An immigrant’s son succeeded while “Big Oil” was seeking new oil fields abroad

imagesCA73TVCKimagesCAX0JZ4M George Mitchell, son of a Greek goatherder immigrant with an unpronounceable name, was born in Galveston in 1919 and graduated from the University of Texas with a degree in petroleum engineering and geology. He recently died with a legacy: “cracking the Barnett shale code”. Dan Yergin, the energy historian, has dubbed him “the Steve Jobs of the oil industry”. It is an American success story extraordinaire that needs to be celebrated as our country debates the immigration issue.

Parts of the U.S. and of many other countries contain huge deposits of shale rock that in many cases contain large quantities of natural gas and, in many cases, crude oil, that are, however, very tightly trapped in these formations. This was known for a long time, but conventional drilling did not allow commercially important quantities of these hydrocarbons to come to the surface. Mitchell Energy owned and had leases in the Barnett shale in Texas and was determined to find a way to liberate the contained hydrocarbons. Hydraulic fracturing, i.e. the process of pumping water at high pressure down an existing well to bring up more oil was well known, but was to that time not considered useful for tight shale formations. For a number of years Mitchell’s firm experimented with sand and chemicals, together with very high pressure water with little success and the company’s board was eventually urging Mitchell to sell the firm’s position in the Barnett shale. However, by 2002, the process now know as “fracking” began to work for Mitchell Energy. Soon, copious quantities of natural gas were coming up to the wellhead. Horizontal drilling to greatly broaden the reach of oil and gas wells had also just started to be employed and was then combined with fracking to produce ever larger amounts of gas, as well as oil. A whole new way to produce oil and gas from tight formations had been born.

The large oil and gas companies had been well aware of the potential of gas- and oil-containing shale. Rather than trying to unlock this rich resource with steady and expensive experimentation (like Mitchell Energy), they looked for large conventional oil and gas fields in Africa, Asia and elsewhere, missing out on this technology until it was time to play “catch-up”.

Mitchell Energy was bought by Devon Energy for 3.5 billion dollars and George Mitchell became a billionaire. Other large oil and gas companies started using the technology, either directly or by acquiring firms that were successfuly using it. (e.g. XTO  Energy acquired for 41 billion dollars by ExxonMobil in 2010).  Fracking was starting to be used in the Utica and Marcellus shale in the U.S. Northeast. It has also been used with great success to produce ever increasing quantities of crude oil in North Dakota’s and Montana’s Bakken formation,  reversing the long term decline in our domestic production.

And the U.S. has now become one of the world’s largest producers of natural gas.

George Mitchell became a major philanthropist and advocate of sustainability. He created the gigantic Woodlands forested housing development north of Houston, concerned with balancing the need for economic development, environmental conservation and social justice. He later joined Warren Buffett in giving away half his wealth for philanthropic purposes.

Of particular interest is the fact that he was concerned that fracking be properly regulated to control and largely avoid the problems that have caused the current controversy, based on events at a number of wells: water contamination, methane escaping to the atmosphere, poor land management. George Mitchell was a rare entrepreneur with a great spirit of initiative, a man who maintained his values until he passed away.

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