The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters (a reprise from 2014)

The following piece is a reprise from a post in 2014. It is important to read the concerns of six years ago about this industry. Fortunately, the renewable energy industry continues to make huge strides.

I recently completed a very interesting book written by Gregory Zuckerman, a Wall Street Journal reporter called “The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters,” published by Portfolio/ Penguin Press in 2013. Zuckerman is also author of “The Greatest Trade Ever.” I highly recommend this book as it is as entertaining as it is informative, in multiple ways. It gives you a clearer picture of the risks and rewards of fracking, but also shows how hard it is to both glean the fossil fuel you are seeking and to be so highly leveraged in debt as you do.

The successful fracking companies, usually bucked the odds and the more measured risk takers in the larger companies who had much more capital to withstand some of the risk. As a result, even the ones who had success, usually failed before, after and sometimes during their success, due to the need to be land rich which came at a highly collaterized cost of debt. When some went public, they also had to contend with impatient shareholders. These wildcat developers made and lost huge sums of money, oftentimes with their egos getting in the way of knowing when to stop.

Zuckerman does an excellent job of telling the story of people like George Mitchell, who has been called the “father of shale fracking,” Aubrey McClendon, Tom Ward, Harold Hamm, Charif Souki, Robert Hauptfurher and Mark Papa, among countless others who were key to the success of gleaning natural gas and oil from places that were perceived too difficult to crack. He also defines why methods and strategies are so secretive, as companies will follow suit to leverage off your success. These men and their companies, Mitchell Energy, Oryx Energy, Chesapeake Energy, Continental Resources, Chenier Energy and EOG Resources, were truly the path finders in this process called fracking. They led the US to become more energy independent, yet in so doing, understated or overlooked the risks that came with those rewards.

As I read this entertaining book, I found myself convinced of a preconceived notion, that the main mission of these guys was to make a lot of money, as well as proving others wrong. Some even took delight that their hypothesis was true, even if they had not benefitted as greatly as the company that bought out their rights. Yet, what I also found this lust for money also was an Achilles Heel, and there seemed to be less consideration of what fracking was doing to the environment. They were more content to let the problems be handled by someone else and often belittled the complaints and complainers.

Zuckerman addresses these concerns from the frackers viewpoint earlier in the book, yet does devote an Afterword to the environmental risks that are real. But, before doing so, he notes that George Mitchell, late in life continued to buck convention. Per Zuckerman, Mitchell “gave millions to research clean energy even as he, along with his son and Joe Greenberg, invested in a new shale formation in Canada.” But the quote that interests me most, is by Mitchell who responds to those who contend how safe fracking is:

“Fracking can be handled if they watch and patrol the wildcat guys. They don’t give a damn about anything; the industry has to band together to stop isolated incidents.”

This dovetails nicely with a well-worn phrase I gleaned early on. Even if fracking were safe, it is only as safe as its worst operator. Mitchell, the father of fracking is more than acknowledging the bad operators. His son Todd, who was also in business with his father, said “his father’s work will have had a negative impact on the world if it forestalls progress on renewable energy, instead of giving innovators time to improve wind, solar and other cleaner energy sources.”

Let me close with an even-handed quote from Zuckerman, which frames the issue, yet also notes a caution. He answers the question “Is fracking as bad as activists say, and what will its impact be as drillers continue to pursue energy from shale and other rock formations?” His conclusion is as follows:

“The short answer: Fracking has created less harm than the most vociferous critics claim, but more damage than the energy industry contends. And, it may be years before the full consequences of the drilling and fracking are clear.”

With my reading I would agree with both of these sentences, yet not place the fulcrum in the middle of the scale. I would be more on the side of vociferous critics as the evidence continues to mount and as non-industry scientists are revealing issues. The massive water usage, the seepage of the poisonous slickwater fracking fluid into the environment, the particles that are blasted into the atmosphere which are causing breathing difficulty, and the degradation to the surrounding environment just to get vehicles and equipment into frack are compelling arguments by themselves.

But, the great caution in his last sentence is where we need to focus. “And, it may be years before the full consequences of the drilling and fracking are clear.”This is the bane of any environmental group fighting for people and the environment. Oftentimes, it takes years for the true damage to be seen and felt. Some show up in shorter order, yet when the companies making the money do not want to stop a mission, they can afford to fight people who cannot clearly make a connection. The developers want to settle with each complaint at minimal outlay and move on. Unfortunately, the people exposed to the problem, remain in harm’s way.

The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters

I recently completed a very interesting book written by Gregory Zuckerman, a Wall Street Journal reporter called “The Frackers – the Outrageous Inside Story of the New Billionaire Wildcatters,” published by Portfolio/ Penguin Press in 2013. Zuckerman is also author of “The Greatest Trade Ever.” I highly recommend this book as it is as entertaining as it is informative, in multiple ways. It gives you a clearer picture of the risks and rewards of fracking, but also shows how hard it is to both glean the fossil fuel you are seeking and to be so highly leveraged in debt as you do.

The successful fracking companies, usually bucked the odds and the more measured risk takers in the larger companies who had much more capital to withstand some of the risk. As a result, even the ones who had success, usually failed before, after and sometimes during their success, due to the need to be land rich which came at a highly collaterized cost of debt. When some went public, they also had to contend with impatient shareholders. These wildcat developers made and lost huge sums of money, oftentimes with their egos getting in the way of knowing when to stop.

Zuckerman does an excellent job of telling the story of people like George Mitchell, who has been called the “father of shale fracking,” Aubrey McClendon, Tom Ward, Harold Hamm, Charif Souki, Robert Hauptfurher and Mark Papa, among countless others who were key to the success of gleaning natural gas and oil from places that were perceived too difficult to crack. He also defines why methods and strategies are so secretive, as companies will follow suit to leverage off your success. These men and their companies, Mitchell Energy, Oryx Energy, Chesapeake Energy, Continental Resources, Chenier Energy and EOG Resources, were truly the path finders in this process called fracking. They led the US to become more energy independent, yet in so doing, understated or overlooked the risks that came with those rewards.

As I read this entertaining book, I found myself convinced of a preconceived notion, that the main mission of these guys was to make a lot of money, as well as proving others wrong. Some even took delight that their hypothesis was true, even if they had not benefitted as greatly as the company that bought out their rights. Yet, what I also found this lust for money also was an Achilles Heel, and there seemed to be less consideration of what fracking was doing to the environment. They were more content to let the problems be handled by someone else and often belittled the complaints and complainers.

Zuckerman addresses these concerns from the frackers viewpoint earlier in the book, yet does devote an Afterword to the environmental risks that are real. But, before doing so, he notes that George Mitchell, late in life continued to buck convention. Per Zuckerman, Mitchell “gave millions to research clean energy even as he, along with his son and Joe Greenberg, invested in a new shale formation in Canada.” But the quote that interests me most, is by Mitchell who responds to those who contend how safe fracking is:

“Fracking can be handled if they watch and patrol the wildcat guys. They don’t give a damn about anything; the industry has to band together to stop isolated incidents.”

This dovetails nicely with a well-worn phrase I gleaned early on. Even if fracking were safe, it is only as safe as its worst operator. Mitchell, the father of fracking is more than acknowledging the bad operators. His son Todd, who was also in business with his father, said “his father’s work will have had a negative impact on the world if it forestalls progress on renewable energy, instead of giving innovators time to improve wind, solar and other cleaner energy sources.”

Let me close with an even-handed quote from Zuckerman, which frames the issue, yet also notes a caution. He answers the question “Is fracking as bad as activists say, and what will its impact be as drillers continue to pursue energy from shale and other rock formations?” His conclusion is as follows:

“The short answer: Fracking has created less harm than the most vociferous critics claim, but more damage than the energy industry contends. And, it may be years before the full consequences of the drilling and fracking are clear.”

With my reading I would agree with both of these sentences, yet not place the fulcrum in the middle of the scale. I would be more on the side of vociferous critics as the evidence continues to mount and as non-industry scientists are revealing issues. The massive water usage, the seepage of the poisonous slickwater fracking fluid into the environment, the particles that are blasted into the atmosphere which are causing breathing difficulty, and the degradation to the surrounding environment just to get vehicles and equipment into frack are compelling arguments by themselves.

But, the great caution in his last sentence is where we need to focus. “And, it may be years before the full consequences of the drilling and fracking are clear.” This is the bane of any environmental group fighting for people and the environment. Oftentimes, it takes years for the true damage to be seen and felt. Some show up in shorter order, yet when the companies making the money do not want to stop a mission, they can afford to fight people who cannot clearly make a connection. The developers want to settle with each complaint at minimal outlay and move on. Unfortunately, the people exposed to the problem, remain in harm’s way.