The Hard-Rock Lessons of George Mitchell, 1919-2013

The Hard-Rock Lessons of George Mitchell, 1919-2013

George Mitchell passed away last week and this piece is more of a celebration rather than an obituary. We met Mitchell under different conditions.  Economides, while with a major service company then, met Mitchell almost 30 years ago.

Mitchell always proud of the fact that he was first a petroleum engineer (“first” in his class at Texas A&M to boot) and then a businessman, engaged young Economides on the need to understand the petroleum industry technically first, to apply engineering and thinking. Eventually the shale work needed exactly that, a departure from a misconception that ignored physics, the moving away from the notion of shale as a barrier rock between lackluster formations, great to control fracture height migration. It became the target rock itself, storing massive quantities of gas as adsorbed.

One of the least emphasized qualities of Mitchell and it took a Greek to understand a fellow Greek was the kind of ambition and competitiveness he had. Unquestionably he had a keen sense of those. One does not accomplish the kind of things that Mitchell did without them. But it was a competitiveness that did not need the suppression of others, the winning by reducing their ambitions. This is a uniquely Greek quality. Both the development of The Woodlands and the focusing on shales contained much of that uniqueness, thinking out of the box and finding golden opportunities where conventional industry hadn’t thought to look.

Darbonne is in the finishing stages of The American Shales, an excerpt from which is below.

By 2007, the Fayetteville shale play was well under way. It was, indeed, the very same rock as the Barnett. But the Arkansas play’s founder, Southwestern Energy Co., had struggled with it. Harold Korell, chief executive officer at the time and now chairman, got a call.

“My secretary came in and said, ‘George Mitchell called and wants to talk to you.’ I said, ‘The George Mitchell?’ She said, ‘Yes, the George Mitchell. He wants to have lunch with you.’” Mitchell was taking Korell to school.

Dan Steward, who had been vice president of geology for Mitchell Energy prior to its merger in 2002 with Devon Energy Corp., had just completed a book, documenting the company’s exploration work that led to the Barnett play. Mitchell had asked Steward in 2005 to write it, The Barnett Shale Play: Phoenix of the Fort Worth Basin, A History.

Mitchell brought a copy to Korell. “And he said, ‘Harold, you’re really onto something big in the Fayetteville.’ I mean, he thought we were onto something big. It was a really fun moment for him to invite me to lunch and to give me a copy of that book.

“That was a very important book.”

As Korell began reading it, he ordered copies for all of his staff. It was practically a playbook for what to do—and absolutely not do—in a shale play.

“It’s saying, ‘Don’t drill by the faults.’ And, hell, that’s what we were doing.”

To drill by the faults was how oil and gas wells were made in conventional reservoirs in the industry’s first 150 years. To develop a play by avoiding the faults was counter to conventional wisdom. But this wasn’t a conventional reservoir.

“In the shales, you have to maintain frac pressure in the rock itself to break it up. When the water you’re pumping can go into those faults, you just lose your energy. That’s why it doesn’t work. You’ve got to stay away from the faults.

“Yeah, we hadn’t figured that one out. But we were mostly drilling vertical wells, so they weren’t that expensive.”

Korell points to another lesson learned from Mitchell’s journey in the Barnett as told by Steward: Don’t out-smart yourself.

“It’s a constant learning curve,” Korell says. “We might get good at something, but it doesn’t mean we completely understand. We always have to challenge ourselves. Dan Steward talked about how George Mitchell was always challenging everyone as to why something’s happening, how it’s actually happening and what you can do to make your wells better.

“And, don’t out-smart yourself, which we all do because we all think we’re so damn smart.”

One example in the Mitchtell Energy story that Steward tells is about a Barnett well, H.A. Smith No. 1, that was drilled in 1985. The production team declined to complete it, deeming it a dry hole. It was in Denton County in Mitchell Energy’s first test of the Barnett outside of Wise and Parker counties; the company was putting together some 100,000 lease acres there.

Steward writes, “…The consensus at the time was to plug the well, get the core analysis and review.” By the following Monday, plugs were set and the rig was taken down.

“It was normal procedure on Monday mornings to review logs of new wells with Mr. Mitchell…After listening to our discussion…, Mr. Mitchell explained that, regardless of what our subsequent analysis showed, we were going to attempt a Barnett completion in this well.”

The rig was to be put back together, plugs drilled out and casing run. When it was fraced, it wasn’t a great well, but it was an acceptable one. And, it held the lease.

Steward writes, “I believe Mr. Mitchell’s point was that, in the early stages of a play, you shouldn’t out-smart yourself by thinking you know more than you do. He was exactly right. Important lessons were learned that kept repeating themselves in the Barnett play: Don’t apply conventional exploration/exploitation logic, don’t be afraid to try different approaches to problems and don’t out-smart yourself.”

The well, which was put into sales 16 years later in March 2001, came online with 700,000 cubic feet of gas a day; in its first 58 months it made 225 million cubic feet of gas. As of this past April, it had made 364 million.

Steward, who went on to Republic Energy Inc. after the Devon deal, said earlier this month that the well still isn’t “a great well but, more importantly, Devon has drilled five horizontals in the Barnett associated with the lease and I believe they are quite satisfied.”

Nissa Darbonne is editor-at-large for Hart Energy and author of The American Shales (November 2013)

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