Energy independence: Texas oilman's idea leads to today's shale boom
In the 1980s, everyone said it couldn't be done, but Texas oilman George Mitchell didn't listen.
Two decades later, Mitchell's idea of combining horizontal drilling with hydraulic fracturing — the process of injecting pressurized water and sand into rock formations to release oil and natural gas — sparked a flood of oil and natural gas nationwide. The innovation reversed more than 40 years of U.S. production declines and reigniting discussion about whether the country could become energy independent.
“George Mitchell has always been a believer that our country has a tremendous amount of natural gas,” said Dan Steward, who worked with Mitchell for 23 years. “He believed we had not gone through the necessary steps to understand it and get it out of the ground. I thought it could satisfy our company's needs, but I didn't expect it to grow like it has. But he can see things that other people aren't capable of.”
The son of a Greek goatherder, George Mitchell in 1946 joined a Houston startup oil company, Roxio Drilling, which was backed by six investors who had pledged $50 a month. Mitchell changed the company's name to Mitchell & Mitchell Gas & Oil in 1962 when he bought out his partners. The company's name changed to Mitchell Energy and Development Corp. when it became publicly traded in 1971.
In 2002, Mitchell sold his company to Oklahoma City-based Devon Energy Corp. in a deal worth $3.5 billion.
Steward joined Mitchell as a geologist in 1981 and eventually became the company's vice president of geology.
Steward was on the team first tasked with trying to figure out how to make the Fort Worth basin profitable. His group determined in 1982 that the lease area Mitchell controlled held only about 10 years worth of natural gas production.
“We were challenged to look at anything under our acreage that we might be able to bring in,” Steward said.
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One of the most promising options they looked at was drilling into the North Texas Barnett Shale formation about 2,000 feet below the shallow Atoka rock layer the company was focused on at the time.
The oil and gas industry knew about the Barnett Shale that was buried deep beneath the ground throughout the Fort Worth area, but it was considered so impossible to produce economically that most companies that drilled through the Barnett did not even record information about it as they drilled.
When Mitchell tried to sell his company in an auction in 1999, Devon and other companies were interested, but the sale did not receive a single bid.
“Our professional experts looked at it and said they didn't think it would work,” said Larry Nichols, Devon's executive chairman. “Everyone else had the same conclusion.”
That all changed just two years later.
“In 2001, I recontacted George Mitchell and asked if we could take another look,” Nichols said. “He had solved some of the technical problems we saw in 1999. We saw the potential to greatly broaden what he was doing.”
One of the main challenges with the Barnett was that a layer of water rested just below the Barnett, without a hard rock layer in between. Because of that, Mitchell's company had to be careful that hydraulic fracturing used to shatter portions of the Barnett rock did not extend fractures to the water. Otherwise, the well produced only water, not natural gas.
Hydraulic fracturing, or fracking, had been used by the industry for decades, but Mitchell developed a unique blend of water, sand and other additives at a specific pressure that was successful in the Barnett.
Devon built on Mitchell's research. The larger company used its cash flow to drill numerous horizontal wells with Mitchell's fracking mix.
Now companies industrywide are reaching oil and natural gas in shale — hard, dense rock — deeper than they ever have.
Mitchell's research was built upon the findings of earlier U.S. Department of Energy-funded research on shale drilling in Appalachia. Mitchell knew the Barnett Shale contained large amounts of natural gas, and he believed his company could figure out how to make the shale rock profitable.
The Energy Department also helped evaluate and partially pay for the company's early wells in the Barnett in 1991.
Steward said he and the company were grateful for the government support, which allowed the project to be completed a decade or two earlier than it would have otherwise. But he said the biggest factor was Mitchell himself.
“If he had given up, the project would have died,” Steward said. “The shale gas revolution we are experiencing now is because George Mitchell stayed with it. If he had given up, it would have died. There are several people who wanted him to give up. Several said he was throwing away their retirement on something that was not any good.”