The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters - Hardcover

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Gregory Zuckerman is a special writer at The Wall Street Journal and the bestselling author of The Greatest Trade Ever. He is a two-time winner of the Gerald Loeb Award and a winner of the New York Press Club Journalism Award. He lives in New Jersey with his wife and two sons.

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INTRODUCTION

William Butler was up nights, full of worry.

The grizzled eighty-three-year-old rancher in South Texas owed millions of dollars to various lenders, had almost nothing in the bank, and feared his two sons wouldn’t be able to manage when he was gone.

Butler had the look of someone just off the set of a John Ford movie. Tall and broad, he tended his cattle in a flannel shirt, blue jeans, and muddy boots. He went by the nickname “Buck,” spent seven days a week working with thousands of cows on his ranch, and in his old age relied on a walking stick made from the manhood of a two-thousand-pound Brahma bull.

Buck Butler was no cinema hero, however. A series of local schemers and connivers had taken advantage of him over the years. Butler compounded his problems by plowing all his free cash into nearby land, usually telling his nervous wife, Vera, about the purchases only after they had been completed.

By 2009, Butler faced growing difficulties with his business and was coping with a nervous system disorder. Vera began taking medication to calm her own nerves.

“When you owe over three million dollars you worry,” she explains.

Less than four years later, on a warm January afternoon in 2013, I bounced around the front seat of Butler’s new Dodge pickup as he told the story of how his difficult days had come to an end and a new life had begun.

Pointing to his rolling acreage like a proud parent, Butler described how one day—just over two years earlier—a representative of Conoco Phillips had come knocking on his office door to ask if the huge oil company could drill on his property. It turned out that a type of rock called shale was buried more than a mile below its surface. The rock was soaked with oil that suddenly had become accessible. Almost overnight, Butler’s land was transformed into some of the most valuable acreage in the world.

Butler parked his truck outside a Mexican restaurant in Nixon, Texas, population twenty-four hundred, and turned to me with piercing blue eyes.

“It’s goddamn unbelievable what’s happened to me in the last two years,” he said, a smile of relief forming on his rugged face. “I have to reach out and pinch myself, it’s too good to be true.”

I was a business reporter from New York on a visit to South Texas in search of a story. My crisp blue Yankees cap seemed to clash with Butler’s scuffed cowboy hat, and his honeyed Texas twang sometimes sounded like an entirely new language. I had spent a career at the Wall Street Journal writing about men and women who traded stocks and bonds, not livestock. Before I began my research, “frack” was the kind of word I’d caution my kids to avoid.

At that moment, though, I was sure my Marlboro Man’s tale, and the stories of others I had heard in places like Williston, North Dakota, New Milford, Pennsylvania, and Lexington, Oklahoma, were among the most compelling a writer could hope to find. Buck Butler and others at the heart of one of the greatest energy revolutions in history had experienced astonishing and unexpected change thanks to American oil and gas discoveries deemed unthinkable just a few years ago. The nation itself had been transformed, as had the world.

The more work I put into the topic, the clearer it became that a burst of drilling in shale and other long-overlooked rock formations had created the biggest phenomenon to hit the business world since the housing and technology booms. In some ways, the impact of the energy bonanza might be more dramatic than the previous expansions, especially if shale drilling catches on around the globe. Surging oil and gas production likely will affect governments, companies, and individuals in remarkable ways for decades to come.

Consider the following:

• As recently as 2006, business and government leaders fretted that America was running out of energy. By 2013, however, the United States was producing seven and a half million barrels of crude oil each day, up from five million in 2005. The country enjoyed its largest production increase in history in 2012 and could pump more than eleven million barrels a day by 2020, its highest figure ever and more than even Saudi Arabia currently produces.
So much oil is flowing that in a few more years, the United States may not need to import any crude, or might only rely on friends such as Canada and Mexico, ending a fifty-year addiction to oil from countries with interests that many years ago diverged from ours. In 2013, Saudi Arabia’s billionaire prince Alwaleed bin Talal said the kingdom’s oil-dependent economy had become vulnerable to rising U.S. energy production, a shocking turnaround from a few years ago when America seemed hopelessly dependent on Middle Eastern oil.

• America already is the world’s largest producer of natural gas, thanks to shale drilling, and the country sits on two of the world’s largest gas fields. Gas production has soared 20 percent in five years, and the United States now should have enough gas to last generations. Soon, the nation will begin exporting gas, an unimaginable possibility just a few years ago when energy supplies looked set to run out and the construction of gas importing facilities was considered a matter of national urgency.

• Rising production from dense rock has sent natural gas prices tumbling 75 percent since 2008. Because gas is used to heat and cool homes, produce electricity, grow food, power some vehicles, and make plastic, steel, and other products, the American gusher has been a boon to consumers and businesses, many of whom are still suffering from the worst economic downturn since the Great Depression. Meanwhile, growing U.S. oil production has allowed the country to enforce a boycott of crude from Iran at relatively little cost, and it could help keep a lid on global prices for years to come.

• The energy boom could generate more than two million new jobs by 2020, offsetting the jobs lost in the housing market’s collapse. Hiring is on the rise in Texas, Oklahoma, and Louisiana, as well as in Ohio, Wyoming, West Virginia, and Pennsylvania, a shot in the arm for many long-struggling regions. North Dakota enjoys an unemployment rate of about 3 percent, a Walmart in the heart of the state’s oil region pays employees twenty-two dollars an hour, and some local McDonald’s outlets have resorted to offering bonuses of $300 and thirty-two-inch flat-screen televisions to lure new employees.1

• Electricity and natural gas prices are so much cheaper in the United States than in most other countries that they could help usher in a new era of American economic dominance. A “reshoring” trend already is under way, as steel, chemical, fertilizer, plastics, tire, and other companies move production back to the country or expand existing factories, while foreign firms build new plants in the United States. The shift is helping to bring back some jobs once believed to have been lost forever to China and other low-cost economies. Some even see a manufacturing rebound in the making as “made in the USA” again becomes de rigueur.

• All the newfound oil and gas, along with expected energy exports, are slashing the nation’s trade deficit and could boost the value of the U.S. dollar. The explosion of oil also has defense specialists debating whether the United States may be able to avoid certain future military actions aimed at securing energy supplies, allowing the country to trim its bloated defense budget and perhaps cede some security responsibilities to other countries, like China, that remain dependent on Middle East oil production.

• China, Russia, Argentina, and Mexico are among the...