George P. Mitchell and crew long have been credited with finding the trigger to unlock unconventional natural gas, but it was in fact a colorful cast of visionaries, oddballs and take-no-prisoner pitchmen who helped launch the United States on the road to energy independence, as told in the insightful, and at times suspenseful, new book by bestselling author Gregory Zuckerman, The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters.
The Portfolio/Penguin book, which hits bookstores on Tuesday, tells the tale of a group of wildcatters -- winners and losers -- who risked almost everything on the promise of unconventional natural gas -- reserves uncovered through horizontal drilling and hydraulic fracturing -- fracking.
Mitchell founded and nearly bankrupt Mitchell Energy & Development Corp. in his quest to discover the secret sauce that would capture commercial gas from the Barnett Shale. Aubrey McClendon and Tom Ward, both landmen, kept running into each other as they traipsed the country securing deals so they decided to form Chesapeake Energy Corp.
Harold Hamm, the son of poor Oklahoma sharecroppers, believed there was more oil than anyone imagined in an overlooked corner of the country and proved it with Continental Resources Inc. Mark Papa, who helmed Enron Corp. oil and gas castoff EOG Resources, saw the resurgence in U.S. energy production but realized his company wasn't prepared for it. And then there's Charif Souki, a "super smart" Lebanese immigrant whose fortunes had disintegrated before he found an unlikely avenue for success.
Zuckerman, a Wall Street Journal reporter and bestselling author of The Greatest Trade Ever about the 2008 Wall Street financial crash, spent some time talking with NGI’s Shale Daily about the new project. He admitted that as an East Coast journalist, he had preconceived notions of what he'd find in the middle of America. He admits those notions were incorrect.
"Two things jump out at me," Zuckerman said. "First is, as a guy based on the East Coast -- and I haven't spent my life dealing with energy executives -- I sort of had a cliched perspective...of a lot of these guys. You know, cigar-chomping, giggling in their Houston offices as 'oops, we spilled here or we spilled there.'...They were not as concerned about the environment.
"But when you start talking to these people, and you spend a lot of time with them, and I did -- I was really, really privileged to spend a lot of time with a lot of these executives and others in the business -- you realize that a lot of them are geologists, and they like rock, and they have ranches, and they spend more time outdoors than I do."
The energy industry leaders "do have a real love for nature," Zuckerman said. "It's not that they don't make mistakes and they don't pollute. But they are much more conscious of the environment than I would have thought...
"To me in many ways, it was very reassuring. It reassured me about America...So it was reassuring in that it reminded me again, on the East Coast you often have your kids going to school, going to good colleges, coming out of college, and they can't get jobs. There's still many people who are just sort of downbeat and don't have tremendous hopes for the future.
"But then when you start to get into the energy business and this revitalized industry and resurgence...It's completely different. It's like going back in time almost. You go up to North Dakota and the Williston and it's like sort of like the tech world 1999. There's a gold rush, and you don't know how long it's going to last for, but people are coming from all over the world.
"It's wonderful to see these young people. This kid in Louisiana I came across who didn't go to a college or maybe he went for a couple of years…didn't really have a future. And now he's making over $100,000 in a small town in Louisiana, doing quite well, working in the…oil industry, and it was very reassuring to see. The entrepreneurs out there, and the people, the resiliency of this country, of the frackers..."
Zuckerman said he was "privileged" to spend time with visionaries like Mitchell, who was more complex than many believe. Zuckerman describes the pre-success period for Mitchell Energy, 17 years into it, when George Mitchell, then in his 70s, was diagnosed with prostate cancer and his wife Cynthia was suffering from Alzheimer's Disease. The energy arm remained focused on unlocking Barnett Shale gas, even though it appeared to be for naught. Mitchell often would micromanage some of the field work. He would have screaming matches with staff, some urging -- begging -- him to give up on his Barnett dream.
Many characters' gray areas are drawn out in The Frackers.
"Mitchell was driven." said Zuckerman. "I'm really attracted to some of the great characters. In my first book, some people loved the characters, some people hated them. And I think it's going to be the same thing here too, where…I think afterwards you put [the book] down and you say, 'You know, some of these guys I really like and some I don't like and some combination and some black and white.'
"And George Mitchell was driven, and he's a visionary, and he also could be a jerk...In the same breath, people who worked for him say they loved him, and yet, he pushed them really hard. Maybe that's what it takes to be a visionary. I don't know."
Some of the successful wildcatters, such as Hamm, were more difficult to interview, said Zuckerman. "I love Harold Hamm for the American story that he represents, for what he's done with starting from so little and how he's changed this country...But he's not someone who's going to talk…He's not the most open guy." McClendon and Ward also were more reticent. "They may be self-reflective but they're not sharing those reflections with a writer necessarily."
Souki and backers formed Cheniere Energy Partners LP in the late '90s originally as a wildcatter focused on the Louisiana Gulf Coast. He had blue-chip connections that helped with financing, but the company wasn't finding any oil and gas. He then turned his attention to importing gas and attracted financiers for huge terminal in 2000. That terminal later turned into an export project, and the rest could be history. The first LNG train is expected to begin exports from Sabine Pass, LA, in 2015, the first in the Lower 48.
But why is Souki in a book about "frackers?"
Zuckerman said there were two reasons. "One is I tried to tell the story of this era, this resurgence and how a certain few people are at the heart of it. And he is at the heart of it in that he's going to lead a part of it. First, he leads a company that will be the first to export from the Lower 48 and how he did it, how he got to that point is a remarkable story, in my view. He played an important role. As I say, he knew as much about fracking as he did fajitas a few years ago. But he nonetheless turned on a dime and became a crucial part of this era." Souki also was a "colorful character," which to a writer makes him worth discovering.
The author acknowledged that he will get heat for the title of the book.
"One of the protagonists in the book cut me off when he saw the title of the book, and somebody else, one of the big guys, cut me off when he saw the title of the book," he recalled laughing. It's not meant to be disrespectful. The term has become the international symbol of energy independence.
With all of the optimism he saw when he toured the country, Zuckerman said was disturbed by "how divided we are as a nation, not just when it comes to fracking, but obviously in Washington, DC. But the fracking debate really reflects that." He noted that only the Environmental Defense Fund (EDF) today is working with producer groups "to hold their feet to the fire to try and improve how they operate and to avoid future environmental mistakes...Everybody else is either 'drill, baby drill' or 'fracking poisons.'
"The truth lies in the middle there somewhere, where yeah, fracking can be done properly but often it isn't. But...we're sitting on the biggest natural gas deposits in the world...and we're coming out of the biggest economic downturns…Expecting our nation not to try and tap those cheap gas sources? It's better to work with those producers and put pressure on producers to prove how they do it. But you don't see enough of that."
Zuckerman said he found it encouraging that there were more efforts to prevent accidents in the industry. However, "many people in the energy business feel very defensive when you talk to them. Some are not apt to acknowledge mistakes made in the past or made today partly because they've been under pressure. They've heard it from lots of constituencies and groups out there.
"By the same token frankly, the environmental groups, they care about the environment and about our country very much, and they are very well meaning, but working with producers may not be the best thing for them...I'm optimistic that science will prevail and that cooperation will prevail, I'm also realistic to acknowledge the obstacles…"