Inner Sanctum: While he was writing his book, Harold Hamm organized his papers and thoughts in a room at Continental's headquarters.
Ethan Pines (Forbes)
The oil tycoon just published his memoir, “Game Changer,” and hosted a powerful summit critical of Biden.
HArold Hamm was having a blast. The 77-year-old oil tycoon sat with his family at a table near the stage, listening intently to one speaker after another handpicked by his panel at the inaugural U.S. Energy Security Summit, held at the brand-new Hamm Institute for American Energy Studies.
“Joe Biden hates American energy,” Nikki Haley declared to a group of 350 middle-aged oil and gas executives. “When the president speaks, he demonizes companies like yours. This is anti-American, and it has to stop.”
Haley, whose campaign and Stand for America PAC have received at least $28,000 from Hamm, has pledged to cut federal gasoline and diesel taxes if elected president — “so we don't have to buy energy from somebody else, especially our adversaries, when we can get it at home” — and to fast-track permitting for pipelines and liquefied natural gas export terminals to spread the benefits of American energy around the world. “We're going to open up the floodgates of our nation. You can never have too much American energy.”
Ham agreed with Haley about Biden: “His energy policies have hurt our country's international standing,” he said. Forbes“Since his first executive order, Biden has raised energy prices and increased national security risks in our country by promoting oil development in Iran and Venezuela rather than in Wyoming.”
After taking Continental Resources private and publishing a book, Game ChangerLast month, Hamm thought the perfect time to hold the first energy summit at his new institute (funded by a $50 million gift to Oklahoma State University) was the Monday after United Nations Climate Week in New York, as if those of us who frequent flyers needed an antidote to the naïveté that pervades climate activists about moving away from fossil fuels.
One notable point was that Goldman Sachs CEO David Solomon rejected any notion that Wall Street should stop funding oil companies: “We have to support traditional energy. Society cannot function without affordable, reliable energy,” Solomon said.
The message from big oil companies was that the low-carbon transition won't happen without them. “We're not the enemy,” said Chevron CEO Mike Wirth. “I can say with certainty that if you leave out our industry, you won't get to the goals you want to get to.” Wirth added, “We can't pretend that we can build a new energy system without leveraging the old one.”
“transition is the wrong word. and, and, and“Baker Hughes CEO Lorenzo Simonelli argued that fossil fuels should be replenished, not replaced.”
Former Secretary of State Mike Pompeo blasted the Biden administration's efforts to promote electric vehicles, which run on batteries and solar panels. The sector is dominated by China, which, despite making big environmental claims, burned a record 5 billion tonnes of coal last year – more than the entire United States produced in the past five years. “There's no way China is going to cut back,” Pompeo said.[President Xi] Build a coal-fired power plant [power plants] Stay away from climate change as far as is economically viable. Harikari.“
In Ham's view, Biden is holding American energy hostage. He was outraged when the White House threatened a lucrative tax last year after the outbreak of the war in Ukraine sent oil prices soaring. He also thinks the administration was foolish in releasing 180 million barrels from the Strategic Petroleum Reserve when there was no actual shortage. “The Strategic Petroleum Reserve is a war reserve, not a political reserve,” he says.
What's worse, it's a one-time trick. The beneficiary of Biden's oil policies is Saudi Arabia, says Amrita Sen, an oil analyst at Energy Aspects. She told the summit that Saudi Arabia is a “revenue optimizer and maximizer,” earning $70 million more per day from premium prices than it did before it cut production by 2 million barrels per day. It is deliberately tightening the global oil market now that the U.S. SPR is no longer a threat.
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HAmu isn't a charismatic speaker — his raspy speech is hard even for Midwesterners to understand — so he's written down what he wants to say in a new book. Game Changer: Our 50-Year Mission to Ensure American Energy IndependenceHe emphasizes that he's not calling himself a “game changer.” Rather, his book's title refers to a technique that has come to be known as fracking, combining horizontal drilling and hydraulic fracturing. Ham dislikes the term fracking as much as he dislikes being called a fracker, because it sounds dismissive and disrespectful of the importance of the technology that helped make the United States the world's largest oil producer (12.8 million barrels per day).
He organized the books in his windowless sanctuary, lined with boxes of records, clippings, photographs and awards, on the 13th floor of Continental Resources' Oklahoma City headquarters. He's filled hundreds of yellowed legal pads over 60 years, and it seems he still owns them all.
Around the walls are lengthy timelines stretching back decades. Perhaps his most treasured artifact is a term paper he wrote in high school titled “Oil.” Encouraged by his teacher, James E. Hunter, to pursue his curiosity, the teenage Ham penned 20 pages in neat cursive, an especially impressive work for a kid who was the youngest of 13 children and grew up picking cotton barefoot on an Oklahoma farm. The project was the beginning of his lifelong obsession with discovering oil.
He did it the hard way. A college dropout and largely self-taught geologist, 56 years ago Hamm started working for a trucking company, hauling oily runoff from drilling sites and skimming oil off the top of it to make a little extra cash. He put a million miles on his trucks before drilling his first well. “Oil seeped into them and destroyed countless watches,” his daughter, Shelley Lamberts, recalls in the book's afterword. He went on to become the richest truck driver in the world, and his family is worth about $25 billion.
Ham really got going around 1995, when he started experimenting with steerable drilling in the Cedar Hills oil field in Montana. This was his first time drilling into so-called “tight” rock, i.e. rock with low porosity and permeability. Frustrated that traditional vertical drilling methods weren't working, he tried a then-new technology that allowed the driller to steer the bit — first downward, then rotate 90 degrees sideways to drill several miles into the oil-filled rock. It worked beautifully, and the well produced 900 barrels of oil per day. “That unlocked all of America's tight oil reserves.” In 2007, to raise money to drill in North Dakota's Bakken Shale, Ham took Continental public, selling 15% of it.
Ham was distracted but undeterred by anti-fracking activists like Josh Fox, who made the 2010 film “Gasland.” He believes it's part of a smear campaign against U.S. natural gas led by Russia, which laments losing LNG market share to frackers. As evidence, Ham cites a 200-page report prepared for the U.S. Senate Foreign Relations Committee in 2018 that detailed NATO intelligence that showed Russian operatives had provided $95 million in funding and other support to anti-fracking environmental groups.
Hamm considers perhaps his greatest achievement to have been his relentless lobbying ahead of the passage of legislation in 2015 that lifted a ban on domestic crude oil exports and allowed independent producers like Continental to sell their oil directly to overseas buyers without the middleman. Forbes A decade ago, the U.S. oil industry was expected to double its production of crude oil and feedstock liquids like propane. And indeed, production has reached about 20 million barrels per day.
Meanwhile, natural gas production continues to grow, exceeding 110 billion cubic feet per day. Burning natural gas produces only half the carbon dioxide emissions that burning coal would produce for the same amount of energy. As shale gas has replaced coal in electricity generation, the United States has reduced its carbon emissions by about 15% over the past 20 years, the largest carbon reduction and percentage of any developed country. This is Ham's strong evidence that frackers are not part of the climate problem, but the solution.
Even better, the U.S. is exporting record amounts of gas: 12 billion cubic feet of LNG per day to Europe last year, displacing supplies from Russia. “We can make the same miracle happen around the world,” Robert Pender, founder of Venture Global LNG, told summit attendees.
Hamm's biggest move in recent years (after perhaps writing a check for $975 million to settle his 2015 divorce from Sue Ann) was taking Continental Resources private last year. He says it made sense to raise $4.3 billion to buy out the remaining shares, given that the stock market was valuing Continental at just four times its annual earnings, even though his family already owned 80% of it. He says the top priority now is paying down debt, which should take several years.
Continental is already the nation's largest privately held oil company, approaching 500,000 barrels per day. It operates 23 rigs, the most in the country, but CEO Doug Lawler cautions that the company doesn't have a “drill more and more” mentality. The company is about value creation, not volume. The biggest benefit of going private is that it would free up at least 20% of executives' time by not having to deal with investors and analysts.
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pictureThe most interesting discussion at the summit came when Ham took the stage to chat with Vicki Holub, CEO of Occidental Petroleum. The two share a common interest: Occidental Petroleum, located in the Permian Basin, is developing technology to suck carbon dioxide out of the air using what are called direct air capture units. Occidental Petroleum will add that carbon dioxide to the pipeline network it operates in West Texas, and also connect it to a new power plant it is building in a joint venture with NETPower. The new plant will burn natural gas, but rather than venturing into the atmosphere, it will capture all the carbon dioxide it produces. Occidental Petroleum will collect all that carbon dioxide, pressurize it, and inject it deep into old oil fields, where the gas will remain trapped forever in the rock while still spewing out even more oil.
It's a technique Oxy has perfected for decades in West Texas, and Hollub thinks it could work in fields in Colorado, Wyoming and Oman. “We inject carbon dioxide into shale formations,” Hollub says. “Shale formations still need three times the capture.”
Hollub doesn't reflexively dismiss ESG concerns, like some of the summit's speakers, because he believes sequestering carbon dioxide underground is a viable technological solution to the problem that gives Oxy its “social license to operate.”
Speaking on another panel, Chris Kendall, CEO of Denbury Resources (soon to be acquired by ExxonMobil), explained that his company has been pioneering carbon dioxide injection on the Gulf Coast for decades, with the goal of “pre-offsetting emissions” from oil by sequestering more carbon dioxide than the oil ultimately emits as gasoline or diesel. The company calls this “blue oil.”
Hamm agrees, which is why Continental has invested $250 million in a project to transport CO2 produced at 34 corn ethanol plants in the Midwest via pipeline to North Dakota, where it will be injected into porous rock formations that don't naturally contain oil or gas deposits. Speaking at the summit, Governor Doug Burgum said he hopes “North Dakota's geologic bonanza” will attract $40 billion in carbon sequestration investment.
“These ethanol plants are releasing all of their carbon dioxide into the atmosphere,” Hamm says. “What if we captured it and sequestered it so it wasn't polluting the atmosphere? That's the right way to do it.”
