Transcripts For CSPAN2 Book Discussion On The Frackers 20140819

Given point at one given time. They are cumulative so you cant see at one point at one time or the waste goes. The other thing you can see is whats happening under the surface as well. Its hard to get a good visual gas Industry Based on one wells that. With that i have to call time. We are going to go next door and my wonderful offer authors are going to be signing their books. Buy their books and have them sign the books and we will answer questions there. [applause] [inaudible conversations] is talk from the New York Public Library is an hour and 40 minutes. [applause] thanks very much. Its good to be a pity i spent a good chunk of my Research Time working at the New York Public Library in the huge beautiful room they have available to the public. Its a pleasure and honor to come here to talk about my book the frackers. Often when you are writing a book its a project and it takes a while. You are not even sure you can get it done let alone be able to come back to a nice room like this and share some thoughts so its a pleasure and a privilege to be here. I am going to talk about my book the frackers and some observations from this era of energy resurgence, production resurgence in this country. I thought i would first take a step back and explain why a guy like me from the east coast guy started a project and threw myself into writing about energy and oil and gas and the wildcatters and crackers who were changing this country and soon the world. I have been at the wall street journal for a while now, 1996 i started and ive written about all kinds of things at the journal but what i love to do is write about home runs than strikeouts. What i mean by that is i like to write about firms and individuals that make colossal mistakes, do things wrong, get in trouble and flameout and i like to write about home runs. Im a sports guy. A home run in my world is a firm or individual in its good decision worked out well and it changed if country, Something Big and meaty. So i find there was a lot of drama and home runs than strikeouts in that kind of fame and a lot of lessons to be learned as well for readers and for myself. Im attracted to that theme and it occurred to me good, maybe three years ago that theres no bigger business topic in the world right now especially in this country than this Energy Revolution going on in america. I will give sort of a thumbnail sketch of what im talking about and why its so important and why its changing so many things and then i will kind of talk about some themes from it. Some of these themes people will know about it and others wont. We as a nation just a few years ago were running out of oil and gas. Around 2006 or so Alan Greenspan went to congress and said we need to spend millions and millions of dollars to build terminals in the gulf coast to import liquefied natural gas. Lng that call it because we were running out of gas in this country. Now we depend on natural gas for everything from airconditioning in this room to the lights and heating etc. So we were in a desperate situation. If you think about it going back we have always been the last few decades just worried about our future and our dependence on others and these others are people we want to depend on. I remember in the backseat of my parents car and i was in 73 i guess. I was a little kid that i remember vividly a long line at the gas pump and that was because of the arab embargo. Everything has changed in just a few years. Right now we produce about 8 million a day of oil and thats up from 5 million just a few years ago. We are the Worlds Largest natural gas producer as well. We produce more energy and general than anybody else. We pass rush and its a dramatic remarkable change in just a few years. Again we have gone from a period where we were desperate to now we are going to the exporting natural gas starting next year from the lower states and we are even talking about exporting crude oil. So its a crazy thing for anyone with a grey hair or two in the audience to think that so much has changed so quickly. What else has changed . Our position in this security. Im not a big believer that we will be Energy Independent that i believe and surety. What i mean by that as we will be dependent on friends, pat mama and mexico as opposed to sending all that money to people who are not really friendly but we want to be sending money to, venezuela etc. Money is gone to places we havent really wanted to go and thats really changing. Its also the case that the economy has been transformed. We take away the impact of this energy resurgence over the past few years we would probably still be close to recession. Instead we are probably going to get about 2 million jobs depending on what economists you talk what economists you talk to after saul said and done not just from the Energy Industry but from ancillary types of industries, businesses, things like cement and chemicals. Theres there is a reassuring manufacture movement back to america. We arent boosting jobs jobs yet likely shudder like we hoped but its helping and its going to help Going Forward as well. Companies are moving back from abroad to america because we have achieved natural gas costs. Natural gas has dropped dramatically because of all this production from the crackers. We now pay about a third to a half what they do in asia and in europe and thats the reason why companies are moving back here. Its really kind of giving us a shot in the arm to businesses but to individuals too. When its all said and done people think it will contribute 1 of ged and gdp was less than 1 in the First Quarter but its probably going to be two or 3 Going Forward the rest of us here. So its a bit dramatic change in its transforming small town america. For this project for this book the frackers it was a privilege to travel the country to places i have never been before, louisiana and texas in little towns in oklahoma, north dakota, pennsylvania. You go to smalltown america and its really changing. Farm owners who didnt have really a choice and they wanted to think about moving away and closing down their farms and now they will be able to lease their land and stay in their homes. They are our young people moving back and they never were able to. There are also people who are so welleducated getting good jobs, wellpaying jobs in the we is on him 100,000 a year and they didnt even go to college. There are good jobs being created from this dramatic change in this remarkable transformation of the economy. And you also have interesting people that are being hired as veterans. Fracking is kind of dangerous and you are often in places like north dakota where its cold and you have to work with the team. There are all kinds of people being hired as a result. So the economy is being helped, our Energy Independence is being helped and theres also the geopolitics of this whole era. Its only now that people start to think about the Geopolitical Impact but its going to be something people focus on much more in the years to come. For years we got entangled in battles and wars that we didnt really want to and it was largely because of oil and our dependence on oil. You can think about a different middle east, battles etc. And if you talk to the experts and you do some thinking about it you can really get a sense that we are going going to let the margin be much less involved in the middle east i believe in the next decade or so especially Hillary Clinton is elected in a few years, 2016. When she was secretary of state she led what they called a pivot to asia. You dont want to go overboard but at the margin that means we spent less in terms of controlling the streets of parmesan that kind of thing and more of a focus on asia as opposed to the middle east. Thats going to happen much more so i believe. We now only import 7 of our crude oil from the middle east and i dont think its a coincidence that when saudi arabia begged us to get involved in syria we kind of said sorry we are not getting involved. We dont care as much with the saudi think of us because we are much less dependent on the middle east than ever before. Thats going to give us all kinds of great options and save lives that will even save spending in the military as a pivot. Again its the margin. You dont want to go overboard with the theme. The middle east will always be important to us as long as we have allies there and as long as crude is being produced in the middle east in the International Market but at the margins it will be less important. Those are all kind of great things and a big impact from these people. There is also an environmental impact. Im going to come back to that later and theres a whole separate section for that but theres a whole mixed picture there. So many have been harmed by the energy companies. That said Carbon Dioxide emissions have plummeted. We are down to 1994 levels because of the margin. We have shifted from coal to natural gas. I was in england talking about my book and its funny they now are buying our coal. Its a crazy thing to think about that we are literally selling coal to newcastle because we have this excess cold that we are not using anymore. We shifted to natural gas and they are buying it up. They are big talkers about how they are green and more focused on the environment and yet they are buying our coal because their Carbon Dioxide emissions dropped. They make fun of us for not being compliant with kyoto and they make fun of it unfortunately that we are with kyoto today. Its ironically and paradoxically a shift to natural gas because of the crackers. Just so you know im very much a centrist when it comes to this topic. I have been very much criticized from both sides and we can talk about that. So those are kind of jobs, the jobs and the economy, Geopolitical Impact. We can dig into a little bit more if you would like in the q a section but thats an overview of the huge impact of this revolution and why got so excited about this topic in the first place. Theres nothing quite like it for the impact. We as americans we do a few things better than the rest of the world. We create apps. We rap better than anybody. We do drones really well and we frack. The world has more shale oil and gas and they have more of this abroad than we do and yet they are not close to having any kind of revolution like we are havi having. I will explain why a little later on. I started working on this and traveling the country and rolled up my sleeves and started to figure out how this revolution happen and the people behind it and that is what my book is about. Who is behind it in with the characters are. I kept coming back to a paradox, to this curious and very surprising theme. The theme is it should not have been these individuals i write about to lead this revolution. It should have been others. So its a little bit believe it or not the experts got it wrong. The experts didnt believe in america. The experts said we are done here. Theres not much oil and gas left. Go away from america and give up on america. And until some really stubborn overconfident brash individuals entrepreneurs and wildcatters said no we are going to do at the experts say and drill right here in america. The thing i kept coming back to it as it should have been these people in this game is very similar actually to believe it or not the financial meltdown. I wrote a book in 2009 called the greatest trade ever. It was about the people that anticipated the financial meltdown because of the problems in the country. They made billions behind it. If you think about who should have anticipated the financial meltdown of the housing and subprime issues etc. Shouldve been the banks, the guys who let the banks. They all got it wrong. They missed it. They didnt anticipated and they got burned by it in their firms got burned by it. The gangs didnt get it right. Who will shouldve gotten it right . Greenspan, bernanke, the top investors on wall street all got it wrong. They were all shocked by the financial meltdown. They came up with words and phrases, 100 year flood and excuses that they all got it wrong. Its a bunch of outsiders arent guys, colorful guys the guys i wrote about my last book. Theres a guy named john paulson who is a Hedge Fund Manager got to be funny here but he didnt know anything about mortgages are housing. As recently as 2006 they made 20 billion for investors and five to 7 billion for himself. Hes not the guy you would expect to be a household name. He was just an average single 10 i call him. He doesnt like that but into wells anticipated the financial meltdown . Theres a guy named jeffrey greene. Jeffrey greene was a Real Estate Investor in los angeles but not the person you expect to see something that greenspan did. The best man, the best best man in at his maddening wedding was mike tyson the boxer and he had a houseguest for a while. Heidi fleiss, remember her, the hollywood madam so unusual guide and yet 500 million anticipating a collapse if all the experts fail to see. Thats what happened in the financial meltdown. They kept coming back to that here. What do i mean by that . Who should have led the way . The oil and Gas Companies right . Exxonmobil right where were they . Exxonmobil are in irvine texas. They are literally on top of something called arnet shale. Shale as a formation, a field and thats ground zero for this whole revolution. Thats where it all started in yet exxonmobil are on top of this shale and yet were they doing any drilling in the barnett shale . They were going anywhere but barnett. They are going to africa and asia. They have given up on america so they didnt see the revolution and yet they were the biggest oil and gas company in america. Who ousted anticipated . Chevron. Chevron was really early and anticipating some change. There was a guy named ray galvan and hes in my book who started a little group and his bet that we are going to figure out new ways of drilling in this country. Horizontal drilling and others and we will be able to tackle drilling to figure out how to drill and shale. He always knew it had a lot of oil and gas in it but no one could figure out how to get at it. Its way down below the ground and it didnt seem worthwhile. Ray galvan started a group of top guys engineers geologists from elsewhere, chevron and they started working on. They made some progress but before they had a chance to really see much production are any production they were undercut by everyone else at chevron. They made fun of them. They poach talent from the group. Andarko they were doing. Finally the group disbanded and people went off. Chevron was really early and they blew it. All the big guys, dp etc. Didnt anticipate that the country could yield so much oil and gas. They werent the only ones. Look at wall street trading 2007 there was the largest leveraged buyout in financial history. That is an acquisition with a lot of borrowed money and t. X. U. Is a utility in texas. Why was there an acquisition . Because all the experts said they were running out of natural gas Natural Gas Prices would have to go higher and they would do really well. Who did while . Warned buffett, goldman sachs. All the smart guys made a huge bet that we were running out of natural gas in this country so txu looked like a good deal. T. Boone pickens, nobody anticipated it. I keep going back to that theme. The experts keep getting it wrong and the oddballs, the unusual people, characters keep getting it right. Those are the people that i write about in my book, the frackers and what well talk a little bit about today, the people that lead it. The first is a guy named George Mitchell not relate to the senator. George mitchell was a texas guy. He was the son of an immigrant from greece. His fathers name was paris go ballistic. He was born in a little town in greece. He didnt have much of a future. A little town. No business going on really they are, no future so they got on a boat and came to ellis island and they said go work building a rail system from arkansas to texas. He needed a job so we job so he wanted the data took the family. So hes working on the rail system one day and his paymaster came and looked really unhappy and said whats with this name of yours . I cant write it out. He said what is your name . He said my name is Mike Mitchell. He said okay i will be Mike Mitchell too and he took his name. I went to talk to George Mitchell and they really connected with me. My great grandfather got off the boat and said whats your name . He said and they said we cant spell that name so they took the last guy, zuckerman. An east coast reporter but we had something in common. Its only a story. The story is a fascinating one. As are a lot of themes in my book. George mitchell ran the Company Called Mitchell Energy and they were midsized natural gas. They were responsible for 10 of all the gas going to chicago. They were making money. They did pretty well but around 1982 mitchells can see the writing on the wall and he can see that his company was running out of natural gas. There wasnt much he could do. He didnt have an acreage offshore in asia and africa like exxon and all the big guys. All we had was an acreage in texas so he said guys lets try to figure out out, lets try to drill a little lower and tackle the shale formation. Shale is rock and they call it in the industry the source route. Source rock meaning its where the oil and gas for starts and over millions of years is slowly goes up higher towards the surface. Historically we drill down vertically as with the straw kind of thing and we try to find reservoirs of oil and gas that has flown up from the shale formation. Shale is very compressed and it looks a little bit like a tombstone. They call it the tombstone rock industry. We knew there was a lot of energy and thereby we didnt know exactly how much awaited now how the heck to get it. What mitchell said to his guys is we dont have a choice. We are going to run out of natural gas in our Companies Going to collapse. They started working on it and they spent years on it. What they did was to frack it. I assume some people know fracking is and some people dont. Just means is short for hydraulic fracturing. To simplify that means pummeling this rock, the shale rock with a combination of liquids. Some foam and some chemical and water and some saintdenis try to create little fractures, little fissures in the rock that allow you to pump out the oil and gas. That is traditionally how they did it. Back in the late 1940s fracture or frack, i call her fracture rock in the industry hates it when you use ck. One of my key cut me off when he saw the name of the book. Months before i was done doing the reporting because people hate the name frack. They say the media has appropriated that enforce it on them. Historically they call their fracking without the k. Anyway thats how you spell that sound, fracking sound so it makes sense to me. Basically they started fracking this rock in texas may started doing it in 1982. They spent years on it and by 1997 George Mitchell was around 80 years of age and they were making much progress. His wife had early signs of alzheimers. His heir apparent didnt like what they were doing and behind mitchells back, mitchell wasnt even daytoday running that company anymore. At 80 he was keeping tabs on things but he left it to individuals in the field and he let them do their thing. His heir apparent went up to some of these people and said stop what youre doing. Its a waste of time. We are going make anything out of this. The people who are right about in the book, individuals were shaken. George mitchell really wanted to keep going and figure this out. Les adelman said stop doing this. They came to the conclusion to keep going because George Mitchell is still the boss at least for now. It was a little scary for them meant back then in the late 1990s everything was about hightech. The energy guys knew and they said if this doesnt work well have to forget about running a company. Theres a guy named nick steins berger who really was the one leading the effort. He went home and told his wife we are really in trouble. We will have to find Something Else and find another industry. By 1997 they werent making much progress. Then something happened. There was a lucky break and alter history there are lucky breaks that are responsible for dramatic things. One day the company, the contractor they used to pump this liquid they used a, option of liquids to try to hydraulically fracture to shoot High Pressure at the rock. One day the use way too much water by accident. They use 99. 5 water to try to get natural gas out of this well. Low in the hold that actually produced a pretty good amount of natural gas, nothing dramatic but pretty impressive amounts. Everybody in the industry said its a oneoff, its a fluke. Go back to these expensive kind of homes and other kinds of methods and concoctions. Steins berger said we are not making much progress with those other kinds of ways of fracking and water is much deeper than the foam so lets make it work. Lets see if we can make it work and do trial and error. The crackers the frackers is about trial and error and persistence and resilience. That is what they did over the next year or so. They focused on it and worked on it and found a way to get natural gas to come from shale. Berger and his team change the company because they were able to sell the company a few years later for 2 billion in 2002 they change the company and they also change the country in the world. We still use the version of our fracking cocktail which is mostly water. Its got some chemicals and sand as well but its about 99 water. Mitchell and his team and my book i write about the big guys but i write as much about the individuals in the trenches. They often dont get the reward that they should i believe because they are the ones who work hard and persistent. Get much payment for it. These guys work at provincial made about 100,000 in their usual salary even though they 1800the country company. At the time people said all right george good job you got some natural gas in the barnett area in texas. Whos to say you or anyone can figure out how to get natural gas from other shale formations or fields around the country let alone oil. Theres no way you can get oil so it took some other stuff burned americans to say no we are going to try to make it work. The two of them talk about it. Excuse me. So the first is a guy named Aubrey Mcclendon and he was born in Oklahoma City. He came from the right side of the tracks. He came from the kerrmcgee family in oil and gas company and he went to duke, majored in history, had no real desire to be in oil and gas man. Again that unlikely people that will change the country. He went to duke and got out of school. He was going to work as an accountant but his uncle said come back to Oklahoma City and work in my business. He did that and then it became a land man. You dont get much credit for the business. They are the guys and sometimes gals who go doortodoor knocking and asking if they can lease a farmers acreage or a homeowner and cutting deals to lease and acreage so their bosses could drill. He was doing lab work and as you can imagine you need to be charismatic and outgoing to be a land man. Hes very much outgoing and confident in charismatic and he was doing a pretty good job but the real money isnt in finding oil and gas. He kind of wanted to do that. He kept bumping into another land man who was at the same point thinking about drilling for oil and gas himself. His name was tom ward. Tom ward came from a little to town, a much different story. A poor background. His grandfather was a noted alcoholic in the town. Each sunday he would literally stumble into church in the middle of services crying and he had issues. His mother had passed away and he would be drunk each week. The pastor would stop and welcome him with open arms create but it was embarrassing to the family. His son tom wards father also was an alcoholic. The ward family was notorious in that part of the state. Women were warned not to marry into the family. Tom ward found religion literally and it stabilized him. He decided to go to beirut and got married at a young age and became a land man as well. Around the same time Aubrey Mcclendon started getting excited about finding oil and gas himself. They decided to do a company together and the company was called Chesapeake Energy. They named it after the chesapeake area in maryland mostly because mclendon liked it. It was pretty and he thought it wasnt really going to work. They didnt want to put their name on it in case the company didnt work so they put a name on it like Chesapeake Energy. For a number of years it was sort of they got excited about areas and they made a lot of money. They got too excited and they burrowed too much money and overproduced. The stock went up and down in a boom then crashed. It was exhausting for them and investors but around 2002 Aubrey Mcclendon and tom ward saw what was happening in the barnard area. Again production kept rising. They were among the first to say do you know what lets make a huge bet on shale formation all over the country. Lets try to lease out the land. This thing looks like its for real. They went on this crazy land rush the likes of which a country has never seen. At one point Chesapeake Energy controlled at least the size of land equivalent to three times the size of new jersey. They were everywhere, oklahoma, texas, pennsylvania, ohio. And it works pretty well for a while. Natural Gas Production soared. They were right that shale was working and you can get a lot of natural gas from it. By 2008 Aubrey Mcclendon was worth 3 billion. I write about how he got overconfident and believe too much in himself and his company and in his revolution and they produced too much energy. First off in 2008 if you remember the natural collapse and i write in the book about his broker had to cut him off and sell the shares because he borrowed too much money and bought too many of his own shares. He rebounded and did some very aggressive things like selling has map collection to his company. He cut a huge bonus for himself when maybe he shouldnt have but the thing that god and his investors most upset is that he hurt himself and his company overproduced. As we all know commodities are natural gas. There was too much supply what happens when theres too much supply . Prices go down and he thought they were to focus on what they were doing. Aubrey mcclendon into getting kicked out of his company and tom ward got kicked out of the company he started after leaving Chesapeake Energy. These guys in some ways, its not clear what Aubrey Mcclendon is worth today. It depends what a friend you ask but in some ways we are all paying much less in natural gas as a result of what these guys have done. There are somebody else i want to talk about named harold hamm. Harold hamm also a fascinating story grew up in a little town in oklahoma and even that is interesting because historically the energy world that guys came from texas. Oklahomas sort of the sister and her ways. Harold hamm came from a little town in oklahoma. He was really poor. He was the 13th of 13 children, a little shack of a home i visited. He couldnt even go to school until christmastime because his parents were sharecroppers india to help them in the fields. They were picking watermelon and cotton. It was so cold that he couldnt be allowed to go to school. He grew up poor and he had a pair of new shoes he recalls when his little home burned down and the people in the town chipped in and bought a new shoes and became a good day for him. He remembers it as being a positive day. He grew up really poor, didnt go to College Buddy have this hunger to find oil. He traveled the country and you go to these parts, you still see these people. Its like an american archetype. Theres hunger to find the dallas kind of thing. You hunger to find oil and gas to change your position in life but also to change the nation believe it or not. They talked about moving america towards Energy Independence and i was little skeptical but when you talk to people who dealt with these individuals way back when they were talking about changing this country and ambitions pose both to themselves and for the impact on the nation. Years ago they were talking about so harold hamm again i have this hunger to change his life and get really wealthy and find a lot of oil and gas but he didnt know anything about geology or engineering. What he did was start off in the industry by cleaning out the tankers. He would literally get a break and climb in and dig out the sediment in the muck at the bottom of the tankers. That is how we started the business to do that. He had water transportation and started a company doing now. At night he learned about geology and studied courses back home. He started to look for oil and gas. He was pretty successful locally in oklahoma, nothing to write home about the pretty successful. But he heard about a lot of oil and gas, especially oil that existed in montana and also north dakota. It was called the bocken region. He wasnt the first person to get excited about that area. Its a notorious area for being a boom and bust area. People are eyes getting exciti exciting getting excited going to north dakota or montana but for whatever reason the wealth and work. They ran out or they cost too much to produce and the locals would be upset in the economy would crash. Kim got excited about the area. Again its his overconfidence i would argue among these people. He said guys we are going up there so they went in montana and the north dakota. What they did was they were making progress around the country in terms of fracturing rock but they were also doing something called horizontal drilling. Horizontal drilling is just as important. Everyone focuses on fracking but horizontal drilling is a revolution. I guess usually you drill down vertically. Historically thats been the case though what they figured out how to do is to drill down and turned the drillbit 90 degrees and go horizontally. The reason for that as a lot of these formations especially shale or bakken limestone is very narrow. You really have to go down horizontally to unlock it. Kim was the first in a Company Called continental resources. They werent the first to do horizontal drilling but they heard about it and they were among the first and they set off lets combine the two. Lets drill down horizontally and [and see if they can get oil. So hamm restocked lands, all kinds of acreages to north dakota and put the largest lease owner in the state. They spend from 2002 till around 2006 working on it. It didnt work. They werent making much progress. By then they said you know we are running out of money. So they went to sell the acreage and they couldnt find anybody. Big guys ignored him, middle guys and little guys, they all ignored him. He said to his crew lets pull back and pull down our production and conserve money. That is what they did and they started to make it work. They started to see oil flow from his rocket north dakota. In 2007 they sold stock. Ive helped them that there was one guy named Brian Hoffman who said boss lets target north dakota. They were on the montana side of the border for wild and he said i have a good feeling about north dakota. Brian hoffman sold all of his shares in 2007 when they went public because he didnt believe that they were doing was going to work out. It was to aconda question mark by progress. They made progress and today the bakken and others produces 1 Million Barrels a day close to 8 million then the whole nation does. Poor old hamms whole life has been transformed. Heres this guy who didnt have shoes growing up and now worth 17 billion. Hes one of the wealthiest men in the world. He did that for a few years and found his money was running out so he had to find Something Else to do so he started a restaurant does anyone remember that restaurant . That is where that in this place where ron goldman was the night that Nicole Brown Simpson came into the restaurant. And that is where allegedly o. J. Simpson committed the murders. At the time it was very disturbing because the restaurant was inundated with customers from all over the country. They were stealing plates and knives and business was great but he was disgusted by the whole thing. Said he said it is the late 90s and now with dominated back then so he said if all the money goes to high tech i need to focus on an industry that nobody cares about. So the whole idea was to use new technology to do a better job to find oil and gas. But he did stumble on the idea all the experts said it we will start with a company to build terminals to import liquefied natural gas. That were running of natural gas i will be though one. But then to pick a spot in louisiana but he is jerry smooch charismatic individual in to build these terminals in louisiana. He was worth a lot of money over 100 million in the stock was soaring and importing lng just as suggested. Then lo and behold around 2007 or 2008 you know, there is a desperate need for natural gas now we have a glut. But we really dont need to imports at that point so the energy went to at 100 a share in those big investors on wall street said water you going to do . He had no idea. So they got upset but he could have thrown in the towel but he could have moved onto the next good idea. But he is a bright guy. I will figure out a new plan. And then around as 2008 issa it is true to develop the glut of natural gas maybe i should export. So he went back to his investors to say you know, how we are running out . Actually hell about the adn to export . At that point they had written off the investment. So they didnt have a choice. So if you can figure out more power to you. But then through the teeth of the financial downturn but to export lng and they figured out how to borrow 1 billion more to refit the terminals in the first one starting next year to export around the country. And it is the fascinating story because we have given up said it will not work and my investors hate to me and to there is the National Resources because we all try to figure out what to do and he will export natural gas. Most of the contracts go to asia and then to run the lead editorial. And maybe we can send some energy to europe. So basically we have to do more fracking . They did not say that but they were sold very but they were worried about exporting so it is ironic. There is some interesting people that i write about. The tea tanner not the people you expected. So i will give you some thoughts as to why people led the way and the pioneers then i will set that aside for what they have done to the country to talk about the risks as well. Part of this is a cliche but they have to make it work. The he did not have an acre it offshore. In then he had this shale formation but they did not have a choice in the matter. And that is what it takes sometimes with your back against the wall. But it is much easier to innovate so think of the new products like the energy drink, the the new drugs or the new e cigarettes a few years ago microsoft had a division combining search with advertising that sounds a lot like google but they decided to close the group and allowed google to evolve. But there is the company that i find interesting. Maybe they would trade it like enron. And then in 2007 but the guy who ran it, the ceo by the name of market got scared and there is. But if we can buy natural gas and so can the competitors will there be a glut . So we are in trouble we have to find oil. They turned on a dime to visa of acreage in texas and they did it under giants under huge tracts of land and to date shepard juices 1 Million Barrels per day and it is mostly because he had to but you can also innovates with those upstarts that are better at innovating and making progress. It is a product of good fortune so with the concoction of all of it they ran with that. But he was the average energy producer. Nobody thought he was a superstar but then with for rations it is one of the top fields of the world and he happened to be on the land and loved it. So he ended up doing pretty well but i am a believer in the market signals the individual started to get excited and focus on shale production rightabout would oil and gas prices started to soar. That is one of the reasons i am excited about innovation you could make money from shale production. I am not a vague decider of top down the also that incremental progress you have individual spending years to make it work that is why i am optimistic about alternative solar wind would you talk to people working on them they are excited. We are not there yet but people throwing money at it and there is money to be made. Why are we there yet . Just like the guys that but from 198231998 to make it work with Real Progress you will see the same thing with the alternative where sustainable sources of energy. I am optimistic this era of the frackers have created figure of how to transition away from fossil fuels. So now i will talk about the risks and what i am worried about and then to take some questions. I will first talk about what many people worry about when it comes to fracking and why i am not worried about those things. One thing that many people worried about was methane as a key component of natural gas we have seen films or movies where people light a match and there is the fireball that is very disturbing that is said key concern with the chemicals in the water but 99point 5 is water and theyre pumping a lot of water in there. Some are harmless but summer harmful a and theyre dangerous not what you want to in just. People are concerned about chemicals the third issue is travers or earthquakes. I will tell you why i am not worried about each of those three areas. The first is methane getting into the water. U. K. And light a match to cause the fireball but the problem is you have always been able to whittle kinds of places it just so happens in some areas shale is so high up in the ground the methane gets into the water. How do we know that . Because in west virginia, kentucky because you have always been able to light a match and ground zero for the protest i talked to some oldtimers there will return on a faucet light the match and run. It had nothing to do with fracking but most of the time methane does not get into the water it happens naturally in large doses so i am not worried about methane getting into the water from fracking but then there is that chemicals. So talk to objective scientist they say it is possible because we drill. Remember the formations are so deep it is like 14,000 feet so kayhan the chemicals magically come up through the time . It is possible but unlikely is why will not worry about that but the earthquakes and tremors . Generally speaking these are trevors you dont feel it is not from the fracking by rejecting water from the water use and down you have to do something with it they treat some of it and reduce some of that but a lot of it debris injected deep into the ground below the sale. Sometimes they do a bad job to send it down there that cause this fault issues and has caused tremors or earthquakes but people realize the problem and theyre working hard to recycle more of it and i am hopeful they will figure out a way to deal with that. Those are the three big concerns. So what am i worried about . I am worried about methane leakage. Methane is a Greenhouse Gas i am concerned about Global Warming and we dont have teide to show how much methane is a knitted during touches rotation of natural gas. I have seen different studies. That we dont emit so much methane worse than cold but were not sure. But they enacted rules to crack down on methane the kitsch a and it astounds me by other states have not but the would much prefer environmentalists put pressure on oil and Gas Companies to improve the way they produce rather than saying fracking is poison in you should stop. They are not stopping. They arent taking a lot of the deepest economic downturn since the Great Depression they will not say we found all this oil and natural gas but instead people spend hundreds of billions of dollars and send it to the people we dont like. Be realistic in and with maya bay argument is we have to put more pressure on oil and Gas Producers to improve the way day produce. As opposed do condemning them. So we think this eric is beneficial is better than coal but were not sure about the methane. Soviets dont want that if you worry about Global Warming you know, fossil fuels are not the way to go back my hope this period allows us time to make progress is more sustainable environmentally sound message of energy and solar and wind things like batteries in intermit tint issues we cannot depend on wind and solar so the key is Battery Storage in a flea they bill continue so i am concerned even talking to George Mitchell son he is not sure what his fathers legacy will be to have a huge impact or maybe not so good if we dont make a transition and that we produce too much methane from this era. But this project has reassured me about the nations future. To travel the country to be criticized left and right to not innovate but to get to places like north dakota and texas where the story is technological and americans rolling the dice and taking chances they during out what the rest of the role this not close to figure out. Is it a dynamic quality they are hardworking people cities have been transformed. If you have a chance you should go it is the modern day boom town. It is the heart of the area have you heard about the camps where the workers live and i have spent time there with a flat screen tv and a little room it is like a dormitory bull city is transformed to literally almost overnight the streets are renamed to i was out there and i kept getting lost and they finally said if you were using gps you cannot use one because we rename the city as we speak they gave me directions utility to take a right and they said oh yeah maybe they named it. It was their own street so people from all over the country are living there. They have gone through tough times ahead in pennsylvania they drive up to use of a listed area and i give them a lot of credit because it is hot a1 the unbearable and in the winter it is ridiculous but yet they were card all kinds of people go up there there is ladies of the night and all kinds of characters. Visiting. So it shows of honker to change your life and the mayor says if you dont have a job you dont want a job so that is to assure every of the dynamism that people look down but that it has been discouraging because fracking we are so split so it is either drill, baby, drill the fracking apparently is nothing wrong with it but making a mistake after mistake one of the 10 wells has to be radiated that could lead to chemicals it doesnt happen often they are Getting Better but it is not good enough a and they say we have been fracking since the four days so dont worry about it and they will limit to it we should drill on public lands but believe we dont need to we have a surge of Energy Production so the other side says it isnt true but it is a waste of energy but instead we should come together to put more Energy Limited edition into colorado like wyoming or texas it confounds me there are some environmental groups that work with the industry it is called the Environmental Defense fund they tell them they are sellouts and how dare you work with the industry . We are so split as a nation so that has been a disturbing issue for me. I weld now answer some questions i have gone on long enough. Talk about the dependency on russia for natural gas and oil you say you want to help them to alleviate that problem to be independent now they cannot even retaliates from putin . Why do we delayed the approval of export facilities . It has approved seven facilities will of the Regulatory Agency has approved just one . Explained that. So why are we allowing more exports of natural gas to undermine what russia is doing . It has a stranglehold right now so the answer is why our dree approving more facilities . There are a few others and that answer has nothing to do with environment but it is all politics the companies that use a lot of natural gas like dow chemical dont want that because it may raise prices so they put a lot of pressure on washington to say there are other companies that depend on natural gas the utility that says we use a lot of natural gas but we still want exports and if cars are benefiting but dow chemical is powerful if we should be exporting because not only can they do things to potentially undermine russia you cannot tell them where to export but to go to places like asia it will help but then the jobs are created. Taco bell the tarsia as the canada end could you go back to explain a little more . You see like a very sensible guy. [laughter] with the environmental side you said it is 14,000 feet . So there is not too much of a chance of those chemicals to get in. The first was keystone and it was controversial it was so relevant it is the of pipeline from canada to the tar sands and obviously they do want a pipeline to be approved. But how to get the oil on to the pipeline so what they did is they realized so instead of waiting for it to be developed they said all rail and that is more dangerous. And then the oil coming is a little more dangerous than traditional sold they put it on the rail right now and that is why theyre making a fortune. That were not right waiting all day for keystone so because keystone has not been built they have more use of rails touche transport. I could argue they will produce this any way in canada and if not they will send it to asia. But it will probably be after november. What about the environmental . Sure. They are worried about accidents and it happens all the time so they are worried that they should not be allowed to potentially jeopardize the water system why should they be allowed to jeopardize it at all . But we get 90 of naturalgas from fracking and then to figure out something as a nation that if we got off of fracking Natural Gas Prices would soar the with the solar and Wind Industries i am not ready to force people with the economic downturn to pay so much more for their energy. Tell people conflate fracking with Energy Production it is sturdy and smelly. And peoples lives have then transformed for the better. If you dont own your own home if you are renting the prices have skyrocketed it is about 3,200 per month in the middle of course, dakota for a threebedroom. And there are just people that are unhappy in general. I would just hope and instead of condemning to Work Together to do a better job instead of sticking their heads in the sand to do what they need to do. A twopart geopolitical questions and can saudi arabia and this in the arab state be ed counterweight to russia . But to be in the eastern part of russia it has contracted with china to get the oil ought. Is that up possibility that it will take over those resources . I will not pretend to be a geopolitical experts. For what these people having and the key is something to undercut and unless were ready to go to battling skin and with your question about saudi arabia it has a huge blow wing young population nobody knows how much but it is not clear if they had enough to export for energies they probably could do so more but china like a lot of nations their own country china has a and russia has, uk, poland has, uk, poland, argentina but yet were not close to producing anything because we have a vintages both godgiven and others. To have better access to fresh water into the of the Pipeline System will hold key to this revolution that you go a broad and you could make a argument there because theyve run ad of energy from the north. So they should be but it is hard to make an argument to allow fracking to support fracking now if they were paid for it but they are not. And won his skeptical. End to export more but it is not clear. Are you aware that the shale is high in radon . And that is just the short distance to a new york because the pipelines are now on board that we will have radon coming into our kitchen in san driers that is run by natural gas and radon is the number one cause of lung cancer with nonsmokers. Most of the kitchens do not have a fan or a event or a window that is our real thing. You may not be aware but i did miss the first part of your discussion. As far as water, i have seen numerous trucks going by carrying waste water what they call produced water and that is something that they have to deal with and one of the ways it is to sell it to parts of new york airports use of money to spray on their roads. Now that water, the chemicals is a secret formula they dont have to reveal so that way the epa cannot write the rules against it. From what we can find it is fall of carcinogens in dangerous chemicals. Garett is a lot there. Last one first, it is the myth, for a while they did not have to adjust close what chemicals were in the fracking concoction but today usually, there are exceptions, usually they have to disclose what chemicals are in the concoction. You and i can find it out but the government could find out if there are exceptions to the rule and to see some progress that we will own up so which disturbs me we still have these exceptions. It is up with the epa does not regulate but it is hard for you and i to know there is a lot of water used when it comes to fracking with a 5 million gallons per well in the part of the country going through a drought is we need to have a conversation about water waste water gulf course is Agriculture Energy is 10 times the amount so be subsidized of crackers frackers i think it will over time but it will recycle a little more which is comforting but we are not there yet and we have to raise the price but in terms of radon, the scientists are not that concerned. So these people are not as concerned not talking about industry kind of people but for those that thank you can screen for this kind of stuff but its not what the pessimists say say. At the beginning of your talk musec you are hopeful the will buy us time soon will utilize alternative forms of energy but eventually the rest of the world will catch up with us so ultimately the success of fracking world wide when Everybody Knows how to do that will undermine our japan your ship to develop alternative forms of energy so in effect the success will come around on itself to lessen the effect nor the desire to develop alternative energy sources. A good question. It is not clear if it will catch up to us if at all to have china to ship from coal to natural gas and talking to people investing in these things and theyre not there yet but theyre predicting and anticipating depending on Sustainable Energy Even Oil Companies figure out how much they will have to pay up carbon tax they pay for that even though obama and the others, they anticipate a day where it will be more expensive to produce or consume fossil fuels. So we should act on the car bin is making it more sustainable to make it more an alternative. Thank you for discussing the origins what is the look of it now with these individuals have the of the people come on board and what does it look like now . Is the stubborn while capped wildcatters they were passing the baton to the big giant companies so exxon came back and spend 31 billion all the majors like shale ndp realize they make a mistake to buy up companies to lease acreage and they paid too much money in their realize theyre not quite as good as the independent wildcatters sell some of them stick around and other people are getting out so they tried to start a unit over the shale production is said and you figure of that basis that is proving and never would have expected it so to go to town for the account they started up again to make dash huge bet wager on ohio so its continues over the farquhars frackers. How many of the it wildcatters were over 50 a and what is your take of those documentarys . Are they factually correct . I of interested were all these wildcatters 20 something or in the 60s and 70s when they pushed for innovation . And the majority of them spent years if not decades in relative frustration and the third gentleman is in north dakota there is the lot of immigrants he did it as 75 years of age so there are the people who finally make it work to strike their rich late in life surprisingly. I have seen both. There very well done and disturbing and reassuring but also to a exaggerate i sought a filmmaker and was very well done and made good points that its always been done but not so they dismiss the concerns so was try to go down that lonely middle path. I adjust down in my basement trying to type out the words. [laughter] i have not visual. I follow you but i still need fracking in 101. What would you do . What exactly what you do do you need a license . Can you over to win it as far as chemicals . But some people sayville whole saying is a ponzi scheme that producing a lot of oil and gas but it would not last very is state dash that shows it plummets and production is dropping forget about what the president said about 100 years with Energy Security but talk to people in the field it plummets then it muffles off. So were producing so much oil it will peak a little earlier in terms of fracking won a one. With a little bit alexians are chemicals as the High Pressure. There is more questions. You talk about trying to get the information out there that media has a responsibility are they covering that situation on the slate . I am trying my best. I dont want to criticize my brethren there are some parts of the media they have overplayed both sides. It can become part jihadist you have experts on both sides and very heated conversation. A and people laugh at cnn there is incentive to create controversy it is not popular to be a centrist today. People dont go to what they want to hear. In is this is sad tivoli it is the achiever. And it is relevant as well i did this story one month ago about a call a diana ross street who was always bearish with a lot of followers then he turns a bullish. And what he got from his readers they were furious and the point that i got was we just want to hear real ready made our decision. We just want to hear their repeated and unfortunately win someone changes their mind if you hate them or dismiss them that is what it has come to in this country so we have hundreds of billions and it hasnt made the impact we still drive cars on fossil fuels so i am a big believers to incentivize those getting rich doing something good did it often happens that way so ive got of the leader of the government to take the money then send it to companies that are doing work on solar. I would carbon tax to build the infrastructure and i do believe in more regulation and that it was statebystate the federal government has sought played a huge role to regulate oil and gas drilling. Because the local guys are friends with the oil and Gas Companies and that was my instinct. The government does need to play a bigger role i dont know why it doesnt step in to say with a few different states make it a National Policy to put the pressure on them. They should embrace saying get out into the forefront for those of have come together with the Environmental Defense fund but when i started the project i thought maybe the oil and gas guys are houston and board room types Smoking Cigars laughing their way to the of bank. But you realize they are not angels when you meet them, are not saviors but they are geologists they are outdoors there ranchers and hunters there outdoors more than i am so they are not out to pollute and are not callas they do often pollute but there is a new once there that is not always appreciated. And dont want to spoil the book but to ask briefly how much in your research with people that you interviewed is of what has been spreading down the fracking process other than the unique situation where there is a danger that has been found . Off so i will ask the perception is it focused with energy in general . Is this that and all be all or do they look to the future with alternative sources . Maybe something new . Right now were in an era of oil and gas plenty but people to worry about the future and they worry about it to writing and also there is a contingent trying to plan ahead to sink to the future some of the people that financed oil oil and gas from fracking like kkr also tried to think about the next hole ryan payday that could be the alternative those that would store energy so they go on at the same time. More or less when you focus on those personalities so hall much overall almost like a biography of the personalities involved how much the big boys did not want to take the risk . With the potential loss involved so it in that process of profiling there were genuine cases . Was set materialized that would give rise to the media in the process . And early on accompanied ruined peoples water. They made mistakes, real mistakes. They will own up to it now. Yes. We did not know what we redoing as well as we should have. I think they do own up to it now. And there were mistakes. It was not that they were early on they were skeptical because they had always thought i was just fracking. But it was a new geology, on the part of the country. It makes sense that they went into it thinking they were overconfident and learn their lesson hopefully. So these