00:00:00 Speaker 1
This episode of The Energy Pipeline is sponsored by Caterpillar Oil& Gas. Since the 1930s, Caterpillar has manufactured engines for drilling, production, well service, and gas compression. With more than 2100 dealer locations worldwide, Caterpillar offers customers a dedicated support team to assist with their premier power solutions.

00:00:26 Speaker 2
The Energy Pipeline is your lifeline to all things oil and gas, to drill down deep into the issues impacting our industry. From the frac site to the future of sustainability. Hear more about industry issues, tools, and resources to streamline and modernize the future of oil and gas. Welcome to The Energy Pipeline.

00:00:49 Speaker 1
Hey, everybody. Welcome back to another episode of The Energy Pipeline. Today, I'm here with John Ely, an industry pioneer in the world of fracking. John, we're so excited to have you here with us today.

00:01:03 John Ely
Well, thank you. Glad to be here.

00:01:05 Speaker 1
John, we have done a couple episodes discussing fracking, the last one being what is fracking and getting the education on how it physically works. But today, we're more interested in the history. So, could you share a little bit of your insights on the early days of fracking and what it was like and what you remember from the beginning?

00:01:28 John Ely
Okay. I obviously wasn't here at the actual beginning because I was about four years old when that started. Very interesting for me from a standpoint. I have some awards in engineering, but I'm actually a chemist, and I developed fracturing fluids working for Halliburton. So I was involved very deeply in fracturing and when actually some of the larger treatments started going forward. Initial motivations about its development was need ways to increase productivity reservoirs. In fact, reality, most of the fracturing treatments that were conducted well into the'60s were just damage removable treatments where we damaged in drilling and we were dealing with higher inaudible reservoirs. As you know today, it's a totally different game and we need the huge amount of surface area and much larger treatments. But the initial development was what can we do to enhance the production and get rid of the damage inaudible.

00:02:41 Speaker 1
And so I guess when did your career start in it? You said about 20 something years after fracking began is when you actually got into it because I guess you had to grow up and go to college and get your education first.

00:02:58 John Ely
Yes, ma'am. Yes, ma'am, I sure did. I was very fortunate in that I worked in fracturing research for Halliburton and was the inventor of the first high temperature fracturing fluid and much larger treatments in the stimulation of deep high temperature reservoirs in South Texas and other areas of the country. Far as challenges and breakthrough moments is when we actually started doing some of the much larger treatments. This was late'60s. We were treating. The industry was confused. A lot was confused, but this ultra conservative from the standpoint of completions and we're using tubing completions resulted in very high pressures, but we had some specialized equipment that was developed called intensify our pumps and treated many wells well over 15, 000 PSI. But were able to simulate wells and move forward in understanding, not only understanding, but developing technology that allowed us to make fracturing work and work well.

00:04:16 Speaker 1
That's cool. And it's cool that you were a part of the innovation. You said with the high temperature fluid. What was it like before you came up with that versus after? What changed?

00:04:27 John Ely
Well, what was actually being done in some of the deeper high temperature wells was basically something close to slick water treatments that they're done today that were basically adjusted aides and pump below concentration of sands at high pressures. What we did was develop a temperature stable, viscous fluid that would allow us to stimulate much better the reservoirs, and we published some good papers about the stimulation that occurred. These were not the ultra tight reservoirs, but they could be very economically stimulated. Utilizing fluid was called hi fracking and it was a primary secondary fluid that was used for seven or eight years before we got into some of the cross- link fluids and little lower price operations.

00:05:29 Speaker 1
That's cool because it's like you were on such a granular level of improving the process and sometimes we look at it as such a macro type of operation, but it's very cool to think that even down to the fluids that you guys were developing better ways to go about it, and I imagine to this day it's probably changed even more. Are you aware of, has there been more changes to the fluids and what's different up until today?

00:05:55 John Ely
Yeah, dramatic changes in the poor. Basically, we went through a stage I mentioned earlier, the intensifier high pressure pumps, and then the industry had a moment of understanding and realized we could go down, safely down casing, and we were able to treat a little lower pressure oil still high, but it made, we ended up getting rid of the very high pressure pumps and have the conventional pumps and we got today some of things that evolved when I first started at fracturing, we were all standing outside. We didn't have the control vans and computer. A lot of the signals, some of them were actually hand signals control jobs and created some danger situations and you wore a hard hat, so if it hailed you protected your head and out in the weather and so forth. But that's moved forward. We had people standing on trucks and running equipment and of course that doesn't go on today. We sit down and one person per truck, we can run 25 trucks with one person with a mouse. So we're moving along as far as technology and development. What's happened over the years is we've seen better high pressure pumping equipment going from 750 horsepower to 2000. And now with some the newer equipment, we've got five or 6, 000 horsepower if not more available with the electric and the new pumps that are out in the industry today.

00:07:52 Speaker 1
Do you ever miss the days where it was kind of chaotic and it did take more people to do things and it was a little more uncertain and less high- tech and you're kind of just cowboying it? Do you ever miss that or are you appreciative of the technology more so?

00:08:07 John Ely
Oh, I think I miss it, and yet there's a lot of safety considerations that to account when you're out in the open air, you're kind of open to serious problems and moving around. We've moved forward in safety and ecological environmental standpoint in fracturing. I think it's been a great improvement in our industry.

00:08:35 Speaker 1
Yeah, absolutely. Safety and environment are huge, huge topics today. I guess you mentioned earlier about when it was first coming out with fracturing in your early days in your career that there was a very conservative approach around doing it. Do you remember the public perception of how people felt about fracking then and have you noticed it change over the years or any significant points where it was either really well- liked or disliked?

00:09:02 John Ely
Well, it is interesting, and I would like to think until we got into the two thousands for sure, not before that we were kind of below the headlights. We were conducting very large treatments and moving forward in technology, but nobody knew anything about us. They didn't know what we're doing and so forth. Of course, all we're doing was supplying oil and gas and when we came out with that dumb movie Gasland and then the experts in the industry, Matt Damon and Yoko, who don't even want to spell fracturing, badmouth this and put us down. In reality though, some of the criticism has been somewhat well taken and that we do take more into consideration, care for the environment and take care of our people. I think the vast majority of people took care of their equipment, took care of the people, and didn't pollute and do the things that we were accused of in the industry. There was five or 600 chemicals that were polluting the environment, and of course we never used more than eight or 10, and most of them are things that are used in ice cream and other things, anyway.

00:10:30 Speaker 1
Oh man. Well, I guess we can't say for sure whether or not ice cream's good for you, but if we can eat it must not be too bad. Oh my goodness. Well, that's so cool that you've lived through so much of the change, and it's interesting to think that, like you said, up until the two thousands that you guys kind of flew under the radar and you were just doing your thing, making advancements, and now in the 2020s there's no such thing as anyone flying under the radar anymore. Everything is blown up and everyone knows everything because of social media at your company. Has that affected things at all, just kind of having to have more of a public presence and take more attention to how the public perceives you?

00:11:15 John Ely
Well, I think that's very important. Education and education of people travel worldwide and certainly more so domestically and met up with a lot of people who simply didn't sound to my idea of what we're doing and why we're doing it, and we weren't really polluting the aquifers and we weren't blowing up and causing all of the earthquakes to deal that water injection and so forth and fracturing. But yes, it's important that we explain to people what we're doing, doing how we're doing it and to do it safely and properly.

00:11:58 Speaker 1
Yeah, absolutely. So more back on the fracking itself. I had a question here wondering if you could provide some specific examples of projects or regions where fracking is very crucial in unlocking the substantial oil and gas reserves, so I guess where it plays really well.

00:12:21 John Ely
Well, the obvious advantage today, and this started 15, 20 years ago, was the stimulation that George Mitchell got involved with the Barnett and which is stimulation of very low permeability nanodarcy type rock that we call shale. This is something that changed our whole business and evolved into probably 70 80% of the work that goes in our industry are these large thick water fracks with very large volumes of prop and fluid. Basically, we've gone mostly horizontal to give more surface area, which is what fracturing is about. It's opening up rock to create massive amounts of surface area, and we'd be able to do that with relatively inexpensive profits where we've gotten away from some of the stronger profits cause of the lack of crushing that goes on in the very low permeability rock. But the areas that has occurred, you could say the Marnet and North central Texas, you can say the Oklahoma and the Woodford Scoop Sackville, the area in Wyoming and so forth. With the Bachan, you can go into the Wolf Camp area in west Texas, the Eagleford and South Texas, you can go on and on and there's, there's shell plays and low permeability reservoirs. It's greatly benefited and would not be viable at all without the hydraulic cracking techniques that we have.

00:14:11 Speaker 1
That's crazy to think that if we didn't figure out how to do that, we would just have all this oil and gas just sitting there untouched or that, or it would take us a bunch of vertical wells to just pop around and get them all, which that would not be efficient. Ever since I've been in the industry, which has only been, gosh, seven or eight years ago when I had my first internship, obviously horizontal drilling was very popular then Unconventional Wells had already taken off. Do you remember when Unconventional Drilling came into the scene and how that affected fracking?

00:14:45 John Ely
Well, if we did, we define it, there's two ways people call it called hide sand. Some of stuff like Cotton Valley in east Texas, these are micro Darcy firm, and we had what we call massive hydraulic fracturing treatments, which you really don't match up some of the size that goes under today, but most of that was vertical completions, a lot of sand, a lot of fluids, lot of conventional gel systems used, and we moved from that into the nanodarcy. The six figure, low, low permeability rock, and by using large volumes of fluid and large amounts of province, we're able to stimulate and come up with some wells, which are just awesome. Three or 4, 000 barrels a day that can pay out. We couldn't do that. We couldn't even approach that with the typical stimulation treatments we were using back even in the late nineties. We tried for years and years to assimilate the Wolf camp in west Texas and Terry was not much fun. We couldn't understand, but we do now. We do understand that hydraulic fracturing properly applied, gives us the ability to draw oil and gas from extremely tight, low permeability hard rock wells.

00:16:15 Speaker 1
That's really cool. I love the technology behind it and it sounds so cool in theory, but then when you go out to an actual frack site or a drilling rig or you're seeing this stuff happen, you realize how intense it actually is because in conversation or on paper, you're like, yeah, we're poking holes in the ground, getting fluid coming out. That sounds so fun and cute, and then you go there and you're like, this is really intense. This is actually crazy, and I think it's really fun that you got to actually experience this and see from when it was a bit more chaotic to now where we're just so precise in the way we do things and I think it's going to be really cool over the next few years to see how it evolves even more. I guess the question I would have would be what lessons have you learned from your past experiences through all the hydraulic fracturing that you've kind of had to learn the hard way or just interesting lessons you've learned throughout these times?

00:17:13 John Ely
Well, for myself personally, I was lucky enough to be involved with some early gas research work that's done. Lot of initially was in East Texas and we were all over the country and we used a lot of diagnostics and technology to understand, for instance, there's not any confined, not any perishable member of confined hydraulic fractures that fractures grow up and down and they're very complex. They aren't that pretty picture that you see in magazines or a single fracture portraying even with conventional type completions. We've come and you said something earlier, most of my learning was hands- on. I learned about limited entry and understanding how the perforate wells from the early days with Shell Oil down in the McAllen Ranch and took that technology and used it in others like the PIs basin and actually used it over in Europe and the Middle East. There's been so many changes in so much direction. The slick water thing was a vast change for our industry. Like today, not many service companies really understand or totally involved with convinced high viscosity fracturing fluids. It's difficult for us to get people who can do this, and there still is some application for permeable reservoirs that need to be fracked with high concentrations of high strength crop, but that's the low end. The more we're talking about now is basically water, very small sand, a inaudible 40, 70 cents and large volumes, and that large volumes is to create complexity and to create massive amounts of surface areas to produce to be able to produce oil and gas at high rates.

00:19:22 Speaker 1
That's awesome. It's crazy how much things can change over a certain period of time. The company that you run now, what is it that you guys do in relation to fracking and drilling and how are you using your chemist background in your company today?

00:19:39 John Ely
Okay, well, over the years basically when we started out, we just over oversaw these service companies like Halliburton and Schlumberger and BJ and the Western Company, and we'd go out and be hired by an operator to be assured that the jobs were done correctly. Now, at the time, we developed a better understanding of design and implementation. We actually have means to design and optimize the size of even stick water treatments or conventional treatments to get the aluminum amount of production or get us to where net present value isn't unrealistic because we ran a giant treatment in a high permeability well. But what our company does primarily is to oversee not only make sure everything's done right, but at the same time to make absolutely certain that we're using the very best technology, the very best techniques to optimize the treatment and to stimulate the reservoirs as best as possible.

00:20:56 Speaker 1
Sounds like a very big responsibility that you guys have. A topic that comes up constantly, not only in this podcast but in the industry as a whole is safety and environmental concerns in these operations. How are you guys addressing those in the way that you help your customers?

00:21:14 John Ely
Well, I just tell just a quick story about the early days of fracturing with slip water in Oklahoma, one company we worked for was carrying 60 to 8, 500 barrel frack tanks in Sacramento location, gathering up water, and of course they made, it was very difficult, it guess cold the winter even in Oklahoma and you're freezing and all the problems, and somebody got smart and went to the local farmers, even those that didn't have loyalty and said, what if we dug you a great big pond and gave it to you, and what if we drilled you wealth and filled it with water and then we will pump the water out, evidently refill it with a well, and of course the sales point for particularly the non royalty owners is they offered just talking with fish, but we learned how to do environmentally proper techniques that simplified the operation and optimize the kind of treatments. We're learning how to do this everywhere. It is difficult. There are areas where it's very difficult to get proper amount of water. We're using recycle water every possibility, and as far as from a chemist standpoint, you actually can utilize very high salinity water because of the various technology that's available from the standpoint of turbine suppression or friction reducers, my side, surfactants if necessary and so forth. But from an environmental standpoint, I think there's a general big time realization that we needed to leave a location cleaner than we got there. We need to make sure that there are no leaks. We make sure there's no gas escaping or other things that have happened sadly because of poor operation. Now there are lots of good people doing lots of good work, but there are also sometimes people who don't stay on top of the ness, and I think having people oversee you and be sure you're doing right is not a bad thing. We used to fuss when they'd come on locations and knew this service would be mad, what are you doing out here? And I said, I'm just out here to make sure the job is done. It was early days and I said, you don't want the job done right. Well, we know how, and I said, well, everybody does, but we've been hired to be sure it's done and if you have some technology and understand that's where we benefited the background in chemistry. I was able in my time to put together the product lines for three different service companies because of the knowledge and chemistry that there was there. It was very interesting and sometimes you could be a benefit to the service company because they didn't have somebody there locally that knew what was going on. Just cross thinkers and attitudes and breakers and so forth.

00:24:36 Speaker 1
Yeah, that sounds like you guys come in there and it's interesting where they can look at you and be like, oh man, why are they here? But then end up actually appreciating it because you're right, there's so much room for humans to do good, but then human error, man, we mess up a lot as people, so it's wonderful to have an extra layer of checks and balances there. Now that we're getting closer to the end, I have to ask the question, which is, you've seen so much of the fracking industry change. What do you think is coming next? How do you think it will continue to evolve? Do you have any guesses on the next technology or what you think maybe needs to evolve a little bit more?

00:25:17 John Ely
I think there is technology and understanding. God punishes us black people. He introduces something called heterogeneity and we sometimes drill a well and we really make a good well, and then we decide that type of technique needs to be done throughout the field and maybe it was a goodwill because it was a good part of the field and good part the reservoir, and that's some of the biggest mistakes I see happening. We could give an example of the Austin Chalk, which has been fracked about every way possible, but there was a time when there was probably 20 fry crews running 40 pound cross- linked gel with 300,000 pounds of sand, because that worked on the first, well, we know today that that was the wrong technique to be using, but we have to kind of learn as we go. But it's been a very interesting lifespan that I've had in working in the industry because we have through various techniques, learn technology and taken advantage of it.

00:26:30 Speaker 1
Yeah, I mean it's interesting. Like you said, it's kind of like trial and error, but on such a large scale that it's more than just doing a lab experiment like you are on land. You have these millions of dollars that you guys spend to do each well, so it's a lot of pressure to experiment like that. But now finally, I have to ask, what piece of advice would you give to somebody new coming into this industry and what are your final thoughts?

00:26:57 John Ely
Okay, well, we're not done. All right. Regardless of what politicians are saying or we're going to get rid of, all the hydrocarbons in the world is being disaster. It's very important that you truly understand what's going on. It's very important, and this is my big pet peeve in the world, is I hate to make the same mistakes over again. We have the same problem as some people who don't record their history and record what they've done. I have people come in, they've got something exciting, oh my God, especially illegal. We can run alcohol and frack our wells. I said, " Well, that's amazing." It's been tried about six times. It failed every time. Or we can use oil because it's compatible. Well, we need to think about that and need to understand what's going on and what we've learned. If we can get technically have a technical understanding of what's going on, it's extremely important. You can't just go out and be the meanest guy on the block and hit the hammer harder. In reality, we're now in where technological capabilities lie now. Slick water was a giant technological development, but it took some people understanding what's going on to make it work.

00:28:25 Speaker 1
John, it's been such an honor to talk with somebody today who knows so much and has lived through just so much change throughout this industry, and I really appreciate you coming on here and sharing your knowledge and experience with us. Thank you so much. And guys, thank you so much for listening to The Energy Pipeline. We will see you next week.

00:28:43 Speaker 2
Come back next week for another episode of The Energy Pipeline, a production of the Oil and Gas Global Network. To learn more, go to oggn. com.