Transcripts For CSPAN2 Book Discussion On The Frackers 20140727

Chapbook. She is also working with the survey and has other exciting titles coming for us. I work with an array of writers, some i have heard me mention including same who many of you know who is making her own books and films together. The addicted feature film cannot tober. You also need to know the Cultural Workers who are supporting and promoting these brilliant writers. Theyre People Publishing literary journals print and online in other publications and creating bookselling type. Laura peek round with queerly the journal. There is no say it sounded ivonne cavanagh. Theres brittle paper, it really books site online. There is my homesite smackers. What more can i tell you. Just pay attention. Make the effort to find out what is going on, what the work is out here. It launches necessarily, do you. Communicate with publishers. Everybody is on Twitter Facebook these days. Is there something you want to read, if theyre sent to you think its important for Book Publishers to do, let us know. Atria books is on twitter. I am on twitter. Facebook, interest, and strip you, these are solid and good modes of communication for particularly the africanamerican community, lack community locally and globally to communicate. Avoid the temptation of pitching me books online, but do write me and let me know what you would like to read. And read and read and read. Now even scientists are concluding then showing us how reading too young children, i was reading ourselves affects our brains in a positive way. It is healing. Not just recreation. Its not just something you do in school. I read a statistic that worked than 40 of people dont read locks once they graduate from school. Weve got to do better for ourselves. You know, we just even need a quiet place to relax for a Blood Pressure to reduce. Read, read, read. One area where you wont get much argument from people across cultural lines is run the whole question of education and home port and it is. Generally when we are talking about that, we are talking about the marginalized and the poor, how we need education to survive in her eyes. But the leadership need education ,com,com ma too. The elite and education, too. What better way to succumb to some kind of understanding of that other person, added that other culture who has that other part is banned to read a book. So to my publishing colleagues, to my community leaders, read a book by a black person, via caribbean, by an african. You know, that is the way we are going to heal each other and though these bridges and rebuild the society. I really appreciate your patience and attentiveness and have a great time at the fair and thank you. [applause] more now. Gregory zuckerman talks about the wildcatters and the tracking industry in the endeavor many people the oil industry said was foolish. This is about our 45 minute. [applause] thanks very much. Great to be here. I spent a good chunk of my Research Time working at the New York Public Library and a huge Beautiful Run they have available to the public and a pleasure and honor to come here and give a talk about my book, the frackers. Often when you read a book and its a project, youre not even sure you can get it done, let alone come back to a nicer like this and share some thoughts. Its a pleasure and privilege to be here. I am going to talk about my book , the frackers and some observations from this era of energy come a resurgence, production resurgence in this country. But i thought it would first take a step back and explain why a guy like me started a project and threw myself into writing about energy and oil and gas in the wildcatters and trackers who were changing this country and the world. Ive been at the wall street journal for a while now. 1996 i started in a freight about all kinds of big that the journal. 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. On the sports guy. You can tell maybe. A homerun in the world is safer or individual that makes a great decision, it works out well when they change their own firm of the country, something they come the media. So i find there is a lot at drama in home runs than strikeouts and a lot of lessons to be learned as well for readers and for my health. So why not check it to that and it occurred to me good maybe three years ago that there is no bigger business topic in the world right now, especially in this country and this Energy Revolution going on in america. And i look assorted bigtime now sketch of a man talking about a plight is so important in light is changing so many things. And then i will talk about some themes from it. Some of the things people would know about. We as the nation a few years ago were running out of oil in gas. Around 2006 we went to congress and said to build terminals to import liquefied natural gas. Alan g they call it the can be converted to natural gas because we were running out of gas in this country and obviously we depend on natural gas for everything from the airconditioning to the light and heating, if battery appears so we were in a desperate situation. If you think about it going back, weve always been in the last few decades worried about her future and dependence on others than these others arent things we want to depend on. I remember being in the backseat of my parents car and i was night team 73 or so. I was a little kid, but i remember vividly being in a long line at the gas pump during the arab embargo. Everything is changed in just in a few years. Right now we pump, we produce about 8 Million Barrels a day and that is up from 5 million a few years ago. We are the World Largest natural gas producer as well. We produce more energy in general than anybody else. We passed russia and its a remarkable change in a few years. Weve gone from a period where desperate to now we will be exporting natural gas starting next year from the lower stage and we are even talking about exporting crude oil. So its a crazy thing for anyone but the gray hair or to an audience to think so much as change so quickly. What else has changed . Art difference in security. Im not a baby fever we look at energy independent, but i believe in security. We will be dependent just on france. Canada, mexico as opposed to sending all that money to people we are not really friendly, but want to be sending money to pay venezuela, saudi arabia, that very. The money has gone to think they havent wanted it to go and that is really changing. Its also the case the econom te take away the impact of this Energy Research and over the past few years, we would probably still be close to a recession. And dad were probably going to get about depending what economists get to when its all said and done not just in the Energy Industry, but from an oleary types of industries, businesses, things like cementy. Its not kind of boosting jobs yet like it showed her like we would hope, but it does help and to think that companies are moving back to america because weve achieve natural gas costs. Natural gas has struck dramatically because of all this production from the trackers. We now pay about a third to half what they do in asia and in europe and that is the reason that companies are moving back here. It is really given a shot in the arm to businesses, and individuals, too. When all said and done, people think it will contribute about one percentage gdp and gdp right now was less than 1 in the first quarter, but probably 2 to 3 going forward. So it is a big dramatic change in its transforming mall town america. For this project, for this book, the frackers, i was privileged to travel the country. Louisiana, type this, while thompson oklahoma. You go to smalltown america and its really changing. There are farm owners who didnt have a choice and they were thinking about moving away and opposing them armed and now theyve been able to lease their land and stay in their homes. They were homeowners were young people moving back and they never had any future. There are jobs. Theyre also people that are so welleducated getting good jobs, wellpaid jobs and many young men and weve seen a over one a year so theres good jobs being created for this dramatic change in this remarkable transportation of the economy. So interesting people hired often as veterans. Tracking can be dangerous. You are also often kind of in places like north dakota where it can be unbelievably cold and you have to work with a team. They love to hire veterans. All kinds of people are hired as resulted in young people, to do. So the economy is being held. Theres also the geopolitics of this whole area. It is only now people start to think about the geopolitical and act. I think it is something people will focus on much more in the years to come. For years regarding tangled in title support so we didnt want to. It is partial because of oil and are dependent on oil. You can think about different middle east battles, it better. If you talk to experts and you do some thinking about it, you can really get a sense that the margin will be much less involved in the middle east i believe in the next decade or so, especially if Hillary Clinton is elected in a few years, 2016. When she was secretary of state, she let what they call it a to asia. That means that the margin come you dont want to go overboard, but we spent less in terms of patrolling the streets of hormuz in that kind of thing in order to focus on asia as opposed to the middle east and that will happen much more so i believe. We now import about other and of our crude oil from the middle east. I dont think it is a coincidence that would saudi arabia pick us to get involved area, we kind of said larry, we are not getting involved. We dont care as much with the saudi stink of us and what they want us to do because we are just much less dependent on the middle east than ever before. Alec of us all of great options. Well save lives i believe, spending in deleterious the payday. So thats the margin. You dont want to go overboard with the theme. The middle east will always be import as long as we have allies in crude is being produced in the middle east is an international market. But the margin will be less. Those are all great things in a big impact from these people. Theres also the environmental impact. I want to save a whole separate action for that, but there is a mixed picture there in all kinds of people harmed come communities harmed, mistakes by energy companies. That said, Carbon Dioxide emissions have plummeted. We are down to 1984 levels because at the margin weve shifted whole to natural gas. When you travel, a visiting when talking about my book and it is funny. Its actually sad that now are buying are cool. Its a crazy thing to think about. We are literally selling coal to newcastle because weve got this access coal we are not using anymore because we shifted to natural gas and they are buying into. So they are big talkers about how they are creating more focused on the Environment Committee at the buyer pool of Carbon Dioxide emissions straw. People made fun of for not being tight with kyoto. We are compliant with kyoto today. So what is all ironically in paradoxically because of the shift to natural gas because of the trackers. They are also downsizing and will talk about that as well. Just do you know, and 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. That is jobs in the economy and geopolitical impact, economic impact, we can take in a little more if you like, but that is sort of an overview of the huge impact of this revolution and why we got so excited about this topic in the first place. Theres nothing quite like it for the impact. We as americans do a few things better than the rest of the world. We create apps. We wrap other than anybody. We do drones really well and we frack. The rest of the world has more shale oil in god, the key rack that holds all this oil in gas will talk about. Theyve got more of this abroad then we doing it they are not close to having any revolution like we are having and i will explain why later on. So i started working on this travel the country and rolled up my sleeves and started to figure out how this revolution happened and who the people are behind it and that is what my book is about, how it happened, who the characters are. I kept coming back to a paradox, to this curious and very surprising team. The message should not have been these individuals i write about to let this revolution. It shouldve been others. So with a little bit, believe it or not, in other words, the experts got it wrong here the experts didnt believe in america. Experts said we are done here. Not much oil and gas . Go away, give up on america. It took some stubborn, overconfident, brash individuals, entrepreneurs to say no, we are going to ignore what the experts say we are going to drill right here in america. The thing i kept coming back to is they shouldnt it then these people in this theme is similar to, believe it or not, the financial meltdown. I wrote a book in 2009 called the greatest trade after it was about the people than anticipated the financial meltdown, anticipated problems to the country and they made doing and from it. If you think about who should have anticipated the financial meltdown of the housing subprime mortgage issues, et cetera, it 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. So the banks didnt get it right. Who else should have got it right . Greenspan, bernanke, top investors on wall street got it wrong. They were all shocked by the financial meltdown. They came up with words and phrases. Hundred year flood, all kinds of explanations and excuses, but they all got it wrong. And who got it right . A bunch of outsiders, id guys, the guys i wrote about in my last book. Theres a guy named john paulson who was a Hedge Fund Manager not too far from here. He didnt know anything about orphanages or housing as recently as 26. And yet in 2007 at 218 the 20 billion for investors in about five to seven illinformed self. Hes not the guy you would expect. Not a household name. He was an average single hitter. He doesnt like that, but it drew. Who else anticipated financial meltdown . A guy named jeffrey green. Jeffrey green was a Real Estate Investor in los angeles, but also not the person you would expect twisting something greenspan. Jeffrey green got married late in life. He got married at about 50. The best man at his wedding was mike tyson, the boxer. He had a houseguest for a while. Heidi fleiss. Remember that . The hollywood madam. And in usual guy, yet the guy who gave 500 million anticipating a collapse that all of the experts fail to see. So that is what happened in the financial meltdown and it kept coming back to that theme here in this area of resurgence. What do i mean by that . Who shouldve led the way in terms of production in finding oil and gas in this country . It shouldve been the majors they call them, the big oil in Gas Companies, exxonmobil. So their headquarters is in irvine, texas. They are on top, literally. Their headquarters on top of a barnett shale, a formation, a field and that is really ground zero for this whole revolution. Thats where it all started. So exxon is on top of it. They still are. And yet, were they doing any drilling . No, they were going anywhere but america. They are going offshore, africa, asia. They had given up on america, so they didnt see the revolution coming after the biggest toilet after the company. Who else didnt participate . Chevron. Chevron is really early at anticipating some of the changes. Theres a guy named ray galvan that i write about in my book who started a little group in his bed was we are going bed was we are going to figure out new ways to drilling in this country. And we are going to tackle drilling, figure out how to drill in shale. Shale is this rock that we always knew had a lot of oil and gas, but no one could figure out how to get out of it. Way down below the ground and it didnt seem worth anyones while. So he started a group, brought in the top engineers. Some top guys, engineers, geologists and they start working on it. They made some progress, but before they had a chance to really see much production or any production, they were undercut by everyone else has chevron. They made fun of them, undercut what they were doing. Finally, the group disbanded in people oneoff. So chevron was really early and they blew it. All the big guys, bp, and there he didnt anticipate this country could yield so much oil and gas. Dr. Wall street. There is a 2007 buyouts in financial history. I mean an acquisition with hard money and another Company Called txt or come utility in texas. Why was there an acquisition . On the experts that we were running out of the natural gas, so Natural Gas Prices would have to go higher. Soon we did this deal . It was a whos who on wall street. Born at the thought it said. Goldman sachs. It was everyone. On the sparc guys made a huge bet that we were running out of natural gas in this country, so txt looked at a good deal. No one anticipated the revolution. It is fascinating to me. The experts keep getting it wrong and sort of the oddballs, unusual people, care to keep getting it right. Those are the people i write about in my book. Those are the people i want to talk about today, the people that lead this revolution. The first is a guy named George Mitchell, not related to the senator. George mitchell was a texas guy. He is son of an immigrant from greece. His fathers name was thomas periscope allies. He was born in a little town increase in didnt have much of a future. A little town. No kind of business going on really care. So they got on a boat, came to ellis island, god often they said hey go work the braille system for mark to texas. He needed a job, when it did that. So he is working on the rail system one day and his paymaster came and looked really unhappy and kind of said what is with his name up yours . I cant ballot. I cant write it out. He looked really unhappy. Suicide with your name . He said my name is Mike Mitchell. He said ill be Mike Mitchell, too. And he took his name and he became Mike Mitchell and his son is towards mitchell. So i went to talk to George Mitchell. I love this story because it really connected with me. My greatgrandfather brought up the boat and i said whats your name . They said we cant spell that. Take the last guy. His name is zuckerman. I couldve been brian r. Sub abc. So we have something in common. I was an east coast reporter, not that familiar with the energy business. She told me a story and his stories of estimating one, very american story as are a lot of things in my book. George mitchell ran this company. Its called mitchell energy. They were a midsized producer. They produce natural gas and they are responsible for about 10 of all the gas going to chicago. They were making money. He did pretty well. Around 1982, mitchell could see the writing on the wall there wasnt much he could do. He didnt have any great job sure in asia and africa like exxon. Ali had was an acreage in texas. He said lets figure it out. Lets go somewhere else. Lets try to tackle this formation. Let me explain what shale is. In shale is a rock and it always been they call it in the industry the source route. Starstruck meeting that is where the oil and gas for his starts and over millions of years slowly goes up higher towards the surface. Historically we have drilled down vertically like with a straw kind of thing and we try to find rest of wars of oil and gas that is flown up from the shale formation. Shale is very compressed that looks like tombstone and its the kind of thing where you know theres a lot of energy and matter, but we did know exactly how much and we didnt know how the heck to get it. So what mitchell said is we dont have a choice. Our company is going to collapse. Weve got to figure it out. Go work on it. So they started working on it and this year is. What they did was frack it. To simplify it, it means pummeling this rock with a combination of liquids. That kind of resolve and chemical and water, sand and you try to create little fractures, little fissures that allow you to pump out the oil and gas. So that is traditionally how they did it. Theyve done it since the late 1940s, fracture or hydraulic fracturing. The industry hates it when you use the ck. One of my key characters cut me off and stop talking when he saw the name of the book on amazon. People just hate the word frack. They say the liberal media has appropriated that because historically they called it fracking. But anyways, weve adopted a frack and that is how you spell it. So basically they started fracking this rat in texas. They spent years on it and by night in 97, George Mitchell was around 80 years of age and they werent making much progress. He had cancer at that point. His wife had early signs of alzheimers. A guy named Bill Stephens didnt like what they were doing and behind mitchells back, mitchell wasnt even day to day running anymore. He was keeping tabs of things, but he left it to individuals in the field and he let them do their thing. This guy, Bill Stephens was going to run the company. He went up and said stop what you are doing. Its a waste of time. The people in the book, the individuals were shaken. A new George Mitchell wanted to keep going. On the other hand, Bill Stephens said stop doing this. They were confused and they came to the conclusion we would keep going. At least for now. But it was a little scary. Back then if you think about the late 1990s, everything was about hightech in the energy guys knew is that guys knew instead of this as a war, we have to figure out another company and engineer. A guy named expands broker who was one of the guys leading the effort. He went home and told his wife, we are really in trouble. The frackers really is about trial and error and innovation and persistence and resilience. Thats what they did over the nexting year or so, they focused on it, and they worked on it, and they found a way to get natural gas to come from shale. And the team, they changed the company because they were able to sell the company a few years later for 2 billion. In 2002 they changed the company, but they also changed the country and really the world because we still use a version of that fracking concoction, that cocktail which is mostly water, but its got some chemicals, and its got some sand as well. Its about 99 water. So mitchell and his team in my book really, i write about the big guns, but i write as much about the individuals in the trenches. They often dont get the reward that they should, i believe, because theyre the ones who work hard and persist and dont get much payment for it, these guys working for mitchell. These guys made about 100, 150,000, usual salary each though they saved the even though they saved the company. At the time people kind of said, all right, george, good job, you got some natural gas in the bar net area this texas, whos to say youre going to be able to figure out how to get natural gas from other shale fear missions formations or fields around the country, let alone oil. So it took some ore sort of other sort of stubborn americans to say, no, were going to try to make it work. And there are two im going to talk about. Excuse me. So the first is a guy named Aubrey Mcclendon, and he was born in Oklahoma City, came from the right side of the tracks, he comes from the kerrmcgee family, an oil and gas company, and he went to duke, majored in history, had no real desire to be an oil and gas man. Again, that theme that these unlikely people who have changed the country. So he went to duke, got out of school, was going to go work as an accountant, but his uncle said come back to Oklahoma City and work in my business. And he started doing that, and he became a land man. A land man, they dont get much credit in the business. They are the guys, and sometimes gals, who go door to door knocking and asking if they can lease a farmers acreage or a homeowner and working out deals, cutting deals to lease acreage so someone can drill, so their bosses can drill. So he was doing land work, and he was very, as you would imagine, you need to be criz hattic and outgoing to be a land man. He was very much outgoing and confident and charismatic, and hes doing a pretty good job. But the real money is in finding oil and gas, so he kind of wanted to do that. And he met up, and he kept bumping into another land man who was at that same point thinking about drilling for oil and gas himself. His name was tom ward. Tom ward came from a little town in the oklahoma, ive spent time there. Much different story, much a poorer 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, and his mother had passed away, and he would be drunk each week, and the pastor would stop and welcome him in open arms. But it was embarrassing for the family. And then his own, his son, tom wards father, also was an alcoholic. And the ward family was notorious in that part of the state. Women were warned not to marry into that family. But tom ward found religion literally and it stabilized him. And he decided to go a different route, got married at a young age and became a land man as well. And around the same time that Aubrey Mcclendon started getting excited about finding oil and gas himself, so did tom ward. They decide to do a company together, and the companys called Chesapeake Energy. And they really named it after the chesapeake area, maryland, mostly because mcclendon liked it, it was pretty. They werent sure it was going to work so they didnt want to put their name on it in case it didnt work. So they started Chesapeake Energy, and they got excited about areas, they head a lot of money, they got two excited, they leveraged up, overproduced, the stock went down, boom and crash, it was exhausting for them and for investors. But around 2002 Aubrey Mcclendon and tom ward, they saw what was happening in the barnett area and in mitchells acreage that he had sold and saw that production kept rising. And they werent the first. They were among the first to say, you know what . Lets make a huge bet on shale formations all over the country. Lets try to lease up the land before anyone else can because this thing looks like its for real. So they went on this crazy land rush the likes of which our country really has never seen. At one point Chesapeake Energy controlled, leased the size of land thats equivalent to three times the size of new jersey. They were everywhere, oklahoma, texas, pennsylvania, ohio, all over. And it worked pretty well for a while, and natural Gas Production soared, and they were right, that shale was working, and you could get a lot of natural gas from it. And by 2008 Aubrey Mcclendon was worth 3 billion. I write about how he got overconfident, and he believed too much in himself, in his company and in his revolution. And they produced too much energy. Firstoff, in 2008 if you remember the financial collapse, and i write all about in the book about how he had a margin call, and his broker had to cut him off and had to sell his shares because he borrowed too much money and bought too many of his own shares. And then he rebounded and did some very adepressive aggressive things like selling his map collection to his company and things that got investors really upset. And he cut a huge bonus for himself when maybe he shouldnt have. But the thing that got his investors most upset is that he hurt himself. His company, they overproduced. As we all know, commodities, these are commodities, still natural gas, there was two too much supply. They were too focused on what they were doing, and they thought Natural Gas Prices would stay higher, and they collapsed. Aubrey mcclendon got kicked out of his company, and tom ward got kicked out of his company he started after leaving chesapeake. Its not even clear what Aubrey Mcclendon is worth today. He, you know [inaudible] but this some ways were all the beneficiaries because we all pay much less in natural gas as a result of what these guys have done. So those are two key guys in this revolution. Theres somebody else i want to talk about named harold hamm. Harold hamm also, i think, kind of a fascinating story. Grew up also in a little town in the oklahoma, and even that is interesting because historically the energy world came from texas, and oklahomas sort of an ugly sister in some ways. And harold hamm came from a little town in oklahoma. He really was poor. He was the 13th of 13 children, little shack of a home. I visited. He couldnt even go to school each year until around christmas time because he had to, his parents were sharecroppers, and he had to help them in the fields. And they were picking watermelon and cotton. And only around christmas time was it so cold out there that he could be allowed to go to school. So grew up poor. He never had, the only time he had a pair of new shoes he recalls is when his little shack of a home burped down, and people burned down, and people in town all chipped in and bought him good shoes. He remembers it, actually, being a positive day, he finally got new shoes. So he grew up really poor, didnt go to college, but he had this hunger to find oil. And when you travel the country and you go to these parts, you still see these people. Its like an american archetype. Its this hunger to find sort of like a dallas kind of thing where you hunger to to find oil and gas and to change your position in life but also to change the nation, believe it or not. It sounded, im a cynical reporter, and they all talked about moving america towards energy independence, and i was skeptical. But when you Start Talking to people who dealt with these individuals way back when, believe it or not, they were talking about changing this country. And they had these outsized ambitions both for themselves and for their impact on the nation years ago they were talking about it. So harold hamm, again, had his 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, etc. So what he did is start off in the industry by cleaning out the tankers. And he would literally get a rake and climb in and dig out the sentiment and the muck in the bottom of the tankers, and thats how he started a business to do that. Then he did some water transportation and started a company doing that. And he took that money and at night he learned about geology and studied some courses back home, and he started to look for oil and gas. And he was pretty successful locally in oklahoma. Nothing to write home about, but pretty success of. He heard successful. He heard about a lot of oil and gas, especially oil, that existed up north in montana and also north dakota. Its called the bakken forhaitian, the bakken region. He wasnt the first person to get excited about that area. Its a notorious area for being a boom and bust area. So people are always getting excited, going up to north dakota, montana, making money early on but then for whatever reason the wells didnt work out; they ran out, they cost too much to produce. And then they would pull out, and locals would be really upset, and the economy would crash. So hamm got excited about the bakken area. But, again, he wasnt the first person. But he said, no, were going to be were going to do it. Again, this overconfidence, i would argue, among these people it took and brash, theyre real unique characters. They went up first to montana and then to north dakota. And 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. And horizontal drilling is just as important. Everyone focuses on fracking, but horizontal drilling is just as important in this whole revolution. Just as it sounds, it means, like i said, usually you drill down vertically. Historically its been the case both in this country and elsewhere, but what they figured out how to do was to drill down and turn the drill bit 90 degrees and go horizontally. A lot of these formations, especially shale and things like limestone, theyre very long, but theyre very narrow, and you really have to go down horizontally to unlock it. So hamm wasnt the first, and his companys called continental resources. They werent the first to do horizontal drilling, but they heard about it, and they were among the first, and they said, aha, lets combine the two. Lets drill down horizontally and then frack it. And lets see if we can get oil. So hamm leased up land, all kinds of acreage in north dakota. The largest lease owner in the state. And they spent from 2002 until around 2006 working on it. And it didnt work. It wasnt, they werent making much progress. And by then they said, you know, were running out of money, so he went to sell the acreage, and he couldnt find anybody. The big guys ignored him, little guys, midsized guys, everybody ignored him. All he could do was say to his crew, well, lets pull back, lets slow down our production and just conserve money, and thats what they did. And they started to make it work. They started to see oil flow there this rock in north dakota. From this rock in north dakota. And in 2007 they went public, they sold stock. That helped them, but even the guy, theres one guy named Brian Hoffman who was the one who said, boss, lets really target north dakota. They were on the montana side of the border for a while, and Brian Hoffmans the one who said, nah, ive got a good feeling about north dakota, lets go there. And Brian Hoffman sold all his shares in 2007 because he didnt even believe what they were doing was going to to work out. It was still kind of a question mark. But they progressed. And from 2007 on, they made progress. And today the bakken area, both harold hamms area and others, ruses about 1 million a day of the close to 8 million the whole nation does. And harold hamms whole life has been transformed. Today this guy who didnt have new shoes growing up is worth, believe it or not, 17 billion. Hes one of the wealthiest men in the world. Hes worth more than the state of the estate of steve jobs, hes worth more than all kinds of people. And hes so wealthy that hes, unfortunately, going through a divorce right now. But his wife is going to walk away with more money than oprah winfrey. [laughter] and its a real american ragstoriches story. Theres one last individual im going to talk about before we get to the downside of the risks from this era and what the frakers have done. Excuse me. The other person i want to talk about is an individual named sharif suki, an immigrant from lebanon. There are a lot of immigrants in my book. There are a lot of individuals who late in life finally make it work after years and years of persistence and futility. So sharif suki was an investment banker from lebanon, went to columbia business school. Did pretty well, made some money, decided to give it up and go ski in aspen. And he did that for a few years, and he found that the money was kind of running out. He went through a divorce, that can be expensive, so he had to r to start Something Else to do. He started some restaurants in los angeles as well as colorado and bars as well. Does anyone be remember the mezzaluna restaurant . Thats where ron goldman was the night that Nicole Brown Simpson came in to the restaurant, and she left her glasses. Ron goldman brought the glasses to her home, and thats where allegedly o. J. Simpson committed the murders. So, and sharif suki owned the restaurant at the time. It was a very disturbing period for him because right away after the murder he was inundated. The restaurant was inundated with customers from all over the country. And they, they were stealing plates and knives, they wanted something with mezzaluna on it. Business was great, it was booming, but he was disgusted by the whole thing, and he needed to find Something Else to do. He said, you know what . This is sort of the late 90s. Remember i said earlier about how hightech was so important, it dominated back then. He was a smart guy, so he said if all the moneys going towards hightech, maybe i should focus on an industry that no one really cares about, and thats the oil and gas business. So he started an energy company, and his whole idea was to use technology to do a better job of finding oil and gas. He didnt really find much, but he did stumble on this idea, and the idea was that we as a nation were running out of natural gas. All the experts said it, so he said, all right, im going to start a company, and were going to build terminals to import lng, liquefied natural gas. Its hard to transport natural gas, you have to liquify it, its expensive. He said, hey, why dont we take it from abroad, import it, and ill be the one. Yeah, itll take billions and billions of dollars of borrowed money to build these huge terminals, and he picked a spot in louisiana, but he figured it was worthwhile. So he set off to do that, and hes a really smooth, charismatic individual, and he was able to borrow all this money and they built these huge terminals in louisiana. And they were making progress and things were looking up for sharif suki. He was worth a lot of money, other 100 million, and the stock was soaring. They were really going to be a savior for this country. They were importing l, this g just like chairman greenspan suggested. And then, lo and behold, it dawned on people around 2007 or so, 2008, that you know that whole thing about there being a need for a desperate need for natural gas . Actually, we have a glut going on here. So he couldnt have been in a worse position, he and his company. And the stock tumbled because its one thing if you dont need gas, but we really dont need to import gas at that point when theres a glut working out. So sharif sukis company tumbled, went to under a dollar a share, and his investors are some big guys on wall street. They were like, okay, sharif, what are you going to do . And sharif didnt have an idea, so he said ill figure something out. And its not what they wanted to hear. [laughter] so they got upset, but sharif didnt have any choice. He could have thrown in the towel, but he didnt, and i give him a lot of credit for that. He could have moved on to the next good idea. Yeah, hed kind oflost almost all his money, but hes a bright guy. He said im going to figure out a new plan. And then he realized, i dont know, around 2008 or 2009, as recently as then, he realized you know what . If its true that were developing this glut in this country of natural gas, maybe instead of importing it, i should be exporting it, right . [laughter] so he went back to his investors and said you know that whole thing about how we were running out of natural gas and we were going to import it, actually, how about the idea of exporting it because we have a lot . And at that point be they had really written off their investment, and they didnt in what he was doing, but they didnt have a choice in the matter. Good luck to you, sharif. If you can figure out how to do it, more power to you. Weve already begin given up on it, you know . They called him delusional, but he persisted, and his team persisted, and they were the first to get approval from the government in sort of the teeth of the financial downturn when no one was really paying attention to export natural gas, export lng. They figured out how to borrow billions of dollars more to refit, reformat these terminals, and theyre going to be the first ones starting next year to export lng from this country. And his stock has soared. Hes worth about 3 400 million today, and its really a fascinating story to me of resilience and persistence. Be and maybe overconfidence too because you or i might have kind of given up and and say its not going to work. My stocks at a dollar, my investors hate me. But he didnt give up, and i do give him credit for that. And today hes seen as sort of a national resource, sort of a hero in some ways because were all trying to figure out what to do with russia and putin, and hes the one thats going to be exporting natural gas. Now, hes not doing it to europe, most of his contracts are going to asia, but hes still seen as at the forefront of this new era of people that are going to be exporting natural gas. And in some ways the New York Times recently ran a lead editorial about how we should be exporting more natural gas. Theres really not much we can do, but maybe we can send some energy to europe. And if you think about it, you know, natural gas comes from fracking, almost all of it, 95 , almost every well is fracked today. So, basically, weve got to do more fracking. They didnt really say that, theyre so wary of fracking itself. But they were very supportive of exporting natural gas. So its sort of ironic. I find it ironic. So those are some of the interesting people i write about in my book, the frackers, and, again, theyre not the people you would have expected to have changed the country and started this revolution. So im going to give you some thoughts, and id love to hear other peoples thoughts, as to why i think it is that these people led the way and were the pioneers. And then im going to set that aside and talk about the risks and what theyve done to the country, talk about the good things, we can talk about some of the risks as well. So why was it these people . Well, part of it is, and its a little bit sort of a cliche, but they didnt have a choice in the matter. They had to make it work, you know . Necessity truly is the mother of invention. If you think about George Mitchell, again, he didnt have acreage offshore in africa and asia like the exxon guys did. Oh, yeah, it was texas. And he had this shale formation. He was on top of it, they had to make it work, and they persisted, and they did. A lot of those people sort of didnt have a choice in the matter. Same with sharif suki. If he wanted to keep his company going, he had to figure something out. Thats sort of what it takes sometimes, the back against the wall sometimes is easier than sort of the Bigger Company that doesnt have pressure on them. Its also the case that upstarts often find it much easier to innovate than incumbents. So if you think just in the last few years about some of the new products, energy drinks, ecigarettes, some of the new drugs, it was all upstarts that shocked the bigger, bigger companies. A new years ago microsoft few years ago microsoft had a division that was doing search, and they were going to combine it with advertising. Sounds a lot like google, but they decided to close the group and werent that excited about it and allowed google to evolve. So time and time again you see the incumbents, the big guys just a little slow. In my book in the frackers, theres a Company Called eog that i find interesting. Eog at one point was enron oil and gas, and they were kind of spat out by enron. Ebb on didnt care about them enron didnt care about them because they were actually looking for oil and gas ask as opposed to trading it. For a while they didnt do much after enron, but they finally start finding some natural gas in 2007. They did really well, and they were targeting these shale formations that everybody else was, and everybody was kind of highfiving each other, and they were celebrating, they went off to this retreat this arizona i write about. But the guy who ran it, the ceo, a guy named mark pappa, he started getting scared and nest because he came to the realization, he said, well, hold on a second. If were finding it easier to find natural gas and so are our competitors, wont there be a glut at some point . Were a natural gas company, were going to have real problems if price come down, so were in trouble, guys, we have to find oil. And what they did was turn on a dime and started leasing up acreage in texas in a field called the eagle forth which is about an hour, hour and a half from san antonio. And they did it under the noses of the giants and leased up among some of the largest tracts of land in the eagleford, and today the eagleford produces about a Million Barrels a day. Oh, that eight million that we produce as a country. And he, again, he got it before anybody else, he and his company did. And its mostly because he had to, but also he was able to innovate. Hes a smaller company, and sometimes the upstarts are just better at innovating and making progress than giants. Theres also the sort of importance of good fortune in this whole thing. Again, the mitch l people stumbled on their concoction of the water. It was mistake, but they ran with it. Theres a guy named terry pa ghoul la who owns the portfolio low sabers. Buffalo sabers. No one thought he was any kind of superstar. Ive spent time there. He had acreage that happened to be on top he was producing in formations of rock, and it was the marcellus which turned into one of the top three fields in the world. And he didnt see that coming, but he happened to be on that land. So thats part of the reason why these guys ended up doing pretty well. But i also am a big believer in market signals. A lot of these individuals started getting excited and focused on shale production right about when oil and gas prices started soaring. And that was from 20002008. And they saw the reason, its among the reasons why im excited about some other things and innovations like alternatives. But they saw you can make money from shale production, so they focused on it. And it takes, to me, those market signals. Im not a big believer in sort of topdown the government deciding where to allocate the money. Its also the case that you need incremental progress. In all these cases i described, you had individuals spending years trying to make it work. And thats why im very optimistic about things like alternatives. Solar, wind, etc. When you talk to people be working on them, theyre excited, and theyre making progress. And were not there yet, but you have individuals, you have wall street people throwing money at it. Theres money to be made, and it just takes a while. People say, well, why respect we there yet, greg . Well, i think just like the mitchell guys, it took them from 1992 to 899 1982 to 1998 to make it work. Youre going to see the same thing when it comes to alternatives, more sustainable sources of energy. And im optimistic and people who call me naive, im sure people in this audience probably will im optimistic that this era that the frakers have created by this time as a nation to figure out how to transition away from fossil fuels. So ill take a few minutes now to talk about the risks and what im worried about when it comes to fracking, and then we can take some questions. Ill first talk about what many people worry about when it comes to fracking, things like people in this room are probably concerned about, and ill talk about why im not worried about those things and why im worried about Something Else. So the three keys, i guess, i think, that many people are worried about are, a, water and methane. Methane is a key component of natural gas, and i think weve all seep probably movies or films, tv where there are pictures of people turning on a faucet, lighting a match, and theres a fireball. Its very disturbing and disconcerting. So thats a key concern people have, methane and water. The other is chemicals in water. So, again, these when you frack about 99. 5 percent is water, but you also have chemicals, and youre pumping report in them, and some are harmless, but some really are harmful, and theyre dangerous and not the kind of things you want to ingest. So people are concerned about chemicals getting into the water. And the third issue are earthquakes or tremors created by fracking. Im sure weve heard all those kinds of things. Ill tell you why im not too worried about each of those areas. The first is methane getting into the water. Methane does get into the water, and you can light a match and cause a fireball. The problem is youve always been able to in this country in all kinds of places. It just happens, so happens that in some areas shale so is high up in the ground that it actually gets, the methane gets into the water. How do we know that . Well, there are three towns in this country called burning springs. West virginia, kentucky and new york. And thats because youve always been able to light a match and set the water on fire. The native americans were able to do that. I went to dimock, i traveled to dimock which is ground zero for the protests, and i talked to some oldtimers there. One woman said to me, greg, i used to get to school early, turn on the faucet, light a match and run. Thats not what we did. It has nothing to do with fracking. So most of the time, ill talk about when this is the exception. Most of the time methane doesnt get into the water because of fracking just naturally, and its not something thats going to harm you unless its ingested in large doses. So im not that worried about methane getting into the water from fracking. Then theres the chemicals. So im not so worried about that either because ive talked to scientists. You try and talk to objective scientists, thats what i do. And they say, listen, greg, its possible but its unlikely. Why . We drill, i tell you these formations are generally deep down, theyre as much as 14,000 feet below the ground and the water is about 400 feet below the ground. So can the chemicals magically go into the rocks, its possible but very up likely. So im not that worried about the chemicals. The third are earthquakes and tremors. A little more concerned with lately theres been more ed of that. Generally speaking, these arent little tremors that you dont feel, and its not from fracking, its from reinjecting. What happens is a lot of water comes back up when you do the fracking both from the water you send down there, but other kinds of things, and you have to do something with it. They treat some of it and they reuse some of it but not enough yet. And a lot of it they reinject into the ground even below the shale. And theyve done bad job often or sometimes of sending it down there, and its caused some false issues, and its probably caused some tremors and earthquakes. The people in the industry realize its a problem. Theyre working hard at treating more of it, recycling more of it. And im hopeful, im not confident, im hopeful theyll figure out a way to deal with all of that. So there are three big concerns im really not that worried about. What am i worried about . So im very worried about, im worried about methane leakage. So, into the atmosphere. Methane is a greenhouse gas, and im concerned about global warming. And we dont know, we dont have great data to show how much methane is emitted during the production and the transportation of natural gas. And ive seen different studies, weve all seen kind of different studies, depends on who you ask. The general consensus is we dont emit so much methane through the production that it makes natural gas worse than coal. But were not sure. So some states, really just colorado, theyve enacted some rules lately to crack down on methane leakage. I, it confounds me why other states havent. We need, and ill talk about it a little bit in the environmental in a second, but i would very much prefer they put pressure on oil and Gas Companies to improve the way they produce as opposed to just saying fracking poisons and these guys should stop because theyre not stopping. Theres no way this country, still digging out of the deepest economic downturn since the great depression, is going to say, yeah, we found all this natural gas and oil to, but instead of using it, were going to keep spending hundreds of billions of dollars to people like venezuela and saudi arabia, people we dont really like. Theres no way. And were not going to pay higher prices. Weve got to be realistic about it. And my big argument, and this is why some people on both sides dont love me, my big argument is we have to put more pressure on the oil and Gas Producers to improve the way they produce oil and gas, the way they frack and do other kinds of production as opposed to just sort of condemning them. And part of that is more rules about methane leakage. So we think that this whole era is beneficial because we think natural gas is better than coal, but were not 100 sure. The last issue and the one im concerned about but, hopefully, itll be okay is getting addicted to fossil fuels. So we dont want that. We, if you worry about global warming, you know that fossil fuels arent the way to go. My hope is that this era, this period allows us time, as i said earlier, to make enough progress with more sustainable and environmentallysound methods of energy, solar and wind. And then you talk to people, theyre doing a lot of great research. Things like batteries, i mean, the intermittent issue so key. We cant really depend on wind and solar right now, but hopefully well be able to. And the key is storage and battery storage, and theyre making a lot of progress with that, and hopefully theyll continue to do so. So i am concerned about this era, getting addicted to it. I talked to George Mitchells son in the book. Hes not sure what his fathers legacy will be. It could be an Alexander Graham bell kind of impact for good, or it could be maybe not so good if we dont make this transition, if it doesnt buy us time and if it turns out that we do produce too much methane from this whole era. The last thing i want to say and ill stop and take questions, im sure theres some questions, is this project in some ways has really reassured me about the nations future. And what i mean by that is i travel the country, and you see innovation. You know, our country gets criticized left and right for not innovating anymore, but youve really got to get away from the coast to places like north dakota and oklahoma and texas where its fascinating. This story is really a technological story as much as it is energy, oil and gas. And its americans rolling the dice and taking chances and figuring things out, figuring out how to do something the lets of the world isnt close to figuring out, and thats producing oil and gas from this kind of difficult, challenging rock. And theres a dynamic quality of this nation that you see when you travel and you talk to people. Theyre hard working people. Ive been to cities that have been transformed. Theres a city called williston, north dakota. Anyone been there . If you have a chance, you should go. Its a modern day boom town. Its being transformed almost overnight. Its really the heart of this bakken area in north dakota. They have things like man camps, have you guys heard about man camps where a lot of workers live . I spent time there. Pretty safe and clean, you get a flat screen tv, a little room, you share a bathroom with other people. Its sort of like a dorm to have, and the whole dormitory, and the whole citys being transtomorrowed. The streets are being renamed. I wented a car when i was there, and i rented a car when i was there, and i kept getting lost. I finally asked, whats going on here . They said, greg, are you using a gps . I said, yeah. You cant use one in williston because we are reip vebting the city reinventing the city almost as we speak. I stayed at the man camp, and they gave me directions, and when i first checked in, i said you meant to tell me take a right on morris. What do you mean, morris . Theres no morris. I said i saw morris. Oh, yeah, maybe they named it. Their own street, he didnt know they were naming it. So its fascinating to see, and there are people from all over the country moving there. And these people owe a lot of money, theyve gone through tough times. I met people from oregon i wrote about and minnesota and pennsylvania and they get in the car, their truck, and they drive up to the williston area, and they try to get a job as opposed to being on unemployment and being on welfare. And i give them a lot of credit because in the summer its really hot and unbelievably unbearable and uncomfortable, and in the winter its ridiculously cold. And yet they get out, go up there, and they work hard. A lot of times they dont see their families, they go up there for a week, go back home for three weeks. Theres ladies of the night from las vegas that do quite well coming up there for weekends, all kinds of characters. Its worth visiting. [laughter] so its a fascinating place, and it really shows, again, this hunger to change your lives and people not sitting on their hands and getting up and changing. The mayor there says if you dont have a job, you dont want a job. Its really the case. In some ways this project has reassured me about the entrepreneurial spirit of this country. Im much more upbeat. In other ways the project has been very discouraging for me because fracking, like almost any topic of importance gun control or anything else were so split. So its either drill, baby, drill and the industry doesnt see any problems even though and i meant to get to it, i didnt fracking inherently theres nothing wrong with it. But it doesnt mean they dont mistake after mistake after mistake. They, about one in ten, ive seen some data, one in ten wells have to be remediated, improved the casing around it, the metal around it doesnt hold x thats really scary, and that could lead to chemicals getting into the water, methane getting into the water. Doesnt happen often, theyre Getting Better at it, but theyre not good enough. So the industry kind of says, oh, weve been fracking since the 40s, so dont worry about it. Not in shale and not the level weve been doing, not these formations, and they made mistakes early on, and theyll admit to it. The industry says we should be drilling on public lands which we really dont these to. Again, as i demonstrated, weve had this huge resurgence of Energy Production. We dont have to touch public lands, and theres not much shale in there anyway. So the industry kind of ignores the problems often, and the other side says fracking poisons. And, a, its not true, but, b, its just a wasted no one intended waste of energy. Instead, we should be coming together and putting more pressure on the energy guys to doing a better job. You are seeing some states embracing some better regulation; wyoming with water, texas with well integrity. And it confounds me that we dont as a nation embrace all of these improved regulations. There are some environmental groups, very few, that work with the Energy Industry. One in particular is called Environmental Defense fund, and they get all kinds of flak from the left, and they tell them theyre sellouts and how dare you work with the industry. Its sad to me, and its not just about this, its about almost any topic where were still split. In some ways, thats a disturbing issue for me. So ill stop now for some questions. Ive gone on long number. [applause] sure. Yeah. I wanted to ask you about european dependency on russia for their natural gas and oil. We say we want to help them to alleviate their problem of being dependent, and now they cant even retaliate when putin is on the move. Why are we delaying the approval of export facilities . I understand that the Energy Department has approved seven facilities while the federal Energy Regulatory agency has approved just one. Can you explain that . Yeah. Thats a good question. So the question, if everyone heard, is why arent we allowing more exports of natural gas since we want to do something to undermine what russias doing. And russia has a stranglehold over europe right now. They depend about 30 , they get about 0 of their 30 of their natural gas from russia. Its dropped a little bit, but its still about 30 . So the answer to that question why we arent approving more facilities, sharif suki, the immigrant i told you about, hes the first, and there are a few others that are coming, but there are a lot on the runway. And the answer has nothing to do with the environment, believe it or not. Its all politics. The guys who use, the companies who use a lot of natural gas like dow chemical, they dont want us exporting natural gas. Why . Because it may raise Natural Gas Prices in our country, so theyre putting a lot of pressure on washington saying we shouldnt be exporting natural gas. There are other companies that depend on natural gas like southern company, a big utility. They say, yeah, we use a lot of natural gas, but we still want exports because its going to create jobs, and its going to improve the economy. And if our customers are benefiting, thats going to help us as well. But theres so much politics involved, and dow chemicals pretty powerful, and this squabbling about whether we should be exporting, its sad because not only can we do things to potentially undermine russia, you really cant do too much, but you can send a signal. At the margin it helps a little bit. You cant tell them were going to export it. But if you send a lot more natural gas to places like asia which is more expensive, then theres more in the international market, and itll help. But theres also issues of jobs that would be created too. These are shovelready projects. But i think more of these products will be approved, but theres a lot of politics involved. Yeah. Hi. You didnt say anything, maybe because its not related, to the tar sands of canada and the keystone pipeline. Is this part of it . And could you go back and explain a little bit more . You seem like a very sensible guy. [laughter] im probably wrong. [laughter] why more both sides and the environmental siders you said its 14,000 feet they usually as much as that, but its deep down there. And the waters roughly around the 400 feet. Often. So theres not too much chance of the dirty chemicals getting in. Those two topics . Sure. So the first is keystone which, obviously, is controversial. Its somewhat relevant to this. Not entirely, but somewhat. So keystone is the pipeline, obviously, and it goes really from canada to the tar sands which is a dirtier kind of oil, how its produced. And, obviously, there are people that dont want it, the pipeline to be approved, because they believe itll increase the production be of tar sands in canada. Its relevant this that the frakers, guys like harold hamm, figured out how to get their oil onto this pipeline. So theyre picking up. Its going to start in canada and also going to pick up some bakken, some other oil as well. So it involves the frakers. They figured out or realized, it dawned on them this is going to take forever, the politics is horrible, so instead of waiting for the pipeline to be developed, what are they doing . Their sending it on rail. Thats actually much more dangerous. Were seeing issues now, fires and such, because were learning this is all sort of a new trend, new revolution were learning that this oil coming from the bakken is quite combustible and a little bit more dangerous than your traditional. So, but theyre sending it on rails right now, and thats why warren buffett, he owns a railroad, and theyre making a fortune. So theyve adjusted. So the frackers have said were not going the wait years for keystone, and were going to start sending the rails. Because keystone hasnt been built, theres more use of l rails to transport oil which is disturbing to me. I would argue the conventional wisdom when you tabling to people is their going to be talk to people, theyre going to be producing in anyway. If they dont send it through keystone, theyre going to send it to asia. Thats why probably it will be approved, but it will probably be after november because politics is important here. And your other question, i apologize to allow why arent they believing you as well as we are . Sure. So i guess there are a few reasons. A, they worry, they worry that something bads going to happen. First of all, they worry about accidents, and it happens all the time like i mentioned earlier, too often. So they worry these guys are messing up, and they shouldnt be allowed to jeopardize, potentially jeopardize our water system even if its unlikely theyre going to hurt it. Why should these guys be allowed to generaltize it at all . Jeopardize it at all . So thats what they would argue. Although, again, we get about 95 of our natural gas today from fracking. So they kind of say, well, if we didnt, we would figure something out as a nation. I know theyre saying if we got off of fracking, Natural Gas Prices would soar, wed all pay a lot more, but youd force the solar and Wind Industries to adjust and to come up with a solution. I dont know. Im not ready to force people still digging out of this economic downturn to pay so much more for their energy. And also, listen, it becomes a cost too. Its a popular cause. And a lot of people just dont want, you know, people conflate fracking with just Energy Production. And Energy Production is noisy, its dirty, its smelly. I wouldnt want it in my backyard unless im being paid pretty well to lease my acreage. And a lot of people their lives have been transformed for the better, but not everybody. In north dakota, you know, i talk about this area. If you dont own your own home there, if youre representing, rent prices have skyrocketed. They pay about 3900 a month 3200 a month for a threebedroom in the middle of north dakota. It also changes the complexion of small town america. So ive been in little towns, and theyre one stoplight towns, and they have traffic all of a sudden. A lot of people are angry about it. And i write about some environmentalists in my book who just are unhappy that theres oil and Gas Production in general. So i understand that. Listen, it is america, we have free right to protest and such. I just would hope that instead of condemning we would maybe Work Together better as a nation and force these producers to do a better job as opposed to just sticking our head in the sand. And theyre going to go on doing what theyre doing. [inaudible] a twopart, a twopart geopolitical question. Can saudi arabia and the sunniarab states be a counterweight to russia . And the second part of my question is i understand theres a lot of gas or oil in siberia or the eastern part of russia and that russia has contracted with china to get that oil out. Is it a possibility that china at some point will actually take over that part of russia for the Natural Resources in siberia . Im not going to be a geopolitical expert. I talk to people, and there are different three cease people have about whats going to happen here. The key is to do something to undercut what russia is doing, and exporting natural gas is really only one of the things we can do unless were ready to go to battle again. Im not sure as a nation we are. Your question about saudi arabia, saudi arabias got a huge, growing, young population. And were not always so aware of them, and they can produce more. No one really knows how much, but its also not clear whether they have enough to export or how much they have to export because they have a growing demand for energy as well. So they probably can do some more exporting, but theyre not so close. China, lets talk about china for a second because china, like a lot of nations, has a lot of shale in their own territory, their own country. Shale formations even bigger than ours. Theyve got, china has, russia has, u. K. , poland, mexico, around general teach that. And yet theyre argentina. And yet theyre not close to producing anything like what were doing. And its was weve got all kinds of advantages to this nation, both god given and other. Weve got, ill tick em off quickly, but there are a lot of them. Weve got better access to fresh water than other nations, weve got our shale formations are actually not as deep as in places like china. We have a Pipeline System that ore countries other cups dont have, very extensive. Entrepreneurs. I mean, the key to this whole revolution is the fact that you and i, homeowners, own the mineral rights under our homes, and you go abroad, almost every other country doesnt. So i was in england, and you can make a pretty strong argument why they should start fracking, because theyre running out of energy from the north sea, and theyre buying our dirty coal. Were selling coal to newcastle, as i said. Its hard to make an argument to somebody living in a pretty part of the country to start to allow fracking and support fracking when its going to change the complexion of their neighborhood. Now, if they were getting paid for it, its one thing, but theyre not going to be. The crown owns mineral rights under the ground. So they say, the government says, well, were going to figure out a scheme to kick money back to those areas, but, you know, one can be skeptical. So its going to take years for other countries to catch up to where we are. So we can step on the pedal and export more and try to help a little bit, but its not clear what other people can do. Well start with the young woman and go back a little bit further in the room. Hi. I was wondering if youre aware that the marcellus shale is very high in re done and that radon and that as it travels just a short distance to new york and is now part of our energy mix because of the pipelines are now onboard, that we are going to have radon coming into our kitchens and our dryers and thinking else thats run by natural gas and that radon is the number one cause of lung cancer among nonsmokers. Most new york kitchens do not have a fan in the kitchen, a vent or even a window. This is a very real thing, and i think that you may not be aware of it or it just didnt come up in your discussion tonight. I did miss the first part of your discussion. Thats one thing. Sure. As far as water, ive been to demick as well, and ive seen the numerous trucks going by carrying the waste water, what theyre calling produced water. Uhhuh. That that is something that they have to deal with. And one of their ways of dealing with it is to sell it to parts of new york that are poor and could use the money to stray spray on their roads to melt snow. Now, that fracked water, the chemicals in it are a secret formula like the big mac sauce. They dont have to reveal whats in it. Therefore, the epa cannot write laws against it unless they know whats in it. And from what we have been able to find, it is full of carcinogens and dangerous chemicals. Okay. So theres a lot there. Let me tackle maybe the last one first. Its a myth that for a while it wasnt a myth. For a while they didnt have to disclose what was in the chemicals, what chemicals were in the fracking concoctions. But today usually, not always, unfortunately, there are exceptions to the rule, usually they have to disclose what chemicals are in the concoction. You and i can find it hard to find out, but they do reveal it. Theres a database. The government can find out. Unfortunately, as i mentioned, there are exceptions to the rule. Youre seeing some progress. Exxon and others are kind of saying, you know, were going to own up, were going to share everything thats in there, so youve seen a little bit of progress, but it confounds me and disturbs me that we still have these exceptions. And so were, again, its a myth that the epa doesnt regulate this kind of stuff, because they do, but its hard for you and i to know which is harder. Water in general, we should talk about water because theres a lot of water used when it comes to fracking. You need about five million gallons of water per well. And this is usually fresh water. And there are parts of this country that were going through droughts, and its becoming troublesome, and i think we need as a nation to have a conversation about water. We waste water all kinds of places; golf courses, agriculture, the Beer Industry. I mean, the Beer Industry uses ten times the amount, more ive seen, maybe 20 times the amount that the Energy Industry does. Obviously, you need a lot of water for beer. So, and water in some ways we subsidize the frakers because they get frackers because they get water so cheaply, and its fresh water. That has to stop. I think it will over time, and theyre starting to recycle a little bit more. Which is comforting, but were not there yet. I think we may have to raise the prices for them to do a little bit more. In terms of radon, when you talk to scientists, theyre not that concerned about it. Radon naturally was not from fracking, as we all know we measure it in our home. So these people arent as concerned as some environmentalists. Im not talking about industry kind of people, objective people , kind of centrists. They think you can screen for this kind of stuff, and theres not as much produced as some of the people on the other side, the pessimists, say. Sure. At the beginning of your talk, you said that youre very hopeful that fracking is going to buy us some time. Right. So that eventually we will utilize alternative forms of energy. But eventually, the rest of the world is going to catch up with us which means that, ultimately, the success of fracking worldwide when Everybody Knows how to do it technologically, it will actually undermine entrepreneurship in trying to develop alternative forms of energy. So in effect, this success will come around on kansas city and will lessen the effect or desire to develop alternative energy sources. So thats a good question. There are the answer i would the answer i would have is, a, its not clear when the rest of the world is going to catch up with us, if at a all. And, b, we sort of want them to catch up with us. We want china to shift from coal to natural gas. And. And lastly c and lastly, when you talk to folks about this, theyre way down the road in terms of solar and wind and making progress. Were not there yet, but they all are predicting and anticipating a new world, a world dependent on Sustainable Energy. Even companies, the big oil companies, theyre already figuring out how much theyre going to have to pay in sort of a carbon tax. Theyre actually preparing for a tax on carbon even though obama and others havent gone forward with that. So theyre anticipating a day when its going to be not something, its going to be more expensive to produce and to consume fossil fuels, and so they are anticipating it, we should start taxing them on the carbon at some point. So its going to make it a world thats more open to sustainable, more sustainable methods and Sustainable Energy alternatives. Thank you so much for discussing the origins of fracking. Sure. I was just wondering how it became, like what is the look of it now in terms of how it went from these individuals and these enterprises and what has happened since then in terms of how is our government now supporting it, how are the other people coming onboard and what does it look like now . Sure. So my book is about these sort of iconic dallass iconoclasts, and they it looked like as of even a year or two ago they were sort of passing the baton to the big, giant companies. So exxon realized they were late, they came back to america, they spent 31 billion to buy a Company Called xto in 2009. All the majors, shell and bp, they all raced back to america. They realized they made a mistake, and they start buying up companies or leasing acreage themselves. And they paid too much money for it, and they realized theyre just not quite as good at it as these sort of they call them independent wildcatters. So some of them are sticking around like exxon. Other people like shell, theyre pulling out, theyre getting out. And bp, theyve tried to start a unit, a small unit to manage their shale production and u. S. , in the u. S. Acreage because they figure maybe if its a small unit, it can better compete with these individuals. So its fascinating. About 40 of the production in the basin in texas thats booming comes still from wildcatters. I never would have expected it. And some of the very guys i write about in my book who were down for the count just a year or so again, kicked out of their companies, theyve started up again. This guy, Aubrey Mcclendon, hes making a big, huge wager on ohio, that hes going to find a lot of gas there. So it continues of the frackers. In my book, and he found the biggest fields in the whole area of north dakota and i think he did at around 75 years of age, maybe even older around 80 so there are other people who finally make it work and strike it rich late in life surviving. Im sorry what is the second part of your question . They are very disturbing or assuring the ones in the right and they all sort of exaggerate so i saw one today where i imagine film makers on the rig right. It is very welldon well done aa lot of good points but its always been done. Or yeah its always been done but not in these areas. Not being a shale or this amount, and we do not have the data a lot of times. And we sort of dismiss all of the concerns and again the same thing with those on the other side who do not explain that. Its likely to do with fracking. I go down the middle path and i get criticized both times. [inaudible] no. Im just down in my basement trying to make words. We still need to fracking 101. We know exactly what to do and can you over frack . Can you over frack in terms of sending too much chemicals intand too much water . Producing too much there is a flipside to some people argue it is a policy scam and youve probably read some of the thin things. We are all excited about it and a lot of the data shows up really strong and then it plummets in the production is dropping and its going to be over soon. Forget about what president obama said in the oil and gas and energy security. Its not going to have been that if you talk to people in the field, of course it starts out strong. We have a few generations of natural gas. It is going to peak a little bit earlier than even a year or two ago and the current auction in the sand and chemicals you drill down like i said vertically, horizontally you shoot at High Pressure and pull the orioles and gas back up. You talk about trying to get the information that is more accurate. It seems like the media has a kind of responsibility where. Im trying my best to my friend. Is your book available on kindle . All kinds. Theyve overplayed it on both sides and others have tried to play it down the middle. You have experts on sort of both sides unfortunately today and because the very heated conversation. But also, i think it is in the immediate front. So, today it is a larger conversation where people say msnbc or fox and the controversy i would say to maybe overdo the stories and it isnt very popular today in the media, so there are parts. Turning that on two msnbc its sad when people do not hear the conversation often it is an echo chamber. I did a story six months ago about a guy in wall street a pretty wellknown economist who was always bearish. It then it turns more bullish. The readers were furious with him. How dare him go bullish and the point that i got from it is often we just want to hear we have already made your decision. When we listen and we watch, and unfortunately when someone changes their mind they say even if you like the person that they change their mind and they go to the other side you hated them and dismiss them its sort of sad that thats what its come to in this country. You said before that youre not a big deal beaver in the organizing and leading the government decide. I was wondering, it seems like there needs to be some Safety Measures in place to make sure things like the one in ten casings dont go bad and become a week but it seems to be a vision of how people on the left and environmentalists can Work Together with corporations to put something in place. Its going to make it safe. Can you elaborate on what that vision is . What i meant by the topdown criticism is im not a big fan of allocating the capito capitad the government deciding where its going to go. If you look at other kind of things when we spend the data in my book. I knitted the lever and incentivizing onto the doors. Lets take that money and then we are going to send it to the companies that are doing work on solar. I would take that money and attacks the carbon tax and take the money to build an infrastructure for things like natural gas. So when it comes to the infrastructure i believe in more regulation and i believe what is interesting is the state has always historically been a statebystate thing in this country that the federal government hasnt played a huge role in regulating oil and gas drilling, and that is depending on who you ask easier because the local guys in each state know that geology much better or because they are chummy with the oil and Gas Companies. That was my instinct when i started the process. So, the government does need to play a bigger role. I dont know why the government doesnt step in and say theres a great role in colorado coming and we have good roll good rolew different states won off kind of things. Lets make it a national policy. Lets put some pressure on them and i think the companies should embrace it, too. When it comes to pennsylvania there are a few that have come together with this Environmental Defense fund, but many havent. One other thing when i started this project i had this impression may be able to people in this room did who are the oriole and gas guys they are the suits and cigars spelling left and right and the view of the gas industry and when you meet them you realize they are angels and saviors or heroes, but they often are geologists. They are outdoors, they are hunters, they are not out to pollute. They dont like to see themselves as being polluters. They too often do, but there is a lot of nuance i dont think is always appreciated. Something else . Yes i dont want to spoil the book that i want to ask briefly how much in your research the people you interviewed in the scenarios and cases that you came across what you say that its been kind of innings to show prejudice or maybe anticompetitive sour grapes thats been spreading kind of doubt on the fracking process versus the situations that are genuine situations where there has been a real danger thats been found and also i would just ask kind of offhand the perspective to people in the industrindustry have is it kindf focus on this right now on energy and general come is this the end all be all or are they looking towards the future and seeking alternative sources not just the wind and stuff. Sure. I will do the second one first. Right now we are in the era of energy planning. Oriole and gas plenty. If we could to the future and some of the same evil that funded and financed the oil and Gas Production of fracking like the big private equity firm in wall street they are also trying to think about the next home run into the next payday and that could be alternatives. We come up with the right battery. They are both kind of going on at the same time. And im sorry what was the first question . I apologize . You focus on the personalities involved, and so i wonder how much overall in the process of, you know, kind of giving almost like a bio of the personalities involved in the development of the industry, how much youv you founded the casee that it was you mentioned briefly they avoided the potential loss involved and it was a bad investment. So i wonder how much in the process of the profile link you founprofiling youfound that thee case for the interpretation and how much loss was involved and was, you know, was there a materialized and documented preponderance of the dangerous association that would give rise to a lot of the media that has been casting doubt of the process the individuals, the independent rvs entrepreneurs. They ignore conventional wisdom. The experts, the scientists, the Major Companies come and they focus on this stuff and early on, they were always aware of the risks involved and people were kind of making them into evil people but i dont think they are. I think they messed up left and right so lets say pennsylvania. But part of the state hadnt been drilled for many years and early on in a cabinet energy, they ruined peoples water, they made mistakes. Real mistakes. And they own up to it now. They were skeptical because as a nation they have always been fracking so maybe there arent going to be any problems here but for any part of the country it makes sense they went into it maybe overconfident and learned their lesson. I think you also had kind of a larger question about the environmentalists most, not all but most are a genuine concern for the environment and for the water system, for the areas its not just a call but sometimes they are genuine and the people involved are genuinely worried and if i lived in a pretty area and i didnt need to be smiley andme smileyand, im not sure td embrace it as much but unfortunately there are parts of the country like pennsylvania before the production where things were challenging and tough he has some destitute troubled areas and instead of fracking they are going to embrace gambling which is sad to me so i come back to that and instead of telling people not to do it lets encourage it and put many more regulations and scrutiny on them. We have one more back there. 5 billion gallons of water per while . Thats true. I understand they have the pits to recapture that water but they do not recapture every one of those 5 million gallons. Is it safe for the new york city