God Save Texas: A Journey Into the Soul of the Lone Star State(10)
A safer and more precise method, developed in the seventies, was to use jets of fluid under intense pressure, to create microcracks in the strata, typically in sandstone or limestone. Expensive gels or foams were typically used to thicken the fluid, and biocide was added to kill the bacteria that can clog the cracks. A granular substance called “proppant,” made of sand or ceramics, was pumped into the cracks, keeping pathways open so that the hydrocarbons could journey to the surface. The process came to be known as hydraulic fracturing, or fracking. It certainly did jostle loose the captured oil or gas molecules, but as far as Mitchell was concerned, it had a fatal flaw: it was too costly to turn a profit in shale. His quest was to find a way to liberate the gas and save his company—and, perhaps, the world.
In 1981, Mitchell drilled his first fracked well in the Barnett Shale, the C. W. Slay No. 1. It lost money. Year after year, Mitchell continued drilling in the Barnett; he sank $250 million into this venture, hoping to formulate a cheaper and more effective fracking formula. Seventeen years later, Mitchell’s company was in real trouble. His shareholders had begun to think he was a crank—the company was heavily in debt, and its share price had plunged from thirty dollars to ten. And yet Mitchell kept drilling one unprofitable well after another.
To cut costs, one of Mitchell’s engineers, Nick Steinsberger, began tinkering with the fracking-fluid formula. He reduced the quantity of gels and chemicals, making the liquid more watery, and added a cheap lubricant, polyacrylamide, which is used in the manufacture of face creams and soft contact lenses. The resulting “slick water”—aided by a dusting of sand for the proppant—worked beautifully. It also cut the cost of fracking by more than two-thirds.
Mitchell combined this new formula with horizontal drilling techniques that had been developed offshore; once you bored deep enough to reach a deposit, you could steer the bit through the oil-or gas-bearing seam, a far more efficient means of recovery than just going straight down. In 1988, after about three hundred attempts, Mitchell’s company finally made a profit on a fracked well in the Barnett, the S. H. Griffin No. 4. The shale revolution was under way. The same fracking innovations that Mitchell had pioneered in gas were almost immediately applied to oil.
For the third time in Texas history, the state transformed the energy business in ways that would shake economies and stir political quarrels all over the globe. In July 2008, oil prices had reached an all-time peak, $145.31, but the frackers were just getting started. By 2010, there were more than fourteen thousand wells in the Barnett alone, and the economic formula of past Texas booms held: a sudden fortune, a glut, a crash in prices. By January 2016, oil had fallen to less than $30 a barrel.
“We’re back where we were in 1931,” Robert Bryce, an author and journalist who writes frequently about the energy business, told me. “Texas drillers are once again determining the price of the marginal barrel in the world market.”
“Two things are going on,” Mack Fowler, an oilman and philanthropist in Houston, told me, as he laid out several graphs for my education. The first showed the U.S. production of crude oil. In 1970 American oil production reached nearly ten million barrels a day; that summit was followed by a long, slow slide, decade after decade, touching bottom in 2008 at little more than five million barrels a day. The decline was marked by oil embargoes, price shocks, gas lines, shifting geopolitical alliances, wars in the Middle East, and the fear of the world economy being held captive to oil states that were often intensely anti-American. Then, around the time Barack Obama was elected president, something startling happened. U.S. production shot back up, approaching its all-time high. On the graph, it looked like a flagpole. “In the span of five years, we go from 5.5 million barrels a day to 9.5 million, almost doubling the U.S. output,” Fowler said. It was the fastest growth in oil production ever seen. The difference was fracking and horizontal drilling techniques.
Five thousand energy-related companies make their home in Houston, the world’s energy capital, and the effect of the crash in prices caused by the shale oil boom was evident in the slowdown in home sales, empty office buildings, and diminished traffic on the freeways. One Houston restaurant in the storied River Oaks neighborhood, Ouisie’s Table, began offering a three-course meal each Wednesday night pegged to the price of a barrel of oil—when I visited in the spring of 2016, it was about $38. At oil’s peak in June 2014, that meal might have cost $115. Between January 2015 and December 2016, more than a hundred U.S. oil and gas producers declared bankruptcy, half of them in Texas. That doesn’t count the financial impact on the pipeline, storage, servicing, and shipping companies that depend on the energy business, and the colossal debt—$74 billion so far, much of it unsecured—that these failures leave behind.
Recently, I drove to North Texas to visit the well that started the revolution, the S. H. Griffin No. 4. It stands amid a little community of prefab homes and tidy brick bungalows, marking the extended reach of the Fort Worth suburbs. The town used to be called Clark, but a decade ago the mayor made a deal with a satellite network to provide ten years of free basic service to the two hundred residents in return for renaming the town after the company, using all capital letters, as in the company logo. Satellite dishes still sit atop many houses there, and even though the agreement has expired, the town’s name remains—DISH.
This part of Texas is flat grassland dotted with scrubby mesquite. You see a lot of heavy industry associated with pipelines and drilling. Tanker trucks, which carry the millions of gallons of water required to frack a well, and tractor trailers known as SandCans, which haul silica to the site, have worn down the roads. Each drilling rig is huge and arrives disassembled, in a dozen truckloads of parts. There’s also the four-inch metal pipe for the hole, which comes in thirty-foot lengths weighing six hundred pounds apiece; the concrete to encase the pipe; and the carbon-steel transmission pipes, between two and three feet in diameter, that transport the gas to storage containers. About 1,200 truck deliveries are needed for every well that is fracked.