Sunday, March 21, 2021

A Tribute to Legendary Wildcatter Jim Bob Moffett

 

Jim Bob Moffett. Image from Freeport McMoran announcement

"When I heard that Jim Bob Moffett had kicked the bucket, I thought to myself we just lost one of the ballsiest guys in the history of oil and gas..."


A Tribute to Legendary Wildcatter Jim Bob Moffett

When I heard that Jim Bob Moffett had kicked the bucket, I thought to myself we just lost one of the ballsiest guys in the history of oil and gas. Less than 15 years ago James Robert “Jim Bob” Moffett (1938-2021) had the industry gawking when he drilled the deepest well in the Gulf of Mexico. Perched on the Outer Continental Shelf in the Gulf’s shallow waters, Jim Bob penetrated over 30,000 feet, 5 1/2 miles down, to depths called “ultra-deep.” The problem with monkeying around at those depths is temperatures and pressures are so high they can fry well equipment and cause it to malfunction. If, on the other hand, Shelf ultra-deep drilling and completion could be done safely and “economically,” it opened a new oil and gas frontier, with game-changing potential.

Before Jim Bob was CEO of the multi-billion dollar company Freeport McMoran, he was a penniless pale-face kid who lived in an undesirable part of Houston, who bagged groceries and pumped gas and delivered newspapers and sold shoes and did whatever it took to help his mother and sister make ends meet. The family was from Golden Meadow Louisiana, a Lafourche Parish mud hole which Governor Earl Long established as a town in 1950, but it took some pushing for that to happen. If the truth be known, Uncle Earl was probably too distracted by the horse races to bother with incorporating tiny swamp communities. Jim Bob’s mother moved her 5 year old son and his sister Marilyn to Houston to find work after her oil field-laborer husband split Golden Meadow.

Tireless tenacious effort brought him from Houston public school, to a football scholarship at the University of Texas where he earned a geology degree, then completed a Masters in geology at Tulane University. It was a quick jump from lowly roustabout carrying drill pipe through a snake-filled swamp to honcho with a keen understanding of subsurface geology and a talent for nailing oil and gas. He co-founded McMoran Exploration in 1969, and in 1981 orchestrated its merger with Freeport Minerals, one of the largest mergers in Wall Street history. Jim Bob served as Freeport McMoran’s Chairman of the Board for 30 years and as its CEO for 20 years.

He must have felt really puffed up the day he drilled down below 30,000 feet and reached hydrocarbon bearing sands, after some said it couldn’t be done. Besides, hadn’t one of the majors tried and failed? Exxon Mobil and some partners attempted to drill the Blackbeard West well offshore Louisiana on the Shelf to 32,000 feet or deeper, but pulled out at 30,067 feet when high temperatures and pressures freaked them out. A fortune in well costs went down the toilet. Jim Bob acquired Blackbeard West, re-entered, and drilled to 32,997 feet, the deepest well drilled below the mud line in the Gulf of Mexico.

Why was Jim Bob hell-bent on drilling Shelf ultra-deep? Shelf ultra-deep was “a new economic frontier.” Onshore was fairly depleted, and much of deep water GOM’s production was declining. The Shelf at depths above the salt weld was also picked over. Shelf ultra-deep on the other hand was largely untapped, if you had the guts to drill deep enough and try to extract profitably. When Jim Bob staggered in, the industry’s mouth started fluffing.

Jim Bob Moffett at Petroleum Club 2011 in Davy Jones cap.
Image by Brett Clayton Houston Chronicle 

“We got gamma ray, resistivity, neutron and sonic log, but we don’t have the density log. The damn thing keeps burning up!” This is Jim Bob notifying analysts and investors that hellish temperatures and pressures incinerated his well logging equipment and screwed up test results for the Davy Jones well. Davy Jones’ flow test would be delayed. Not good, given the size of the natural gas field discovered. How big? Jim Bob hoped to confirm a multi-trillion cubic feet volume of gas, which he called a “mega-discovery,” and “one of the largest GOM gas deposits discovered in decades.” Don Briggs of the Louisiana Oil & Gas Association used oil patch slang to help a Houston Chronicle journalist get it, "At a time when everybody had given up on finding elephants, Moffett went out and found the Godzilla elephant." 

Elephants have to be evaluated, for size, recoverability, will the sombitch flow. Equipment for testing a well five miles below the sea floor where reservoir temperatures reached 450 degrees Fahrenheit and pressures were, according to Jim Bob, “four times the pressure it takes to launch a spaceship into orbit” didn’t exist. This was new territory. “No one has ever tried to flow a well at the combined temperatures and pressures we have at Davy Jones.” Obsolete well equipment went out the window, and he began to collaborate with Schlumberger and others to “figure out what the hell we have.” Jim Bob worked with people “all over the industry.” He made a “pioneering effort” to collaboratively design and manufacture high pressure safety valves, wellhead trees, production casing and tubing and blowout preventers. All decked out in his Davy Jones cap, he addressed a room packed with geoscientists at the Houston Petroleum Club, and challenged the service industry to up the game with technical innovations for operating ultra-deep. They did. Fairly quickly you saw re-engineered wireline tools, drilling mud, production equipment and logging equipment. In one press release Jim Bob claimed to be “an indirect catalyst” for new 30,000 psi wellhead trees. He told analysts that Baker Hughes had developed new logs to operate at 500 degrees. 

South Timbalier 168, Blackbeard West operated by McMoran.
Image from American Oil and Gas Reporter

"I've never met a good wildcatter who quits.” Re-engineered testing equipment and tools unfortunately didn’t clarify Davy Jones’ capacity to produce. The well completion process let rip with problems. When it clogged up with drilling mud, he had to use high pressure shocks to loosen up the mess. That failed, so a tool was sent down to detonate explosives to perforate and re-establish flow. At one point the well flowed, then got turned off to comply with post-Maconda permitting, according to reports. More delays, costs through the roof. Analysts chimed in it might be the most expensive well ever drilled. Short-term shareholders got impatient, trying to evaluate reservoir performance was dragging on too damned long. Commodities prices tanked, and activist investor Carl Icahn threatened restructuring. By the time Jim Bob retired as Chairman of Freeport McMoran’s board in 2105 at age 77, only some of his Shelf ultra-deep portfolio was online and producing. Working out Davy Jones’ engineering and mechanical kinks essentially took precedence over development and production

Nevertheless, he and his team aced the geology. Their geologic modelling revealed structural continuity at the Gulf, in other words, onshore, the Shelf, and deep water GOM were one continuous geologic basin below the salt weld. A high quality reservoir sand that produces onshore, and also produces in the deep waters of the GOM, will have hydrocarbons where it folds over the Shelf, if you go deep enough. Starting with the oil found by Blackbeard West’s exploratory well, all of Jim Bob’s Shelf ultra-deep penetrations confirmed his geologic model. Gawd, was he charged up about the geology. If you read the transcripts, you can sense he’s practically giddy when discussing it. Understanding trap-door tectonics, Jim Bob said, helped him interpret ultra-deep trends. “Below salt on the Shelf you find a different tectonic environment, it’s similar to the big rolling folds of the Rockies.” He called the Shelf “the missing link between onshore and deep water.” 

As much as Jim Bob’s guts, industry admired his geologic mastery. Resoundingly, he was labeled a visionary. “He knows what he’s doing,” T. Boone Pickens told the Houston Chronicle. Oil giant W. A. Tex Moncrief, Jr. praised him highly. Back when he was Senior Vice President at Ryder Scott Petroleum Consultants, my friend Ed Gibbon sized up Jim Bob for me. “You just don’t find off-the-edge wildcatters like that. The depth of his knowledge is awesome.” When Chevron wanted in on Shelf ultra-deep, they asked Jim Bob to partner. He was the guru. 

His elevated intellect was what made the redneck act so funny. Jim Bob used hick words like “dad gum” during investor conference calls and technical presentations. Shifted into good-ole-boy demeanor. He didn’t hesitate to compare a sedimentary deposit to a body part while chitchatting with an analyst. I wasn’t acquainted with Jim Bob, but admired him from a distance. He was in and out of an office in which I worked in downtown Houston in the early 80s. My brother-in-law Mark fished with him offshore Louisiana. I once had a short phone chat with him, and told him I had visited Golden Meadow Louisiana a couple of times, and asked him if he had cameras on the wells so he could watch the action on his laptop when stuck in the office. He did. 

“You don’t get big rewards without big risks.” He demonstrated it was possible to reach hydrocarbon-bearing sands at ultra-deep depths below 30,000 feet. He revised industry’s understanding of GOM geology below the salt weld. He instigated the design and manufacture of super-charged high pressure high temperature equipment. Jim Bob’s relentless drive blasted open one of the most prolific hydrocarbon-rich basins in the world, and the entire time he gave equal credit to his team and his partners. 

Thinking about Jim Bob put me in mind of legendary Texas wildcatter Michel T. Halbouty’s assertion that geoscientists did more to advance humanities’ welfare than any other group on the planet, the implication being geoscientists are the reason we have cars and planes and medical centers. And even if you have the misguided notion that fossil fuels are evil, you have to admit there’s truth in Halbouty’s words. Two years before he died at age 95, Halbouty told a crowd of geologists and geophysicists that to be a successful oil-finder requires creativity and originality, and if you do your science correctly and the data are convincing, you must stick to your convictions. He was saddened that practitioners with fresh innovative ideas kept silent out of fear of being squashed by mediocre exploration managers. Halbouty told his audience he once drilled 36 dry holes in a row, and totally lost his shirt twice, however devastating, he found ways to come back, and he never ever abandoned his convictions. Ole-man Halbouty fancied himself the last of the wildcatters, typically defined as those who take financial risks in unexplored or unproven areas. Jim Bob’s unfurling into high temperature, high pressure highly prospective Shelf ultra-deep marks a wildcatter. In fact Jim Bob’s obit quoted his buddy billionaire T. Boone Pickens, "Moffett's oilfield exploits rank him in the top five of any list of U.S. wildcatters." 

Advancing humanity’s welfare however didn’t keep people from hating him. Environmentalists pilloried Jim Bob and Freeport McMoran’s mining operations in the mountains of Indonesia. The environmental impact of the Grasberg mine, Jim Bob countered, was the equivalent of his pissing in the sea. Human rights activists gorged themselves on drivel that alleged the corporation was in cahoots with the Indonesian governments’ use of military force to protect the mine from activists, which Freeport McMoran denied. Global corporations that partner with foreign governments typically face scrutiny of this type. Freeport McMoran’s sustainability pledge to stockholders required responsible management of environmental, social and governance performance. The company invested billions into Indonesian infrastructure including clinics and hospitals.

Jim Bob Moffett 2004. Photo by Nick Didlick
for Bloomberg

Some University of Texas professors caused a stink over one of Jim Bob’s gifts to the school. They didn’t want that man’s name on a building. Too bad. The professors moved on, and the school honored Jim Bob. All the foolishness wasn’t going to stop him from making philanthropic gifts to UT. His children graduated from the University of Texas. After Jim Bob passed away on January 8, 2021 (82), the Texas State Capitol lowered its flag at half-staff. 

In a 1995 interview, New Orleans journalist Gus Weill asked Jim Bob how it made him feel in 1988 when Freeport McMoran discovered the world’s largest gold mine, and the world’s third largest copper mine. Satisfied! The discovery proved some Louisiana guys had the technical know-how to pinpoint deposits on a 9 million acre asset, “real needle in a haystack technology,” in a remote mountainous god-forsaken part of Indonesia, without roads, electricity and running water. The Grasberg mine discovery validated the Freeport McMoran merger, combining oil and gas exploration with mining, and acquiring great assets for each, and it “paid off for all the guys who gambled with him” and backed his entrepreneurial schemes. To get “that kind of pay day” for all the people involved was an astonishing feeling. He likened the find to making an initial discovery of oil and gas in the Gulf of Mexico, getting in on the ground floor of a frontier, something huge, with development potential for hundreds of years. 

Jim Bob spoke about his work ethic. His mother was key. To do anything less than excel at academics, excel at sports, “do the best he could,” work his butt off, would have dishonored the woman who sacrificed for her children. Jim Bob measured all of his business negotiations and dealings against his mother’s sense of fairness to others and her instructions to “always stay clean.” His upbringing and his mother’s moral principles surfaced “at the darnd’st of times,” and impacted his decisions. 

Advice to young people? Use your instinct to identify the thing you do better than anyone else. Doesn’t matter if it’s cooking, or finding oil and gas or discovering minerals, gold and copper, like he did, develop and improve that talent, get better at it than anyone else, which means outworking everyone else. Never stop preparing, never deviate, especially in the face of criticism, because you can trust your instinct to know “God given talent.” It might take a while, won’t happen overnight, but you will be recognized. An opportunity will present itself and if you prepared, you will take advantage of it and succeed. Luck is preparation meeting opportunity. If you find your niche, and prepare, “you’re gonna get lucky.” Coach Royal, Jim Bob’s football coach at UT told him “the harder you work, the luckier you get.” Jim Bob knew so many “dad gum people” who had an opportunity, but weren’t prepared “to do a damned thing about it,” then whined they were unlucky. “They weren’t unlucky, they weren’t prepared.” 

Did Jim Bob believe in the American dream? You can bet your beer money. Probably the greatest compliment you could pay him, he said in the Weill interview, was that he exemplified the American dream. In America, a person has a chance to succeed regardless of humble beginnings. During frequent international travel he saw governments that want to prop up, but not allow real success, mediocre states that “can’t support an economy or a social fabric.” But in America, even with concerns and problems to fix, people still believe they have a chance to succeed. “And in most countries I go to, they don’t. So if I can give people the feeling that’s something that’s still possible, then I’ve really paid my debt to America by proving to other people that if they’ll keep their dream, that they can achieve it.”


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