While a junior in high school in the early 1960s, Harold Hamm was asked to write a paper on a career that sounded interesting to him. He picked the oil business, researching and describing in great detail how it worked—from exploration and extraction to refining and transportation.
Until then, the petroleum industry—although it was all around him in Enid, Oklahoma—wasn’t very familiar to him.
What was familiar had been farming with his family at his first home south of Oklahoma City and picking cotton when in season in Texas, getting paid 2 cents a pound.
As the season began to wane, the family would return home. Hamm and his siblings—he was the youngest of 13 children—would go back to school, catching up on the missed work as best they could.
His earliest years were without electricity, as the bucket trucks and linemen of the Rural Electrification Act had not yet reached the family farm.
His first oil job—after working at a gas station during high school—was cleaning sludge out of oil tanks. He helped grow the boss’ three-truck company to 10 trucks, but the owner had “personal challenges” and Hamm quit.
Having a family already—a wife and two small children—he took a refinery job, but felt stifled by timeclock-oriented union work. He wanted to explore.
Starting with a smile and a truck of his own in 1967, he grew his oilfield-services company into a $25 billion E&P, Continental Resources, which he took private again last fall by buying out the remaining percentage of the shares he sold in 2007.
In 1973, living 100 miles from a commercial airport, he obtained a pilot’s license and a plane to expedite business travel. And, one year later, he attended [the former] Phillips University in Enid to study geology so he could better understand how to find oil.
The two skills literally helped him “see” rock strata, such as near Inola, Oklahoma, observing its waffle-like surface features from the air that helped determine what was required to tap the resource matrix from the intersections of these squares.
Hamm, 77, still has that initial high school paper, which he titled simply “Oil,” along with hundreds of other mementos from his career. He cites excerpts of it in his memoir, “Game Changer: Our 50-Year Mission to Secure America’s Energy Independence,” published Aug. 1, in which he shares more C.V. details beyond the few-paragraph synopsis that is typically his corporate bio.
The book’s forward is written by former Secretary of State Mike Pompeo.
And, yes, Hamm talks about former President Donald Trump too, with whom he “remained friends throughout much of his term,” he wrote, but saw “become more and more distracted” as time went on.
“I get asked a lot about my support for [Trump] running again,” he wrote. “Although many of his policies were sound and helped our nation prosper, he simply did not stand with many of those who stood with him.
“My strong belief is there are better qualified candidates ….” But not Biden.
Nissa Darbonne, Hart Energy’s executive editor-at-large, visited Hamm at his headquarters in late June. During the three-hour conversation, he sent to voicemail three calls from another GOP presidential candidate.
Hamm still looks for unique surface features today from the air, but not as the pilot. The company’s board urged him to quit in 2010 when he turned 65. Does he miss the cockpit? Not really, he said. “Now I get to sit in the back and enjoy a drink.”
Nissa Darbonne: You’ve been working on the book for several years. What do you hope readers come away with?
Harold Hamm: No. 1, our goal is to set the record straight and tell it like it is. There have been a jillion myths and untruths unfairly told by disparagers about this industry I love—for their own benefit.
No. 2, I’m someone who sees the glass half-full, and I’m always looking for solutions. I believe people will come away with common sense and real-world solutions to inspire future generations. Perhaps the next little, barefoot country boy will get a big enough good idea to change the world.
ND: Of all the presidents you’ve met over the years, Ronald Reagan was not on your list.
HH: Yeah. I didn’t have the opportunity to meet him. I wish I had. He did some great things and he did some things that were really harmful to our industry.
ND: Like crushing Russia with an oversupply of oil, but crushing the U.S. industry, too, with sub-economic prices?
HH: He broke up the Soviet empire, drove the Soviet economy into the ground. But it really harmed our industry. It was devastating.
ND: You write that his tack with the U.S. natural gas industry was no better.
HH: He deregulated natural gas, which probably needed to be done, but it should have been done over time—slower and more systematic. He did it all once—dumped all the nation’s gas supply on the market at once.
It drove down the price to the point you couldn’t invest in it, and it actually wound up causing a shortage in 2000.
But was he a great American? Probably. I don’t think any of us ever thought he wasn’t. But he was tough on us. About half of the industry didn’t make it through the ’80s.
ND: In early 1982, you felt like the market had become too overheated, too frothy. You sold your 10 rigs and bought them back just a few years later for 10 cents on the dollar.
HH: I started doing what I like to do best: explore. I looked at all the basins in the country.
I wanted to find oil—and [a] lot of oil. The Williston Basin and Powder River Basin were interesting, but primarily the Williston. I wanted to find some really large fields. I wanted to find some giants.
And, as we say, the rest is history.
ND: You had the idea of testing the Middle Bakken in eastern Montana and brought it to a Dallas operator who declined, but then did it on his own. There are people you name in your book, but you didn’t name this person.
HH: I didn’t want to throw any bad light on these guys because that’s what happens sometimes.
ND: You didn’t get to be first in the middle Bakken in eastern Montana, but you had already moved onto figuring it out in North Dakota.
HH: We wound up with almost half of Elm Coulee Field in Richland County, Montana. That’s where the Bakken started. Quickly, I jumped over to where the rest of it was—in North Dakota.
ND: The center of the Williston is in western North Dakota, so if using the “you find oil where it’s been found before” rule of thumb, it seemed the Bakken—the source rock—would be particularly bountiful there?
HH: It was grassroots geology. You always got a show in the Bakken. But every time you tried it, it didn’t do much of anything.
North Dakota had a core library. We went up to Grand Forks, and [the late] Julie LeFever—she was a great geologist—who ran the core library, laid out all the cores they had on the Bakken. I mean, she had a full room of them. The rock looked like this [granite] table. It was so dense that it was just hard to imagine how you could get oil out of it. But all of it had [oil] staining through it. It had very little porosity and very little fracturing. So, it wasn’t a fracture play [a play made of tapping oil trapped inside natural fractures].
We came back [to Oklahoma City headquarters] and completed the mapping and decided, “Hell, let’s go try it.” We leased 350,000 acres. [With test wells,] we were getting a little more precise in where we needed to be, and what we needed to do. Basically, we put together all the acreage we could near the Nesson anticline, and we amassed 1.2 million acres over time.
ND: You decided in 2007 you needed more money.
HH: [The rock] didn’t work anything like it did in Montana. It was different. What worked in Montana did not work over here. We kept trying different techniques and finally went to stage treatments. So we had to change everything.
We’d bought a lot of acreage that we needed to be developing, and we had very little capital. We decided we’d take the company public.
ND: You went on to wildcatting new tight-rock plays in Oklahoma and Wyoming. What’s been the most obstinate of them all? Was it the Bakken?
HH: I think it was. It took breaking the code in the Bakken in North Dakota. It was an extreme challenge. And a lot of people just didn’t believe we could do it.
ND: Newcomer generalists in the business miss the fact that producing oil from nearly impermeable rock is a much greater challenge than producing gas from shale, since an oil molecule’s so much larger and heavier.
HH: Yes, you could get gas out of shales. But, as far as getting oil molecules out of shale, it’s probably the toughest thing we ever did.
ND: As the Eagle Ford and Permian joined in, the U.S. soon didn’t have enough refining capacity for all the new light, sweet oil. Oddly, the U.S. had developed a situation of “stranded” oil.
HH: Almost all the refining capacity at that time had [been retrofit for] heavy Canadian crude [after U.S. light, sweet production began to decline in the 1970s]. The U.S. refineries didn’t want our oil. Believe it or not, here in the U.S., it had all been modified for heavy sour. That’s why lifting the export ban was necessary.
ND: Since you don’t have to publicly announce a new play anymore, might Continental get to do more exploring than before?
HH: Oh, yeah. It’s going to be better.
ND: Were you having to hold back to keep your ideas tight-holed?
HH: You always did. You didn’t want to give secrets away early, but you had to when it became material [to investors]. It’s like observing the oil-staining down in the Three Forks and [later on] testing it. When we did, everybody thought it was crazy even thinking about it. But, within a year, everybody was drilling the Three Forks.
ND: You had seen the staining in Three Forks when you looked at the cores for the nature of the overlying Bakken.
HH: Yes. And it was like, “What the hell? How did this get down here?” I can understand, up here [in the Bakken] where you have organics, you’re going to have oil show. But there are no organics in Three Forks. Yet, we had oil show. I never forgot that. I just hung onto that for the time being. We started drilling it once we figured out the Bakken.
ND: What might we hear about that you’re working on right now?
HH: [Laughs.] Well, it’s no secret, really. Powder River is one that we have a big interest in. It’s needed somebody that had enough size and scale to consolidate the basin. And we’ve done a pretty good job of that, putting a huge leasehold together—and big enough that we could add scale to it.
ND: I understand it’s gassier in the southern fairway.
HH: Part of it is. It’s a big enough and diverse enough basin that you can pick and choose.
ND: And the Powder has lots of formations and benches.
HH: You have so many zones out there in Powder. It’s hard to even put them in a box, you know? It’s a stacked pay. I mean, it’s just pay after pay after pay.
ND: You’re still looking for a new play—but from the cabin—while you’re flying?
HH: It’s interesting, particularly in the northern Rockies. In Wyoming and a lot of Montana, all of the geology is on top of the ground. You see a lot of it expressed in the surface features. Here in Oklahoma, you don’t. Where I saw that waffle-like pattern—the block fracturing—it was over around Inola here in Oklahoma. And once I figured out what that was, then I could treat it. Up until then, it was just a tight formation that you were lucky if you had one good producer.
Well, once we figured out the structure, we could use retarded acid to get into the bigger system. You couldn’t go in and get rough with it. If you did, you were out of zone. But using retarded acid and being careful, then you’d get into the bigger block system. And all of a sudden, you were connected.
Made some damn nice wells. If you hadn’t seen it on top of the ground, you wouldn’t have known it.
ND: What’s an area you’d like to get into?
HH: We continue to look for new basins. We don’t have any burning desire to go international. You get into all the geopolitics. Pretty soon, it’s nationalized and it’s taken away. But there are some interesting basins still that have some allure, some of which have been picked over a little bit but no one found anything. That doesn’t mean it’s not there.
So, we’ll continue to pay attention to those. And, they’re in the U.S., so we’ll keep looking.
ND: Would you ever consider a gas play?
HH: Yes, in the right economic situation. Certainly, the Haynesville is a really great play. It’s close to market. And it has a lot of running room. But it has the same supply-demand situation as everything has. It’s fairly easy to oversupply the gas market. So, it’s precarious.
ND: You had an opportunity to get into the Barnett early on when it was going horizontal in 2002, but passed. You were disinclined even then to do gas.
HH: As a geologist, you learn that there’s just a heck of a lot of natural gas. I say it’s ubiquitous. It’s everywhere. And oil is not; oil is hard to find. And, it’s a different animal; it’s harder to oversupply oil than gas.
ND: The team probably has a great deal more time to explore these days since Continental’s gone private.
HH: We do. Instead of preparing quarterly reports and all that kind of business, we’re basically back to looking for oil and how we can better produce and how we can create more profit for the company. Doug [Lawler, president and CEO] and I both estimate the time savings is 20% across the company. A huge amount of time. Our auditor, Grant Thornton, recently reassessed what it takes to audit us and do our work. They cut 20%. It’s a game-changer.
ND: Is there a risk that E&Ps’ current tack of low- or no-production growth, returning profits to shareholders instead, is stymying U.S. wildcatting and will harm the American energy posture?
HH: I think it could. The publics are all in this drive to make themselves look good quarter-to-quarter, trying to please the market. I’m really glad to exit that scene.
ND: You were going to be invited to be Department of Energy secretary, but declined. Looking at how things went for Rex Tillerson [as secretary of state], did you dodge a bullet?
HH: I felt like there was so much more for me to do outside of government. I could have done a lot there for a while—a couple years—that would’ve made a big difference. But it would’ve been temporary. And it would have shut down what I was doing from a company perspective. I’d have had to put everything in a trust.
It takes you out of the picture. I wasn’t ready to be taken out of the picture.
ND: You’re affecting the U.S. energy narrative in other ways instead?
HH: You know, the Hamm Institute for American Energy that was set up here at Oklahoma State University can really do a lot to change the narrative of American energy back to what it should be. I look forward to doing that.
Whenever I set out on any task or mission, there are three things I ask myself, going back to when I was a young man: Is there a problem? Is there a solution? And what is the best solution?
The problem is, for 60 years we have faced political fumbles that have cost Americans energy security and independence. And they told us we were running out of oil.
Is there a solution? There is. Innovation and technology. After a lifetime of work, it revealed itself as horizontal drilling, which changed everything. I’m eager for people to read the book to understand the history, the importance of it, and to inspire the next generation of technologists and explorationists and give hope to Americans along the way.
ND: Could a 1981 happen to the U.S. industry again—an event or series of events that mean U.S. producers don’t fully begin thriving again for 20 or more years?
HH: Back then, you had several situations. One was a huge over-capacity from OPEC that’s not there today. Back then, you had an estimated over-capacity of as much as a third of the market.
It’s all different [today]. And, even with natural gas [today], supply-demand is pretty nip and tuck. It’s pretty well balanced.
ND: You wanted to emphasize the value of U.S. energy independence in your book.
HH: That was the real story that we had to tell: Energy independence gives us peace in the world. That’s the whole theme of the book. You don’t have to kowtow to anybody. You [don’t] have to kowtow to someone who’s inhumane [like Vladimir Putin]. You don’t have to deal with them [for] energy.
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