The Frackers reveals how wildcatters spawned an oil and gas revolution in the United States
Wall Street Journal reporter Gregory Zuckerman thought he had found a phenomenal story when he wrote a book about a little-known hedge-fund manager who, in 2007, bet that the overheated housing market would bring down the financial industry.
His book, The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History, was described by writer Malcolm Gladwell as the "easily best of the post-crash financial books".
But Zuckerman recently told the Georgia Straight that he came across an even better story when he began to investigate how the United States suddenly became an energy superpower following the 2008 global meltdown.
His most recent book, The Frackers: The Outrageous Story of the New Billionaire Wildcatters (Penguin), is a gripping narrative about a few determined U.S. entrepreneurs who figured out how to produce vast amounts of oil and gas from shale-rock formations.
What once seemed an impossibility—U.S. energy self-sufficiency—is close to becoming a reality as a result of the efforts of the eccentric characters who appear in the book.
Zuckerman described Texas wildcatter George Mitchell as "the father of this revolution". An industry outsider, he spent 17 years trying to figure out how extract gas from the Barnett shale deposit in his home state.
His company achieved this by experimenting with hydraulic fracturing, otherwise known as fracking. It involves pumping massive amounts of water, chemicals, and sand to shatter the soft rock and free up the resource, but the mixture had to be just right to produce the desired results.
"In that way, I think he changed the country, but also the world," Zuckerman said.
His book covers others who played major roles, including Oklahoma resident Harold Hamm. He was born into extreme poverty, yet became a billionaire after recovering oil from the Bakken shale deposit in North Dakota. In some respects, it's a real-life Beverly Hillbillies story.
In 2008, America was producing five million barrels of oil a day. This year, that figure rose to over eight million barrels a day, putting it nearly on par with Saudi Arabia.
Zuckerman said that the energy boom has given the United States a competitive advantage against other countries, including China, which hasn't developed technology to extract oil and gas from its substantial shale deposits.
It was possible in the United States because landowners possess subsurface mineral rights. So an upstart company such as Oklahoma City–based Chesapeake Energy could purchase drilling rights in areas ignored by ExxonMobil, Chevron, BP, and Shell.
Chesapeake Energy, which was founded in 1989 on a $50,000 investment by former CEO Aubrey McClendon and former president Tom Ward, is now the second-largest natural-gas producer in the United States.
The Frackers chronicles how McClendon, a flashy risk-taker, and Ward, a more cautious hard-core Christian, eventually parted ways and why neither is on the management team or board of directors.
"It took individuals rolling the dice on parts of the country that experts and the majors all scoffed at," Zuckerman said. "You can't roll the dice unless you can work out a deal in short order and in a limited amount of time with landowners. It could be a farmer. It could be just an individual homeowner."
Zuckerman acknowledged that many people object to fracking for environmental reasons, particularly in the massive Marcellus shale area, which stretches from West Virginia to New York.
"I've travelled to Pennsylvania," he said. "Not everyone is a fan, but there are many who've been thrilled by the experience. They've been able to stay in their homes and in their farms."
Zuckerman revealed that some love the characters in his book, whereas others hate them. While they've helped the U.S. become more energy-independent, this has come at an environmental cost.
"If they've furthered our addiction to fossil fuels, then I think they'll be looked down upon as having done little to contribute to society," he said. "So it's not clear long-term whether these guys are heroes or villains. But to me, they're fascinating and they're colourful."
He also suggested that the oil and gas boom in the United States has profound geopolitical implications.
That's because the U.S. is weaning itself off crude oil from the Middle East.
Zuckerman said that only about seven percent of America's oil supply comes from this region, and he expects that to continue falling.
"Six months ago, Saudi Arabia pleaded with the United States to get involved in Syria, and the United States ignored them," he noted. "I don't think that would have happened a few years ago when Saudi Arabia meant that much more."
This, in turn, raises another question: if the United States becomes a less important player in the Middle East, which country will fill that void?
"Is China? Do we want that?" Zuckerman asked. "It raises all kinds of important implications and questions, but I think the geopolitical impact of this American energy resurgence is going to be one of the most important impacts in the years ahead."
Meanwhile, as U.S. energy production has soared, Canadian natural-gas exports across the border have gone into decline.
That, in turn, could be having an impact on the Canadian dollar, which has fallen sharply in the past year against the U.S. greenback.
"I knew the Canadian dollar has weakened," Zuckerman said. "I assume part of it is for that reason."
Apr 3, 2014 at 11:19am
Oil and gas boom?!?
I wouldn’t say this book is propaganda, but rather more like deliberate and malicious disinformation.
Read “Snake Oil: How Fracking’s False Promise Of Plenty Imperils Our Future” to understand what Zuckerman isn’t telling you.
The Post Carbon Institute purchased proprietary drilling data from oil companies and crunched the numbers on the costs and benefits of fracking. Never mind the environmental problems;
1. Fracking is not profitable, and it’s getting funded with Ponzi money that will be lost.
2. The Energy Information Agency and the International Energy Agency and the US Department of Energy massively fudged the numbers to claim 24 years of natural gas and claims of “Saudi America” from fracked oil.
3. Drilling companies such as Chesapeake Energy are financially surviving by selling leases rather than by extracting, refining and selling energy.
4. The claim that the Monterey shale play is a huge reserve ignores the fact that earthquake prone Northern California is all messed up and very complicated, if impossible, to frack.
In other words, Peak Oil and catabolic collapse is still game on. By 2020, the fracking boom will be long over.
Apr 4, 2014 at 5:41am
Charlie, I know by the books you review, you don't buy any of this. So why?
Apr 4, 2014 at 1:25pm
It's not a question of "buying" any of this.
Gregory Zuckerman wrote a book explaining why fracking in shale has taken off. It was the first time I had seen it covered in this way.
I thought this book would be valuable for people who wanted to learn more about how this industry emerged. It's having a monumental impact on B.C. as well as on the climate, which I tried to explain in this article.