There's a short window of time -- call it as short as a half hour -- in the drawn-out, complicated process of drilling an oil well that bears heavily on its ultimate success or failure.
It is, as Dewey Bartlett Jr. acknowledged, a nerve-racking time.
Bartlett, president of Tulsa's Keener Oil and Gas Company, knows that feeling well. During the course of his 29 years at Keener, he estimates the company has drilled 250 wells. And despite all the changes the business has undergone in that time -- all the advances in science and technique, all the experience accumulated through trial, error and hard work, all the fluctuations in price -- this is what it still comes down to: It's the always the middle of the night, in the middle of nowhere, with the darkness and silence of a prairie night cut by the glaring lights and roar of a grimy, muddy rig. A group of people that might consist of four rig hands, a geologist, some company executives and maybe a pipe salesman sniffing for an opportunity huddle together, watching intently as samples from a series of drill cuttings begin to roll in. Depending on the depth of the well, it can take anywhere from a few minutes to an hour to retrieve those samples.
The geologist then examines the cuttings that have circulated to the surface by drilling mud. Studying them first under a microscope, he's looking for his target formation, which generally would be porous sandstone or limestone. This is a crucial moment, because if the geologist doesn't find his targeted rocks in the drill cuttings, it means he just drilled a "duster" -- oil patch parlance for a dry hole; all the planning, time and money expended to this point has been wasted.
But if he's lucky enough to spot the rocks upon which a successful well hinges, he will take each cutting out and put it under a black light, trying to detect a gold fluorescence, indicating the presence of hydrocarbons. He then takes that sample, places it in what is known as a "dimple dish," puts a solvent on it and hopes that the gold fluorescence will stream out of that sample, which is indicative of the ability of the hydrocarbons to flow out of that rock and into the wellbore.
"At the end of that 15-minute period of time," Bartlett said, "We'll pretty well know if we've got a dry hole or a good, producing well."
If that scenario sounds risky, it is. So if you think the only high-stakes gambling that goes on 24/7 in Oklahoma is at one of the dozens of American Indian gaming facilities that have shot up across the state in recent years, think again. By the time Keener has drilled to its target depth, it customarily has already spent in the neighborhood of $400,000, though that amount can easily be much higher, depending on the depth of the well. If the test results are favorable, it will spend about $400,000 more to complete the well and begin extracting the product.
That tense quarter-hour window doesn't reveal everything, of course, Bartlett said. The information obtained from those results is too limited to guarantee whether the well will produce or simply become a tax write-off. But it is the first, maybe the best, indication of how that process will ultimately play out.
"It doesn't kill the idea, it doesn't cement the idea," Bartlett said. "It's still an up-and-down process even after that. But at some point, it all comes to an end, and you know if it's good news or bad news."
But it may very well be the most exciting, anticipated part of the whole endeavor, which often takes months or even years to complete, depending on the difficulty of securing a lease and/or lining up financing. Bartlett said during the next several weeks, Keener will begin drilling five new prospects it has been working on for more than a year in the Seminole area, learning whether that expenditure of time and money will pay off.
That's the fun part of this business for Bartlett, and it's likely that most of his fellow independent Oklahoma oilmen would agree -- though they're not likely to agree on various other subjects.
Traditionally a strong-willed and feisty bunch, they may fall in lockstep when it comes to opposing a proposed windfall profits tax and expressing their feelings that their industry is over-regulated by the government. But that's where the groupthink ends.
As David Fleischaker, Oklahoma's secretary of energy, president and chief executive officer of Oklahoma City's Jolen Operating Company, laughingly put it, "Trying to get the executive committee of the (Oklahoma Independent Petroleum Association) to agree on anything is like herding cats."
A World Apart
Ask an independent oilman what that phrase itself means, and you'll get a good indication of how many diverse opinions exist among that group. Few of them can arrive at the same definition.
In the strictest sense, an independent oilman is anyone who leads a company outside the so-called Big Five -- ExxonMobil, Royal Dutch Shell, British Petroleum, Chevron and ConocoPhillips -- but that leaves a pretty good-size universe of oil and gas companies out there doing business, and the differences between the big ones and the small ones are considerable.
Nevertheless, that's not a distinction OIPA president Mike Terry makes. As head of an organization that advocates on behalf of its more than 2,000 members, Terry said size is not an issue, regardless of whether the independent in question is Oklahoma City's Devon Oil -- a well-known firm with international holdings and more than 5,000 employees nationwide -- or his father's Jack Terry Oil, a much smaller company based in tiny Konawa, Okla., southeast of Norman.
"Independents are those individuals and companies that explore, drill and produce oil and natural gas," he said. "What they don't do is refine, retail and purchase."
Everett Moran, who evaluates prospects and oversees the geological department for Seminole's Moran-K Oil Company when he's not working in the music business, said independents traditionally have been cast as simply one of the Standard Oil spin-offs. "But I think that's wrong," he said. "I think if you're publicly traded, it changes the whole culture of how you do things. And Oklahoma independents are different from others -- they're more family-based."
Moran excludes from the independent group companies like Oklahoma City's Chesapeake Energy, a one-time small company that became a relative giant by acquiring large fields from other companies rather than by drilling, he said. According to its Web site, Chesapeake is now the nation's top producer of natural gas.
"I think a lot of independents would rather be smaller and keep things in house rather than be beholden to cantankerous partners or shareholders," Moran said. "I think they'd rather do things their way."
Moran's company certainly meets the definition of a family-based operation; his grandfather Meyer came to the United States from Latvia in the 1920s. Finding work in an Oklahoma dry goods store, Meyer Moran learned his first hard lesson about the business world shortly thereafter when his boss came to him one day and told him he couldn't pay him his salary. Swearing he would never work for anyone again, the young immigrant managed to convince a local banker to loan him $100 to purchase a flatbed truck and went into business for himself as a junk dealer.
Much of that junk included salvaged oilfield equipment. And when the oil boom began a short time later in Maud, Okla. -- part of the larger Seminole field, which continues to produce oil and gas to this day -- Meyer Moran was in the right place at the right time. He wound up buying a supposedly declining well in St. Louis, Okla., known as the W.C. Davis well, which he planned to plug and salvage. That well turned out to be a better producer than believed, however, and Meyer Moran kept it open, making it the foundation of the company he founded in 1930.
Today, 78 years later, the W.C. Davis well remains in production, though Everett Moran's uncle, Melvin, now leads the company.
The birth of Fleischaker's Jolen Operating Company is remarkably similar. Fleischaker acknowledges that bit of Oklahoma oil history is part of the larger story of the Jewish people in Oklahoma. Jolen was founded by his grandfather, a Russian immigrant named Morris Singer, in the 1920s. He, too, made his entry into the oil business via junk dealing. Fleischaker likes to joke that every pipe pusher in Oklahoma in those days was a Jewish immigrant.
"I mean every single one of 'em," he said, laughing, "bottom of the rung."
As Fleischaker noted, there were a lot of routes into the oil business, and that was just one of them. During the course of the next few decades, Singer converted the company from the supply side to the more profitable production side.
Those stories reflect what Fleischaker calls "the Wild and Wooly West era" of the oil and gas business in Oklahoma and Texas. In its early days, the industry throughout the region was a magnet for larger-than-life characters, the personification of wildcatters who gambled across the dusty plains with their own money, as opposed to the vertically integrated major firms with their international holdings.
For a short time during the Great Depression, for instance, the Bowlegs Field near Seminole gave work to a young man named Clark Gable, who would go on to achieve a degree of fame in Hollywood.
When Fleischaker thinks of the classic independent oilman, it's that image that comes to mind for him, though he said that profile has become dated.
"As a high-risk business, it drew some very colorful people to it," he said. "For a small amount of capital, you could get rich quick. So you had a lot of people like ranchers who were these hard-bitten, hardscrabble guys. Today, the business is tame by comparison."
With that figurative gold rush long over, the industry these days is represented more by staid bankers and corporate types, he said.
"We're not talking about the Wild West anymore, and for the most part, we're not talking about a get-rich-quick kind of opportunity," he said. "You still have very strong personalities in this business, but you don't have the wild types."
The history of Bartlett's Keener oil goes back even further. At the turn of the century, his grandfather owned a general store owner in Titusville, Pa., site of the nation's first oil well in 1859, and was in the habit of extending credit to drillers, who often put up their leases for collateral. When one of those drillers failed to pay his debt, D.A. Bartlett suddenly found himself in the oil business.
He got hooked on it and followed a series of booms across the country to Oklahoma, eventually turning the business over to his two sons. Dewey Bartlett Jr. took over the firm in 1987 after having served for seven years as a land man and has run it ever since.
Bartlett had undergone a lengthy apprenticeship to prepare himself for that ascension. With a bachelor's degree in accounting from Regis University and an M.B.A. from Southern Methodist University, he took the advice of his father -- one-time Oklahoma governor and Republican U.S. Sen. Dewey Bartlett -- and got a job "working in the field" -- in this case, taking a job driving a truck for Halliburton Services in Enid.
It was there, Bartlett said, that he more than got his hands dirty. He learned how oil and gas are produced, met the people who pulled it out of the earth and, most importantly, learned to speak their language.
"At the time, Dad was in the Senate, so that was a little odd in itself," Bartlett said of his truck-driving days. "Fortunately, on my Halliburton uniform, it just had my first name: Dewey. Eventually, even the people who knew who I was would see I was just a regular guy and willing to get dirty up to my eyebrows."
Bartlett made the most of his situation, watching carefully, asking plenty of questions and learning oil and gas production from the ground down. It was an experience, he said, that taught him lessons from which he still draws.
"It certainly taught me how to get along with people," he said. "If it wasn't for a lot of very dedicated, hard-working people in the field drilling wells day and night... I wouldn't be sitting in this office talking to you in a very comfortable environment. I understand how hard they work and the risk they go through. It taught me how to speak the language that was particular to this industry, and it taught me to be respectful of people's land and their privacy."
It also gave him his basic understanding of the workings of an independent oil and gas company, which he likens to a family farm.
"A farmer provides a basic commodity like corn, grains or soybeans in similar fashion to what I do," he said. "But as independent oil companies, we don't own a refinery or chemical plants or anything that takes that basic commodity and turns it into something useful. The independent oil and gas companies drill for a basic commodity and sell it; it's someone else's responsibility to make it into something useful."
Terry maintains that independents are essential to America's energy needs, drilling 90 percent of the oil and gas wells in the United States.
"The fact is, America needs energy -- lots of it," he said. "In order to continue our way of life and our prosperity, we depend on independents in this country to find energy. It is up to the independent to do that."
These days, Bartlett doesn't spend much time on rigs, though he wishes he could. His days are often spent in his Tulsa office, sitting behind the mammoth mahogany partners desk he inherited from his father's Washington, D.C. office, keeping up with company business via phone and e-mail or sitting through meetings.
As often as his schedule permits, he likes to hop in his black Ford F-150 pickup and head northwest on the L.L. Tisdale Expressway out of downtown to his 400-acre property just south of Skiatook in Osage County, where he has planted 1,600 pecan seedlings. The quiet and serenity of that setting is a sharp contrast to the environment on a rig, but Bartlett appears comfortable with both.
After visiting his orchard one dreary day in mid-October, he had plenty of time to ponder his five new prospects and the state of the market as he pointed his truck back toward downtown.
"These are all 4,500 to 5,000 feet in depth, which in today's world is relatively shallow," he said. "The price (of oil) has dropped so much lately, but even so, these prospects, if successful, will survive quite well at that price. But in some areas of Oklahoma, where the drilling is a lot more technical, where you have horizontal drilling, it's so expensive to do that that it requires a very high price of oil for those drilling activities to be justified."
That pricing volatility during the past year, with the cost of a barrel of oil approaching $150 and gasoline passing $4 a gallon before prices fell dramatically this fall, has made the oil and gas industry Public Enemy No. 1 in the eyes of many consumers, along with politicians looking to score points with them. Across the board, Oklahoma's independent oilmen seem weary to wear that target.
Moran, in particular, bristles at the claim that the oil and gas industry should not be considering drilling in environmentally sensitive areas because of the assertion it has 68 million acres in leases in the United States it has not drilled yet.
"Those areas are very, very expensive to develop," he said. "The fact is, out of those 68 million acres, only a handful is economically feasible to develop. I'm a Democrat, and I certainly consider myself a liberal, but I hate to see congressmen and senators who are supposed to represent the way I think making those arguments."
Moran also flatly disputed the notion that American oil companies, big or small, determine the price of oil.
"The oil companies have not controlled energy prices for decades," he said. "OPEC does."
Moran has no use for what he considers the disingenuous claims made by many congressional Democrats toward the oil industry as they stoke public anger over high gas prices.
"I hate to see them blamed for it, even though I have no love for the major oil companies and some of the ways they operate," he said.
Terry said Oklahomans have come to have a better understanding of the importance of the oil and gas industry in recent years, thanks to the work of the Oklahoma Energy Resources Board, but he said that change has not been reflected elsewhere.
"There's just not the trust that there should be," he said. "There's a stark difference between the image of the industry in Oklahoma and (the way it is perceived) across the country."
Fleischaker, another Democrat, said his business is "mercilessly scapegoated" and said there is a broad agreement among his fellow oilmen upon the need to develop resources both on and offshore. But he said he is not sure a consensus has developed among members of that group on a controversial proposal to drill in the Arctic National Wildlife Refuge -- for instance, Terry strongly supports that proposal, while Moran opposes it, though for strictly aesthetic reasons, not out of a fear of environmental damage -- and said there has been a broad shift in his industry toward appreciating the fact that "we have to be careful with the environment and sensitive to the environment."
He also said, more than anyone, "Oilmen are keenly aware of the damage to our economy and security by our dependence on Persian Gulf oil."
The Last Drop
How best to end that dependence on foreign oil is another subject likely to highlight the differences between independents. While some continue to insist oil and gas remains plentiful and could continue to meet the world's energy needs for some time if new leases were made available, Fleischaker isn't one of them.
"I hear among the more thoughtful members of our community the fact that we are dealing with a depleting resource," he said. "At the very least, we need to get behind developing alternative energy."
Moran goes so far as to say oil and gas companies need to start thinking of themselves as energy companies if they hope to survive well into the future, while Bartlett said he would like to see Oklahoma become the alternative energy education capital of the world. He believes in that concept so much that he and oil and gas attorney Ron Barnes -- the two own a building together just southeast of downtown -- elected to have 19 photovoltaic panels installed on their roof earlier this year by Tulsa's Sun City Solar Energy at a cost of $35,000 to $40,000. The idea was partly to help cut energy costs, and it has, but Bartlett said his main motivation was simply to learn more about solar energy.
Even with its increased popularity and affordability, Bartlett recognizes the hurdles alternative energy sources still faced in America.
"It's difficult for the alternatives to be as cheap as the alternatives they're replacing," he said. "Most people won't pay more, no matter how pure the intent, even if they're readily available."
And they're not. Bartlett made the point there is a gas station on nearly every corner in Tulsa, but anyone choosing to burn compressed natural gas in their vehicle has far fewer options. About 25 CNG stations exist here, he said, but only one is open to the public.
"Convenience and pricing has a lot to do with people's decisions," Bartlett said.
Despite the recent high-profile investment in wind energy by billionaire T. Boone Pickens, it remains to be seen how quickly the rank-and-file independents will move into alternative forms of energy production.
Terry sounded noncommittal about where his organization stood on that subject.
"I think a private company needs to make those decisions for themselves," he said. "It's a totally different ball game drilling oil and gas wells than putting up windmills ... alternatives definitely have a place in the energy bucket, and we'll see more of that, but they're not going to take the place of fossil fuels, either."
In his role as the state's energy secretary, Fleischaker has tried to take the lead on a number of alternative energy or conservation initiatives. The first, and most public of those efforts, was the development of the Oklahoma Biofuels Center, a joint project of the University of Oklahoma, Oklahoma State University and the Noble Foundation. The consortium is charged with enhancing and promoting the state's fledgling bio-energy industry.
But there have been less public efforts made by Fleischaker's office, as well. He and his staff pressed for the development of transmission lines that would allow for the harvesting of wind energy in western Oklahoma. Those efforts allowed for the cost of those lines to be born by entities throughout the footprint region, rather than the entire cost falling on the utility Oklahoma Gas and Electric.
The third and perhaps most ambitious initiative may have been the most complicated. Fleischaker and his staff have tried to help redefine the role of the state's utilities so that they not only provide power to customers but also act as an instrument for encouraging and enabling energy efficiency by educating the population. Because utilities make money by selling power to customers, there is a natural incentive to grow, he said. The trick was to provide incentives to utility companies to encourage less consumption by their ratepayers.
"We want utilities to play the role not only of provider of electrons, we want them to encourage efficiency and careful use," Fleischaker said. "They're the perfect instrument for that because they have a captive audience. That was a very significant step because it redefines the role of utilities and how we reward them."
No matter how deep their commitment to alternative energy, nobody is making the case that hydrocarbons won't continue to meet most of the world's energy needs for the short term, perhaps much longer.
"There are a huge number of people in this state who understand that we need to evolve into some combination of alternative energies," Bartlett said. "But to get to that point, we can't be naïve and wish something would take care of us until that point in time when alternative energy becomes an integral part of our society."
Moran is more pointed in his view that it is long past time for Americans to adopt a sense of urgency when it comes to planning for their energy future.
"There is no way in this world this transition (to another energy source) is not going to be painful because we ignored this problem for 30 years," Moran said. "...We're a country that likes everything cheap, and we like instant gratification and we vote for people we think will promise us instant gratification, no matter how unrealistic that is."
Small, But Powerful
Independents fill valuable niche in energy market
By Mike Easterling
OIPA's Mike Terry believes one of the greatest services Oklahoma's independent oil and gas companies perform on behalf of the state is their willingness to drill and operate so called marginal wells, which produce 10 barrels of oil or 60 mcf (each mcf is equal to 1,000 cubic feet) of natural gas per day.
"Marginal wells, collectively, are an extremely important participant on the crude oil side of this business," he said. "And the independents keep them alive. Each one is like its own little business."
Their inability to produce larger volumes of oil and gas makes them unattractive for larger companies, but independents are often able to operate those wells more efficiently and economically. Terry said the average well in Oklahoma produces only 2.5 barrels of oil per day, and 73,000 of the state's 116,000 oil wells are classified as marginal. A total of 85 percent of oil production in Oklahoma comes from marginal wells, he said.
"A lot of independents have weathered storms, up and down cycles, and they know how to do it, how to keep wells alive until things settle down a bit," Terry said. "They're very skilled at that."
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