“The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters” by Gregory Zuckerman (Portfolio Hardcover, 416 pages, Nov. 5)
The rise of shale oil and natural gas in the past decade gets top billing in “The Frackers,” but it's the personalities who end up shining.
Oklahoma energy executives and visionaries Harold Hamm, Aubrey McClendon and Tom Ward feature prominently in Gregory Zuckerman's book. Its subtitle, “The Outrageous Inside Story of the New Billionaire Wildcatters,” might be marketing bluster, but it's an accurate description of how those men, and others before them, fought the conventional wisdom that oil and gas exploration in the United States was waning.
The book traces the shale boom to George P. Mitchell, whose company pioneered the use of hydraulic fracturing to unlock natural gas from the Barnett Shale in North Texas. Mitchell's persistence paid off, but much of the credit also goes to advancements in horizontal drilling technology and computing power, which allowed oil and gas companies to better pinpoint the “pay zones” in rock formations.
Zuckerman, whose last book, “The Greatest Trade Ever,” detailed hedge fund manager John Paulson's huge bet just before the subprime mortgage market collapsed, is a writer at The Wall Street Journal. In “The Frackers,” he focuses on the larger-than-life personalities so frequently found in the oil patch. But Zuckerman also takes the time to tease out the stories of a few of the more humble people caught up in the new energy boom.
Among them are Elizabeth Irish and her husband, Matt, who moved from picturesque Oregon to an oftentimes freezing Williston, N.D., for jobs as the city became the Bakken's newest boom town. It's also nice to hear about William “Buck” Butler, the hardworking rancher in South Texas who seems bewildered that his land is suddenly worth millions. The 87-year-old's one regret: “The only thing wrong is it came forty years too late. I'm too old now, I don't know what to do with the money.” Butler's story is a good counterpoint to the excesses of some of the executives profiled in “The Frackers.”
Zuckerman doesn't shy away from listing those appetites and side interests. Mitchell spends more than $600 million of his company's money to develop The Woodlands, a planned community on the north side of Houston. After Chesapeake Energy Corp. takes off, co-founder and CEO McClendon spends lavishly on wines, antique maps and houses in Bermuda, Hawaii and Michigan. Ward, just as driven but more low-key than his gregarious Chesapeake co-founder, also used his personal fortune to buy houses, land and cattle. Both men dabble in commodity trading after forming their own hedge fund.
McClendon and Ward also donate millions to universities, nonprofits and religious institutions. They were part of the ownership group that brought the NBA to Oklahoma City. As McClendon saw it, the Thunder was an integral part of attracting — and keeping — employees. “You can't attract first-rate employees, especially young ones, if your city is a dud,” McClendon said.
At its heart, though, “The Frackers” is about respect. The independent companies at the forefront of the shale boom — Mitchell Energy & Development Corp., Continental Resources Inc., Chesapeake, EOG Resources Inc. and others — weren't taken seriously by the majors like ExxonMobil Corp. and Chevron Corp., which had left the United States to focus on international oil and gas fields.
Much of Chesapeake's success came from its early and aggressive use of landmen, described by Zuckerman as the Rodney Dangerfields of the oil patch, to secure the best acreage in promising shale plays. When it was late to the game, Chesapeake paid top dollar for the best land or acquired rivals, piling on more and more debt. That strategy would come back to bite the company when natural gas prices fell.