The American Shales

The American Shales
The history of the U.S. shale plays, their founders and their leaders
from rich rock, unconventional ideas and unwavering determination to a renewed world energy future.

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        Nissa Darbonne, Editor-at-Large, 
    Oil and Gas Investor
, Hart Energy

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Chapter 1, Barnett: 1996

It was 1946 and America had entered a new kind of manifest destiny. The great land push from sea to sea had long been achieved. Railroad service was from coast to coast and an unimpeded, interstate, highway system was under way. The world’s tallest buildings had been completed a decade before in New York and one of these, the Empire State Building, would hold the title into the 1970s. Diego Rivera’s commissioned mural, viewed as celebrating Marxism, in the lobby of Rockefeller Center had long been knocked down.

                A nation—men, women and children—had pulled together to form and support a military of some 334,000 into one of more than 12 million to win wars against aggressors across two oceans in just 44 months. Hungry from more than 15 years of poverty—spawned by economic depression that was extended into rationing to fuel the war—goods and services were wanted.

                These would require energy.

                Oil had established itself in the prior several years as king-maker—the key to a country’s economic and political freedom. Neither Germany nor Japan had known what it should have been fighting for. The latter sought China, which was oil- and natural-gas-poor; its aggression against the U.S. was for being cut off from fuel for its march onshore Asia. The former turned its eyes to the hydrocarbon bounty of Russia when it became clear that the Allied Forces’ greater access to oil-fueled ships, tanks and aircraft would not be overcome.[1]

                George Phydias Mitchell was discharged from the U.S. Army in 1946. The 27-year-old had brought himself up from his Galveston, Texas, beginning as the son of a Greek immigrant by fishing to help support the family. As an undergrad at Texas A&M University, he built bookshelves and made stationery, selling these to students of better means.[2] With his degree in petroleum engineering, emphasizing geology, he began offering consulting services, such as for wildcatter Roxie Wright at Roxoil Drilling Inc. He soon bought out one of the partners, going on with the group to discover new oil and gas plays along the U.S. Gulf Coast and extensions of existing plays.[3]

                Then, in 1952, “a Chicago-based bookie’s tip, relayed through a friend, piques George Mitchell’s interest in some North Texas acreage.”[4]

                Mitchell was well familiar with the gaming industry, having grown up in the 1920s and ’30s era of prohibition in what was informally known as “The Free State of Galveston.” There, the economy was supported in part by unprosecuted gambling and liquor sales, generating a tourism industry for the island community that had been nearly destroyed by the unnamed hurricane of 1900.[5]

                A geologist, John A. Jackson, and a drilling-rig operator, Ellison Miles, were familiar with the North Texas prospect. They and Mitchell leased 3,000 acres in Wise County on the David J. Hughes ranch in Bridgeport about 50 miles northwest of Fort Worth. The partners and others were planning to target gas in the Bend conglomerate of formations overlying the Barnett shale in what would become known as Boonsville Field.

                “The first well, the D.J. Hughes 1, is successful—as are the next 10 consecutive wells. Mitchell and Jackson perceive a huge stratigraphic trap underlying the entire area and Mitchell buys leases on 400,000 acres.”[6] [7]

                Fifty years later, in 1996, the company, now Mitchell Energy & Development Corp., had already made 1.5 trillion cubic feet of gas from the Wise County area.

                And another tip was on its way to Mitchell’s desk: “You should try the light-sand frac.”

[1] Oil was not discovered in China until 1959. Relative to its demand, it remains oil- and gas-poor.

[2] Mitchell’s father was Savvas Paraskevopoulos, who emigrated from Nestani, Greece, in 1901 at the age of 20. The Mitchell family explains of the surname change, “He had no skills and spoke virtually no English. He found work, doing manual labor on a railroad gang. When he went to get his pay, the Irish paymaster felt his name was too difficult to pronounce so he told him that, from then on, his name would be the same as his, which was Mike Mitchell. George Mitchell was born approximately 18 years later.”

[3] An extension is to prove commercially producible amounts of hydrocarbons outside the established boundaries of a known field.

[4] Mitchell Energy & Development Corp. annual report, 50th-anniversary edition, fiscal-year 1996.

[5] The storm of 1900 remains the greatest U.S. natural disaster in terms of loss of life; more than 5,000 islanders are estimated to have died. The vibrant Galveston shipping industry immediately began to move north to what would become the Houston Ship Channel, one of the world’s largest ports.

[6] Mitchell Energy & Development Corp. annual report, 50th-anniversary edition, fiscal-year 1996.

[7] Continental Oil Co., which is now ConocoPhillips, made the Boonsville Field discovery well, Bertha Flowers 1, in 1951 southwest of Bridgeport in Wise County.

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