couple years, I have told people this book began as a birthday present to myself. The present was permission to spend long hours alone, hashing out ideas, and writing drafts. I now realize that I didn’t give that present to myself. My wife and children were the gift givers. Their love, unstinting support, and encouragement were constant and appreciated in ways I can never fully express. The book is dedicated to them, but that doesn’t come close to repaying them. Thanks.

ABOUT THE AUTHOR

© JOEL SALCIDO

Russell Gold
has reported on energy in
The Wall Street Journal
since 2002. His coverage of the Deepwater Horizon oil spill was honored with a Gerald Loeb Award and was a finalist for the Pulitzer Prize. He lives in Austin, Texas.

www.russellgold.net

Twitter:@russellgold

Sources

Below are listed the primary sources, by chapter, I relied on to research and write this book.

Chesapeake reported, in its annual 10-K report filed in March 2013, that it held leases, either partial or whole, on 25.9 million acres. This is about 40,500 square miles. Kentucky covers 40,400 square miles. In 2012 the company reported expenditures of $21.6 billion.

The history of the Farm comes from several talks with my parents, Barbara and Steve Gold, as well as records in the Sullivan County courthouse in Laporte, Pennsylvania. The earliest prominent reference to a “Shale Gas Revolution” is a 230-page research report written in part by Chris Theal and issued by Tristone Capital Global on October 6, 2008. Details on George Mitchell and Mitchell Energy are included in the sources for chapter 5. More information about Oklahoma City in the 1980s oil boom and bust can be found in Mark Singer’s wonderful book
Funny Money.
I assembled information on the Matt 2H well from many sources, including the Susquehanna River Basin Commission, the Pennsylvania Department of Environmental Protection, and FracFocus Chemical Disclosure Registry (www.fracfocus.org). I tried, unsuccessfully, to track down the electrical inspector who refused to issue a connection permit through the Sullivan County Rural Electric Cooperative.

Figuring out how many wells are fracked annually isn’t as easy as it would seem. I relied on Richard Spears of Spears & Associates, publisher of the annual and authoritative
Oilfield Market Report.

The best source of data on national energy consumption on a per-capita basis is the World Bank’s calculation of fossil fuel energy use. I relied on its “World Development Indicators: Energy Production and Use” table, which can be found here: http://wdi.worldbank.org/table/3.6#. (Last accessed August 2013.) US per-capita consumption of fossil fuel is about 10 percent greater than Canada. Other nations with higher per-capita fossil fuel consumption are major oil producers, such as Qatar and Kuwait, and use the large amounts of fuel to power export-oriented industries. The International Energy Agency’s
World Energy Outlook 2012
is the source of the claim that by 2020 the United States may become the world’s largest oil producer and for the relative carbon emissions of coal, natural gas, and crude oil.

The section on global shale deposits and how shale was formed was aided greatly by numerous conversations and email exchanges with: Julio Friedmann, the chief energy technologist at Lawrence Livermore National Laboratory; Scott Tinker, director of the Bureau of Economic Geology at the University of Texas; Juergen Schieber, “mudman” and “shale detective,” and, more conventionally, a geology professor at Indiana University; James Coleman, a research scientist at the United States Geological Survey; and Ray Levey, director of the Energy & Geoscience Institute at the University of Utah. I consulted several geology papers and found work by Gregory Ulmishek and Richard M. Pollastro particularly helpful. In addition, Clint Oswald and his colleagues at Wall Street research firm Sanford C. Bernstein have published many great notes on global shale deposits, including “Oil Shale—Forget About the Bakken, Wait for the Bazhenov” in 2012.

Birol, Fatih.

. Paris: IEA Publications, 2012.

Deutch, John. “The Good News About Gas: The Natural Gas Revolution and Its Consequences.”

90, no. 1 (January–February 2011): 82.

Gibson, Arrell Morgan.

. 2nd ed. Norman: University of Oklahoma Press, 1981.

Medlock III, Kenneth B., Amy Myers Jaffe, and Peter R. Hartley.