Energy independence: Texas oilman's idea leads to today's shale boom

Texas oilman George Mitchell is credited with discovering how to economically recover natural gas from hard, dense shale rock deep underground. His techniques fueled the oil and natural gas boom over the past five years.
By Adam Wilmoth Published: October 1, 2012

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.

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.”

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by Adam Wilmoth
Energy Editor
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