05545 Cover:Layout 1 9/18/07 12:31 PM Page 1 OKLAHOMA Where Energy Reigns OKLAHOMA: Where Energy Reigns A supplement to 05545 Cover:Layout 1 9/25/07 5:05 PM Page 2 05545 001-039_Sec.1:Layout 1 9/19/07 1:09 AM Page 1 Oklahoma Where Energy Reigns The Oklahoma Energy Resources Board (OERB) is proud to add this book to the lexicon of our state’s Centennial Celebration. The OERB is a true Oklahoma organization, born of necessity by bold and caring individuals willing to dare things differently. The OERB was conceived by committed individuals from the ranks of Oklahoma’s premier business and industry organization, the Oklahoma Independent Petroleum Association. The OERB exists to educate Oklahomans about the importance of the state’s crude oil and natural gas exploration and production industry, including our state’s rich and colorful history, which is completely intertwined with the birth and development of its cornerstone industry. In 2007, as our tribute to the oil and natural gas industry is published, Oklahoma is undergoing a renaissance. And, as it has been for more than 100 years, the driving forces for economic, social and cultural change are the visionary Oklahomans in the oil and natural gas industry. The OERB is pleased to share some of their stories, past and present, in Oklahoma: Where Energy Reigns. 05545 001-039_Sec.1:Layout 1 9/21/07 7:36 PM Page 2 OKLAHOMA Where Energy Reigns Contents OKLAHOMA ENERGY RESOURCES BOARD Chairman Steve Agee From Office Governor ............ 4 Public Education Chairman the of the Dewey F. Bartlett Jr. Executive Director From the Oklahoma Energy Mindy Stitt Resources Board ................................ 6 Communications Director Mary Ann Osko Environmental Director Steve Sowers Education Director Landi Thompson OERB Centennial Project Director Mickey Thompson OERB Centennial Project Coordinator Ellis Stromberg ENERGY RESOURCES FOUNDATION OF OKLAHOMA / OKLAHOMA INDEPENDENT PETROLEUM ASSOCIATION President Mike Terry OIL AND GAS INVESTOR, HART ENERGY PUBLISHING www.hartenergy.com Publisher Shelley Lamb Editor-in-Chief Section 1 — History 1859-2007 Leslie Haines The Legacy of Oil and Gas in Oklahoma ............... 10 Senior Exploration Editor Peggy Williams Senior Financial Editor Section 2 — Boom and Bust Brian A. Toal An Incredible Ride ................................... 42 Financial Editor Jeannie Stell Contributing Editors Gary Clouser Kelly Gilleland W.H. “Bill” Leach Jr. Taryn Maxwell Director, Custom Publishing Monique A. Hitchings Photo Editor Lowell Georgia Production Director Jo Pool Art Director Alexa Sanders Senior Graphic Designer Melissa Ritchie Section 3 — Drilling Activity Robert McGarr Oil, Gas and The 21st Century ........................ 49 Regional Sales Manager Oklahoma Oilpatch Going Strong ..................... 53 President and Chief Executive Officer Richard A. Eichler Woodford Shale Heats Up ............................ 58 2 Oklahoma: Where Energy Reigns 05545 001-039_Sec.1:Layout 1 9/19/07 1:10 AM Page 3 Section 4 — Oklahomans Independent Development . 64 Partners in Oil and Gas Production .................. 76 Section 5 — Drilling and Services Oklahomans Serve Up Technology .................... 81 Section 6 — Monetary Impact Oil and Gas Drive Oklahoma’s Economy ............... 89 Section 7 — Pipelines and Refineries Midstream and Downstream Sectors .................. 93 Deep Oklahoma Roots . 100 Cushing: Pipeline Crossroads of the World ........... 101 Section 8 — Hall of Fame Key Players in Oklahoma Oil and Natural Gas History .................................. 104 Section 9 — The OERB OERB, Oklahoma Oil and Gas Industry is Family Affair . 124 Oklahoma Oilmen—and Women—Proactive in Telling their Industry’s Story .............. 127 Section 10 — Oklahoma’s Oil and Gas, The Future Oklahoma’s Driving Force ......................... 140 Glossary of Terms .......................... 148 Oklahoma: Where Energy Reigns 3 05545 001-039_Sec.1:Layout 1 9/19/07 1:11 AM Page 4 From the Office of the Governor 4 Oklahoma: Where Energy Reigns 05545 001-039_Sec.1:Layout 1 9/19/07 1:11 AM Page 5 Oklahoma Governor Brad Henry Fellow Oklahomans and Members of the Energy Industry: The discovery of crude oil and natural gas under the famous red dirt of Oklahoma was a defining event in our state’s history and economic growth, one that propelled us to center stage in the U.S. energy industry. For more than 100 years, the unique individuals and dynamic companies who comprise Oklahoma’s energy sector have been more than leaders in business and industry. They have helped build and sustain our communities, our government and our educational, social, cultural and philanthropic successes. So I am excited to introduce this publication to you as part of the many wonderful projects and events surrounding the Centennial Celebration of our great state. This publication highlights our colorful past and emphasizes the opportunities in our future. The efforts of the Oklahoma Energy Resources Board in compiling this publication to commemorate the rich history of Oklahoma’s oil and gas industry are a welcome addition to the Oklahoma Centennial. I hope this edition will be prominently displayed in homes, offices, libraries and classrooms throughout our state and our nation for years to come. This publication is special in two ways: the work of historians Dr. Bob Blackburn and Dr. Paul Lambert illuminates our past; while a treatment of contemporary Oklahoma oil and natural gas topics is provided by some of the nation’s best energy writers. To a great extent, both in 1907 and in 2007, Oklahoma is defined by oil and gas. My hope is that the “can do” spirit of the Oklahoma oilmen—and women—will keep us at the leading edge of energy exploration and production for another 100 years. Sincerely, Brad Henry Governor Oklahoma: Where Energy Reigns 5 05545 001-039_Sec.1:Layout 1 9/19/07 1:11 AM Page 6 From the Oklahoma Energy Resources Board 6 Oklahoma: Where Energy Reigns 05545 001-039_Sec.1:Layout 1 9/19/07 1:11 AM Page 7 OERB Board Chairman OERB Executive Director Steve Agee Mindy Stitt Fellow Oklahomans and Energy Industry Professionals: The 20th Century saw not only the birth of our state, but also a rapid evolution of communities, an economy and a culture powered by access to abundant energy resources. Still today, Oklahomans are blessed to be standing on top of some of the nation’s most prolific sources of energy. Ten percent of America’s proved natural gas reserves are right here in Oklahoma. Our state ranks second in production of natural gas, the cleanest form of abundant energy. And we pump out 61 million barrels of oil each year that the United States would otherwise have to import. Oklahoma: Where Energy Reigns is a centennial tribute to these resources, not only the natural resources, but also the human resources that have shaped our state. Through our first century, oil and natural gas brought many distinctions to the Sooner State — consider that during the prolific discoveries of the 1920s, Tulsa became the “Oil Capital of the World” almost overnight; the University of Oklahoma created the world’s first school of petroleum geology; and 20 of the world’s Top 100 Most Influential People of the Petroleum Century hailed from Oklahoma. One hundred years after statehood, the resources flowing under our feet are still having a tremendous impact on Oklahoma. One out of every seven jobs in our state is directly or indi- rectly supported by the oil and natural gas industry. And this past year, the oil and natural gas industry provided $1 out of every $6 the state spent on education, teacher retirement, roads, bridges, wildlife conservation and all other state programs and services. The future of energy exploration and production in Oklahoma is bright. With advancements in technology, we are unlocking unconventional resources, such as shale rock and coalbed formations. Finding new resources means new jobs, and Oklahoma’s oil and natural gas industry is making sure young Oklahomans can take advantage of these opportunities by generously funding scholarships, university donations and Career Tech educational programs. The Oklahoma Energy Resources Board is pleased to present this book in partnership with Hart Energy Publishing and Oklahoma historians Dr. Bob Blackburn and Dr. Paul Lambert. This book illustrates how Oklahoma’s role in bringing oil and natural gas to the American people has always been and will continue to be significant. It is an account of the proud history and great prosperity these resources have given our state and the promise of a bright future driven by the oil and natural gas industry. It is a timely reminder we flourish in Oklahoma — where energy reigns. Oklahoma: Where Energy Reigns 7 05545 001-039_Sec.1:Layout 1 9/19/07 1:11 AM Page 8 History 1859-2007 Oklahoma Black Gold celebrates the 100th anniversary of the oil and natural gas industry in Oklahoma. The wooden structure on the left of the mural represents Oklahoma’s first attempts at drilling. The modern drilling rig and equipment on the right represent the present and future influence of the energy industry on the state. The three roughnecks in the middle of the epic piece display the physical strength and stamina necessary to work in the oil patch as the Oklahoma state flag blankets the state through “booms” and “busts.” 8 Oklahoma: Where Energy Reigns 05545 001-039_Sec.1:Layout 1 9/19/07 1:11 AM Page 9 Section 1 Photo by Lowell Georgia Oklahoma artist Jeff Dodd painted the fan-shaped mural, 22 feet at its base, to depict how oil and natural gas exploration and production have shaped the history of the state. Funded by private donors organized by the Oklahoma Independent Petroleum Association, the commission was managed by the Oklahoma Arts Council. Dedicated in 1996, Oklahoma Black Gold hangs above the Oklahoma State Senate Chamber entrance on the fourth floor of the state Capitol.