‘The Boom’: A tale of the Barnett Shale and beyond

04/06/2014 12:00 AM

04/04/2014 3:33 PM

Ottis Grimes had seen and heard enough. Too much, really.

His own livelihood might depend on the energy business, but the drilling derrick hoisted right next to his new home in Burkburnett, 130 miles northwest of Fort Worth, was a curse. Grimes and his wife had to yell to talk in their own living room.

So he sued to stop it. In a case that went all the way to the Texas Supreme Court, Grimes lost. He didn’t own the mineral rights on his property, and the driller had the right to get to the oil beneath Grimes’ modest lot, the courts ruled.

And thus, in 1919 — nearly a century ago — a legal precedent was created that has driven courts and public policy in Texas and elsewhere, right up to today’s controversies over shale drilling in North Texas and a growing number of states.

“It’s this wonderful, rich story,” Wall Street Journal energy reporter Russell Gold said of Grimes’ experience, recounted in The Boom: How Fracking Ignited the American Energy Revolution and Changed the World, which goes on sale Tuesday. Gold’s book is arguably the most readable and best-researched volume looking at hydraulic fracturing, or “fracking,” and its impact on the development of U.S. oil and gas supplies.

Gold, 42, has covered energy for the Journal since 2002, working for a time in the paper’s Dallas bureau and now living in Austin. The Philadelphia native accepted a reporting job at the San Antonio Express-News in 1996 and “hasn’t strayed from Interstate 35 since,” he said.

Much of The Boom takes place in North Texas, where the Barnett Shale, horizontal drilling and fracking ushered in a new way of producing oil and gas.

Gold spent time with George Mitchell, whose dogged efforts in Wise County finally unlocked the secret to forcing shale to give up its hydrocarbons. Mitchell’s company, however, was also responsible for allowing methane to migrate into local water wells as early as 1977, a legacy that Mitchell was reluctant to discuss with Gold before the oilman and developer died last year at 94.

The Star-Telegram interviewed Gold last week by phone. What follows are excerpts from his book and an edited transcript of his comments.

Chapter 2, Ottis Grimes

Grimes sued to stop the drilling, claiming that Goodman Drilling had turned his domesticity into a nightmare. The company’s lawyers replied that any delay would allow nearby wells to suck out all the oil. A considerable number of the company’s employees would need to be laid off. Anyway, this was Burkburnett, the lawyers argued, and “the injuries complained of … are but those commonly sustained by the inhabitants of the town.” As many as four wells were being drilled on any given day in Burkburnett and if the court granted the requested injunction, they said, the oil-greased wheels of commerce would stop turning.

Russell, what for you is the lesson of Grimes’ story?

As much as we say how important it is for mineral rights to be owned by homeowners, so they have the incentive to allow the drillers to come in, sometimes you don’t have the choice. You buy a house and you end up in the middle of an oil and gas development.

Here was a guy who worked for the oil and gas industry, but even back then in 1919, he put his foot down and said, “No, this is not right. I’m going to get justice.”

As galling as the details are, the fact that the court said, “No, the driller has the right,” that’s such a fundamental part of the story. The courts and to an extent the politicians have decided that energy development is so important that people and places are going to have to be sacrificed. That’s a difficult part of the story.

Chapter 8, The Rise of Aubrey McClendon

Americans like our abundant energy, but not the men who provide it.

When all is said and done, Aubrey McClendon is apt to be regarded as a visionary, the chief apostle of an energy revolution that left America richer, cleaner, and freer to pursue a new course in the world. With this in mind … I returned to Oklahoma City to witness a very American spectacle. I came to see a public rebuke of McClendon.

His journey, which is intertwined with the growth of Chesapeake Energy and fracking, is one of the most fascinating recent stories in the annals of American business. It is replete with opportunism, insight, risk, and breathtaking materialism. Understanding how the energy boom unfolded requires understanding the person whose personality most influenced it.

Aubrey McClendon gets two chapters. What stood out to you about this larger-than-life figure?

The thing that left me amazed was when I found out that in the midst of running a public company and owning all these little slices of wells and making huge bets on the futures market on the price of natural gas, he was also invested with John Arnold in the Centaurus Fund and the board of directors wasn’t aware of that. He ran a company that was very active in the futures markets — and ran a hedge fund on the side. He invested with one of the largest commodity funds.

Everything flowed through him. I suspect Aubrey McClendon personally owned more natural gas reserves than any other individual since the era of Rockefeller.

Chapter 11: Blessings of the Pope

It was a beautiful day for a protest. A few hundred people marched through downtown Philadelphia chanting, “Hey, hey, ho, ho, hydrofracking’s got to go.” … Filmmaker Josh Fox, in his trademark baseball hat and thick-framed glasses, told the crowd that “fracking is a disaster unfolding across Pennsylvania.”

Inside the convention center, more than a thousand energy executives were attending a conference on the Marcellus Shale. The keynote speaker, Aubrey McClendon, took the stage and called the protestors naive. “Their real game plan is to use political pressure to force Americans to pay exorbitant energy costs for the so-called ‘green’ fuel sources that they prefer,” he said.

What struck you as you watched a story like shale production, which you’ve covered for years, become a national debate?

How polarizing it became so quickly. How people who really didn’t understand even the basics of the business were so ready and willing to pontificate about how good or bad it was. And how quickly both the environmentalists and the companies were willing to move away from facts to make up their arguments. It was kind of disheartening, actually, as somebody who spends my career trying to understand facts and write about them.

Fort Worth clearly has been the major urban area most impacted by wells. To hear some people talk about it, surely Fort Worth must be some sort of barren wasteland right now, without water or good air or anything like that. If you spend any time in Fort Worth and look around, you realize that’s just not the way it is. I don’t want to say everything’s perfect, everything’s great, but the fact of the matter is we can have gas development without causing environmental catastrophe. And frankly it’s our responsibility to do that.

And yet you write about coming to Fort Worth and talking to oil field innovators Marvin Gearhart and Claude Cooke about a tool that could help identify leaking wells. But the companies aren’t interested in it.

If you’re testing and you find a leak, then you’re obliged to do something about it. Sometimes you’d rather not know. If you didn’t know, then you’ve got deniability. If you test and you know there’s a leak, then there’s no way you can get out of that. The industry just didn’t want to know the answer to it. It’s decisions like that — well, we’re not so interested in whether the wells are properly cemented — that are causing trouble.

What do people need to understand about our energy dilemma: depending on fossil fuels but needing to move away from them?

This is an incredibly complex machine to deliver energy. It’s an incredibly reliable machine. When was the last time you went to turn on your lights and they didn’t come on? We expect that, and you simply cannot expect that to change quickly.

We are in the middle of an amazing energy transition. Renewables are rising at double digits, and that’s probably as quickly as they could rise. If they grew any quicker, we’d have more problems than we’re having now figuring out how to integrate them.

It takes time to make a change to the energy system, and people just need to understand that. We’re not going to snap our fingers and be running on solar panels tomorrow. It’s a generational change, and we need to get moving in the right direction and keep moving, just not overnight.

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