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.

But, you told me fracking was perfectly safe….

To honor Earth Day which was earlier this week, I feel compelled to restate and add a few additional concerns that make fracking, at its best, a very challenging process. I have seen numerous legislators state without reservation that “fracking is perfectly safe.” Nothing in life is perfectly safe except for the prediction you will die at some point. Getting anything out of the ground is a difficult process and fraught with problems. Fracking is no exception to this rule especially the way fracking has been done in the last ten years, which exposes further its weakest points.

But, to recap the problems fracking causes, here is quick summary:

1) Radioactive waste – Apparently, frackers are sloppy with their waste and have left some radioactive stuff lying around. This is a new challenge that threw even the most strident fracking critics for a loop. While the level of radioactivity is not high, this is clearly a metaphor for sloppy tactics and does not give confidence that we know the whole truth about fracking dangers. Chester Dawson of the Wall Street Journal, recently wrote an article on this issue entitled “Fracking’s New Problem: Radioactive Waste.” Here is a link:

http://money.msn.com/investing/post–frackings-new-problem-radioactive-waste

2) Earthquakes –  This one gets dismissed often, as frackers have said fracking does not cause earthquakes. That is not exactly correct and may even be less accurate than before. It has been proven the deep underground disposal of the chemically toxic fracking slickwater has caused (not just correlated with) earthquakes in Arkansas and areas like Ohio, Oklahoma and in the UK have seen an increase in earthquakes. Yet, there have been recent reports that the intensity of the fracking process itself (and not just the water disposal) has been linked to earthquakes in some areas like Ohio. Oklahoma, in particular, has seen a significant increase in earthquakes in the past few years dwarfing previous numbers.

3) Chemically Toxic Slickwater – Duke University’s and other studies have shown that the toxic slickwater is finding its way into people’s water. The people in fracking areas like Dimock, PA already know this. When industry tried to discount that you could always light the water on fire, a plain-spoken resident said, that industry person did not live here when I moved in, so how does he know how different it is today? A former fracking engineer said that 1 out of 20 cement casings around the fracking well fail immediately and the toxic slickwater gets out. With 10,000 wells, that means 500 will fail immediately. And, the engineer said with the way they are doing fracking now (which is horizontal as well as vertical), the exposure is even greater. Water finds a way, even when it is toxic slickwater, to get into stuff it should not.

4) Toxic air particulates – This does not get talked about enough, as the toxins that are blasted from the shale are not all captured and find their way into the air. You add to that the dust from the heavy equipment and trucks and the air pollution can be significant and drift into more populated areas as evidenced when Dish, Texas pollution migrated. On top of this, unused methane gas is vented directly into the air. This is such an issue in North Dakota land owners want money for the vented methane and the industry does not want to pay for it. More importantly, this venting has to be factored into the impact of using natural gas on the environment and climate change.

5) Infrastructure degradation – It is hard for us to appreciate what goes on daily with the heavy equipment and trucks that run constantly. One of the landowners actually videotaped the constant noise and dust pollution that wreaks havoc. If fracking goes on in your area, your life will be totally different from before and not in a good way. This sounds like a small issue, but it is a significant change on residents in a fracked area.

However, let’s set that aside. The key concern that is now getting the attention it deserves is the significant impact of water usage that fracking entails. Industry keeps telling everyone it is not that much water, but California and Texas are in a bad way with the droughts going on. Frackers and farmers have been fighting over water in Kansas, Oklahoma and California the past two summers. With 2 million gallons per frack (on the low side) and 10 fracks per well (on the low side), that is 20 million gallons per well. When an area is fracked the wells can easily number 10,000, but let’s shoot low and say 5,000. With that many wells in one area, that totals 100 billion gallons of water.  Per Steven Solomon’s book, “Water: The Epic Struggle for Wealth, Power, and Civilization” he notes “water is the new oil.” With water so dear, the key question remains – Is this where we want to spend our water?

But, don’t just take my word for it. George Mitchell, the father of fracking told us before his death “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.” Mitchell is contradicting with this statement that fracking is perfectly safe. Even if it were, his statement also points out it is only as safe as its worst operator. He was investing in alternative energy before his death, so he saw the future as one that needed to move more away from fossil fuels. But, Greg Zuckerman of the Wall Street Journal and  author of “The Frackers” said it best that the dangers of fracking are greater than what the industry is letting on, but not as great as what the critics are saying. Yet, he added that we won’t know the full extent of the dangers until down the road. Based on what I have read, I would place the fulcrum closer to the critics end.

Truth be told, we are fracking and wanting to drill for oil offshore as the US can become more energy independent and fossil fuel companies can make a bucket load of money. Yet, we are being extremely shortsighted. We could power the entire eastern seaboard of the US with wind energy off just the North Carolina coast. It would create jobs around the wind turbine building/ maintenance and power grid installation. If we played our cards right, we could have over 500,000 wind energy jobs by 2030 (we had 75,000 as of last summer). And, solar energy continues to expand in major and minor ways in the country. Solar energy has become much more efficient, so much that individual homeowners can deploy it. Almost every IKEA store in the country is solar-powered and any data center like the ones Google and Facebook have here in North Carolina are solar-powered. And, Ivanpah, at 377 megawatts is the largest solar enterprise in the world, has gone online near Las Vegas. There are jobs today in solar energy from installation to maintenance.

The United Nation’s International Panel on Climate Change released their updated report last week. The IPCC notes we must act in a significant way to address climate change in the next fifteen years or the cost will be prohibitive. We must move in a more accelerated manner away from fossil fuels. The luxury of time has gone.

Plus, contrary to what the fossil fuel industry, with its huge vested financial interest in the process and who has hired a PR firm, has said about how safe fracking is, take everything you hear with a grain of salt because it is not safe. There is no way it can be as it is too hard a process. If the industry had been more forthcoming about the dangers, saying we are doing our best to be as safe as possible, that would have been believable. But, to say something is perfectly safe when it clearly is not and cannot be is far beneath the truth. People should be insulted when they hear someone say this. But, what do I know, as I am just a concerned citizen who cares about what happens in our country and is highly skeptical when people tell me there is no problem with something when there obviously is.

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.