The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters by Gregory Zuckerman Page B
Authors: Gregory Zuckerman
Ads: Link
group of doctors and dentists from nearby Dallas and elicit a round of oohs and ahhs by lighting a flare and demonstrating some early production. Wily wildcatters would make sure to cash investors’ checks before production from the wells died out. Dvorin was a true believer and wasn’t out to rip anyone off, but potential investors had reason for suspicion.
He kept his hopes high, though. Government incentives had been put in place to encourage big companies to search for natural gas in formations previously believed unproductive. The incentives had helped Mitchell Energy, and they gave Dvorin encouragement that he’d eventually find a partner for the Barnett. Natural gas demand was rising and prices rose for a short while in 1996, as an industry advertising campaign touted it as the “clean energy source.” At the same time, a technical paper by the Gas Research Institute had suggested that Mitchell’s team was on its way to extracting gas in the Barnett, though it wasn’t clear how much there would be.
Dvorin continued drilling on his own, using up the last of his life savings. He even persuaded his son, Jason, a financial consultant, to join the effort.
“Nothing in the oil and gas business is a sure thing. If there was, this was it,” Dvorin said around that time.
• • •
G eorge Mitchell and his gang weren’t getting much of anywhere in the Barnett. But soon a few large energy companies wondered if he and early movers like Sanford Dvorin might be on the right track, at least. It was as if Mitchell had awoken some sleeping giants. Ray Galvin, a senior executive at Chevron, became determined to catch up and pass Mitchell. The odds seemed good for him and his company.
Few executives at Chevron were as popular as Galvin, a six-foot-two graduate of Texas A&M, George Mitchell’s alma mater. Friendly and approachable, Galvin was a petroleum engineer who started as a grunt in the field. He encouraged his staff to share their ideas to improve Chevron’s production, earning the respect of the company’s engineers and geologists, some of whom resented that the executive suite seemed chock-full of MBAs, some with little industry background. It helped that Galvin was an upbeat personality who always seemed to have a smile on his face. He had come to Chevron from Gulf Oil, making him one of the few Chevron executives who hadn’t spent his entire career at the company and providing him with a different perspective from the others.
By 1992, Galvin was president of Chevron’s U.S. operations, the company’s largest division. He sat on industry panels and gained an inkling of some of the progress being made in shale. That year, for the first time, the National Petroleum Council’s estimate of long-term gas supplies pointed to shale as containing some gas reserves, causing a bit of a buzz among some and giving the Mitchell crew more encouragement. Galvin sensed that a technological breakthrough might be at hand. Chevron needed to begin exploring shale and other kinds of unorthodox rock, he argued within the company.
Galvin started a group to study and then undertake this “unconventional” drilling. Within Chevron, he preached that energy companies, like other kinds of businesses, were better off betting on improved technology than on the price direction of the products they produced. This seemed like the perfect way to put the theory to the test.
At the time, most of Galvin’s colleagues in Chevron’s corporate suite, as well as executives of other oil giants, were convinced that the most exciting exploration opportunities were anywhere but in the country’s lower forty-eight states. Chevron was shifting its own focus to places like Kazakhstan, Nigeria, Newfoundland, and Angola, all but sneering at the United States.
The Barnett layer was, quite literally, in the backyard of at least one U.S. energy giant. The corporate headquarters of Exxon was in Irving, Texas—
right above
the Barnett
He kept his hopes high, though. Government incentives had been put in place to encourage big companies to search for natural gas in formations previously believed unproductive. The incentives had helped Mitchell Energy, and they gave Dvorin encouragement that he’d eventually find a partner for the Barnett. Natural gas demand was rising and prices rose for a short while in 1996, as an industry advertising campaign touted it as the “clean energy source.” At the same time, a technical paper by the Gas Research Institute had suggested that Mitchell’s team was on its way to extracting gas in the Barnett, though it wasn’t clear how much there would be.
Dvorin continued drilling on his own, using up the last of his life savings. He even persuaded his son, Jason, a financial consultant, to join the effort.
“Nothing in the oil and gas business is a sure thing. If there was, this was it,” Dvorin said around that time.
• • •
G eorge Mitchell and his gang weren’t getting much of anywhere in the Barnett. But soon a few large energy companies wondered if he and early movers like Sanford Dvorin might be on the right track, at least. It was as if Mitchell had awoken some sleeping giants. Ray Galvin, a senior executive at Chevron, became determined to catch up and pass Mitchell. The odds seemed good for him and his company.
Few executives at Chevron were as popular as Galvin, a six-foot-two graduate of Texas A&M, George Mitchell’s alma mater. Friendly and approachable, Galvin was a petroleum engineer who started as a grunt in the field. He encouraged his staff to share their ideas to improve Chevron’s production, earning the respect of the company’s engineers and geologists, some of whom resented that the executive suite seemed chock-full of MBAs, some with little industry background. It helped that Galvin was an upbeat personality who always seemed to have a smile on his face. He had come to Chevron from Gulf Oil, making him one of the few Chevron executives who hadn’t spent his entire career at the company and providing him with a different perspective from the others.
By 1992, Galvin was president of Chevron’s U.S. operations, the company’s largest division. He sat on industry panels and gained an inkling of some of the progress being made in shale. That year, for the first time, the National Petroleum Council’s estimate of long-term gas supplies pointed to shale as containing some gas reserves, causing a bit of a buzz among some and giving the Mitchell crew more encouragement. Galvin sensed that a technological breakthrough might be at hand. Chevron needed to begin exploring shale and other kinds of unorthodox rock, he argued within the company.
Galvin started a group to study and then undertake this “unconventional” drilling. Within Chevron, he preached that energy companies, like other kinds of businesses, were better off betting on improved technology than on the price direction of the products they produced. This seemed like the perfect way to put the theory to the test.
At the time, most of Galvin’s colleagues in Chevron’s corporate suite, as well as executives of other oil giants, were convinced that the most exciting exploration opportunities were anywhere but in the country’s lower forty-eight states. Chevron was shifting its own focus to places like Kazakhstan, Nigeria, Newfoundland, and Angola, all but sneering at the United States.
The Barnett layer was, quite literally, in the backyard of at least one U.S. energy giant. The corporate headquarters of Exxon was in Irving, Texas—
right above
the Barnett
Similar Books
