"The Frackers" Book Review

Good morning! I’m very excited about today’s post.  This will be Breakfast with Bormann’s very first book review.  I know what you’re thinking… “Come on Matt? A book review? Spare me…” But just wait! Consider this like Cliff Notes.  I’m planning on hitting the high points and interesting lessons learned that I pulled from the book.  Hopefully you will be able to learn something new and maybe, just maybe, I might pique your interest enough to inspire you to buy the book.  So let’s do dive in.

 

I recently finished the book The Frackers by Gregory Zuckerman.  The book outlines the story of the fracking revolution and the men that brought the technique to the forefront of the energy industry.  The book also does a great job of outlining America’s rise to a natural gas power, which is credited to the fracking process. 

The book is split into two different stories; THE BREAKTHROUGH and THE RACE.  THE BREAKTHROUGH outlines the discovery of the fracking technique, while THE RACE outlines the men that capitalized heavily on its invention.  Within those two sections the book focuses on four main individuals, while briefly touching on a few others.

The main characters of the book include:

·         George Mitchell- credited with the discovery of the fracking technique, founder of Mitchell Energy

·         Aubrey McClendon- co-found of Chesapeake Energy

·         Tom Ward- co-founder of Chesapeake Energy, founder of Sandridge Energy

·         Harold Hamm- founder of Continental Resources

·         Charif Souki- founder of Cheniere Energy

The book also briefly touches on:

·         Mark Papa- EOG

·         Robert Hauptfuhrer- Oryx Energy

·         Sanford Dvorin- Independent wildcatter

·         Ray Galvin- Chevron

I really enjoy the way Zuckerman tells the story of the fracking revolution through the stories of these individuals.  The book is outlined very similar to a biography and delves into the emotions each of the individuals experienced.  He also stays very high level with technical information while explaining it in a way that the average person could understand.  The book is a very easy read in my opinion. 

THE BREAKTHROUGH

As mentioned earlier, THE BREAKTHROUGH outlines the discovery of the fracking technique, which is credited to George Mitchell and his group at Mitchell Energy.  The fracking industry really consists of two main elements, horizontal drilling and fracking.  Without the horizontal drilling technique, the fracking process would not be as effective because your reach would be limited.  Before I go any deeper, I’m sure some of you are wondering what is fracking? In a simplified form, fracking is when the operator pumps a liquid into the well at an extreme pressure.  Under extreme pressure, the formation naturally fractures allowing for passageways where oil & gas can escape into the well bore.  Check out this video below for a better description.

While George Mitchell is credited with the invention of fracking, the code cracking really goes to a gentleman by the name of Nicholas Steinsberger.  For years, Mitchell energy could not figure out the right mixture of liquid to pump into the wells.  Finally, by happenstance, Steinsberger pumped a liquid into the well that contained more water than normally used and to their surprise the well produced amazing amounts gas in the Barnett, and continued to do so! Mitchell energy had previously struggled with wells having a very steep decline in production when using their traditional fracking fluid.  Steinsberger's fracking fluid became known as a Slickwater Frac.

While Mitchell Energy discovered the fracking process, it was Devon energy that later purchased Mitchell Energy’s acreage in the Barnett and combined the fracking process with the horizontal drilling process, which was pioneered by Oryx Energy.  The Barnett lies basically under DFW. 

It's interesting to note that this whole revolution occurred right in the backyard of Exxon, whose office is based out of Irving, Texas.  The independent operators were the guys that really pioneered this technology. Larger integrated companies (Shell, Exxon, BP, Chevron, etc..) tend to be slower movers on new technology and formations.

THE RACE

THE RACE, which is about two thirds of the book, takes readers through the stories of several men who capitalized off the new found drilling process.  Probably the most famous of the men mentioned is Aubrey McClendon, co-founder of Chesapeake Energy.  Aubrey is best known for being the champion of natural gas in the United States and was really one of the individual’s that has brought the USA to the energy power that it is today.  I did not know much about Aubrey McClendon before reading this book, but I now have a new found respect him. The guy is as business savvy as they come.  The book often comments on his uncanny ability to raise money.  The guy could sell sand to the Middle East…

When talking about Aubrey McClendon and Chesapeake Energy you also have to talk about Tom Ward, his counterpart in starting Chesapeake.  Tom was known as the more introverted of the two co-founders that operated as the COO of Chesapeake.  He liked to focus more on the operations of the company, which consisted of a mass land grab by Chesapeake’s landmen to control great amounts acreage in some of the most prolific shale formations in America.  Tom’s bio is an amazing story of overcoming great odds to becoming one of America’s richest men in the country.  I really admire the accounts of Tom Ward in the book.  The book touches on Tom’s faith in Christ, and that he could often been seen with his Bible open on his desk studying in between projects.  The book compares Tom to JD Rockefeller, a “below the radar” type of man who contributed large amounts of his wealth to helping other people, which the same can be said for Tom Ward.

The book then moves to Harold Hamm, CEO of Continental Resources, who is credited with developing the Bakken oilfield in North Dakota to what it has become today.  Quite the same as Tom Ward, Harold grew up the son of a poor family and did not graduate from high-school.  Through hard work and perseverance, he was able to bring the Bakken formation online.  The story of Harold Hamm, as with all of these men, involves him overcoming a great amount of skepticism regarding the use of the fracking technology and where he was attempting to apply it (Bakken).  However, with sheer determination and a little luck, he was able to will his company Continental Resources to one of the most prolific independent operators in the country to date. 

The last main character of THE RACE, and probably one of my favorites, is Charif Souki.  Charif was of Lebanese descent, a Columbia MBA grad, and former investment banker.  I really just enjoy the story of Charif.  He decides to venture into the energy business without any prior knowledge and just a handful of connections.  Unlike the other gentlemen mentioned, Charif story is more focused on the midstream side of the business, which is the transport of the oil & gas.  In specific, Charif focused on LNG (Liquid Natural Gas).  LNG is when natural gas is cooled to extremely low temperatures so that it becomes a liquid which makes it easier to transport.  Charif embarked on a long journey to import natural gas into the country.  Many people doubted him, but through hard work and determination he was able to get his terminals built.  However, little did he know that the efforts of Aubrey McClendon and Tom Ward would make importing natural to the US not necessary as Chesapeake Energy would lead the country on a journey to becoming essentially energy independent from all the natural gas now available.  Charif would yet again surpass another hurdle and turn his terminals into export terminals from import terminals.  He initially got the idea from Aubrey McClendon who was sitting on gluttony of natural gas at Chesapeake Energy, and with prices higher in other countries it seemed wise to attempt an export operation.  Charif story is still continuing as they are currently still building their export terminals so we will see what is in store for Cheniere Energy. 

MAJOR TAKE AWAYS

Phew! Sorry to be so long winded… There was a lot of great info and stories in this book. It’s hard to fit them all in.  There were two things that really stood out to me.

1.       All the major characters mentioned had the entrepreneurial bug from an early age

2.       The sheer amount of determination, drive, and work ethic these gentlemen had

Point number two was the item that really inspired me.  The stories of these men gave me a prime example of what it takes to make it as an entrepreneur.  

I’m going to cut myself off here… I could keep going on about the book! I would give it a 5 out of 5 drilling derricks. 

So I'll leave you guys with this great commercial... I think it sums up our recent rise to a major energy power, yet again.  Way to go America!  Be great today "you crazy driven hard working believers." Go out there and change the change the world just as these men have!