SHALE TO THE CHIEF: Founder and CEO Trevor Rees-Jones has put his Chief Oil & Gas up for sale. The rumored price tag is $2 billion. photography by Dan Sellers

The Barnett Shale Millionaires

Much of North Texas sits atop a gold mine of natural gas. A new breed of wildcatters like Trevor Rees-Jones and independents like him stand to make millions, if not billions. Here’s how.

Lynda Field’s neighborhood is transforming before her eyes. An endless beeline of trucks ferries construction equipment on once quiet streets. The steady hum of rigs drilling gas wells has replaced the background sounds of nature. Rig workers now pack the Hickory Stick BBQ restaurant at lunchtime, which, to be fair, was not unpopular in the years and months before, as Field puts it, “the circus came to town.”

Field’s neighborhood in Fort Worth, just south of I-20 in Tarrant County, is the latest front in the rush to extract natural gas from what is quickly becoming one of the most important energy plays in the nation: Barnett Shale. And the frontline is shifting outward at a dizzying clip. The most dramatic change in the neighborhood, which also includes parts of Forest Hill, Everman, and unincorporated Tarrant County, is not just the gas wells that sprout almost weekly, but the wealth they will create for residents like 67-year-old Field. “It’s like we’ve been touched by an angel,” she says.

Field isn’t the only one who sees dollar signs and divine providence. Dan Steward, a geologist for Republic Energy in Dallas who has studied Barnett Shale from its very beginnings in the early 1980s, calls the gas play now booming in the Dallas-Fort Worth area “a blessing for the nation’s energy supply just when we needed it.” Chief Oil & Gas founder and CEO Trevor Rees-Jones has likened it to the oil fields in East Texas.

“Barnett Shale,” the latest buzzword to get businessmen salivating, seems to have emerged from nowhere, though that’s hardly the case. It’s been called “a 17-year overnight sensation,” and no one knows it better than George Mitchell, a legend in the energy industry. “It took a lot of money and a lot of patience, and only George Mitchell had those things,” says Kent Bowker, a geologist who left Chevron to work for Mitchell. “I don’t know how he knew it, but he just knew it was going to work.”

George Mitchell became known in Texas as a wildcatter at a time when oil in Texas was abundant, founding Mitchell Energy & Development in 1946. But his luckiest strike may have come 36 years later, in a field in Wise County, where gas, not oil, set him on a path to riches. Mitchell Energy was drilling a well there in 1981, with the purpose of testing a deeper layer of the Barnett Shale, a segment that engineers did not think had any hydrocarbons. At the time, Mitchell’s reserves in the area, most of which were in shallower horizons, were in steady decline. Workers told Mitchell that the Barnett in the area didn’t seem very productive. Try harder and look more meticulously, he insisted.

The crew was more cooperative than the dense, coal-like shale buried an average of 6,500 feet below the surface. Getting gas from shale is like getting blood from a stone, only less figurative and much more expensive.

Mitchell pushed his engineers to deepen the wells in the area and to improve the technologies to extract the gas out of the Barnett. Engineers used a method called “fracing” (FRACK-ing), where a high-pressure jet of gel is used to fracture the shale, thereby releasing gas—a sort of liquid dentist’s drill. The engineers found that the larger the fracs they used, the more gas they could extract. The wells weren’t economically feasible yet, but there was promise in the field, which led to further study. A pipeline contract in the area that could be used to bring the extracted gas to market gave Mitchell enough money to continue research of the wells in the Barnett Shale.

By 1986, Mitchell had made the wells produce substantial amounts of gas, but production declined rapidly. The wells were still a financial risk. Engineers had been using an expensive gel to fracture the shale, making a single well a $750,000 proposition. Still, Mitchell and his engineers soldiered on, tweaking their fracs well into the 1990s.

In May of 1997, Mitchell Energy finally hit paydirt. An engineer named Nick Steinsburger introduced a cheaper, easier means of fracturing the shale: water fracs, where a mixture of sand and fresh water at extreme pressure did the work of the expensive gel. The water frac could reduce costs by as much as 70 percent. Some staff engineers resisted the new technology, but Mitchell figured the company had very little to lose by trying it. He won big. “It was a shiny success,” says Steward, who formerly served as Mitchell’s vice president of exploration for the mid-continent region. “The wells where we used a water frac were not just cheaper, but we also got a lot more gas out.”

There was more good news. Mitchell Energy lured Kent Bowker away from Chevron. Described by Steward as “the geologist most knowledgeable about shale in the country,” Bowker got to work researching the Barnett field. Bowker’s research estimated that the Barnett Shale held three times as much gas as previously thought—good news for the field but bad news for engineers. The new estimates meant their current extraction methods were not as efficient as they could be.

Enter horizontal drilling, another blessing from Mitchell Energy. The geological structure of the Barnett Shale is like an Oreo cookie, with layers of limestone at the top and at the bottom. The creamy filling is the shale, which can run as thick as a skyscraper is tall. Engineers had been drilling wells vertically—pushing the drill bit straight down thousands of feet before introducing the frac, which broke down the shale and released gas upwards. New technologies brought horizontal drilling, where the well is drilled straight down at first, then the well bore is turned to perforate the shale laterally. Engineers could now get at gas below existing surface structures like buildings, lakes, or Lynda Field’s neighborhood.

Production escalated even faster, thanks to horizontal drilling. Wells immediately yielded twice as much gas as the vertically drilled ones. A gentle rise became a steep one. “We haven’t looked back since,” Bowker says.

In 1999, Mitchell decided to cash out. He put his company up for sale, including the acreage leased in the Barnett Shale, as well as its knowledge of the geology and the water fracturing and horizontal drilling technologies. He found no takers until 2002, when Devon Energy of Oklahoma City purchased his technology and holdings for $3.5 billion. The deal launched Mitchell to no. 139 on Forbes’ 2002 richest Americans list. (He was no. 93 in 2005.)

 “We acquired a lot of acreage at the beginning when we decided Barnett was a major factor for the company,” Mitchell says today from his office on the 18th floor of downtown Houston’s J.P. Morgan Chase Tower, where he continues to oversee his real estate holdings and family investments. “Devon gave us a premium because we had so many sites ready to drill or already drilled. They understood the technology and the site very well and have developed it even further. We sold them on a very good play.”

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