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November 2, 2009

The Natural Gas Glut and the Doctrine According to Hefner

By Kennedy Maize

Robert A. (Bobby) Hefner III, the doyen of deep gas in the 1980s, is back on the energy policy scene in a big way. That’s the only way Hefner has ever wanted to be seen: On a big canvas. He’s touting the rebound of natural gas as a dominant fuel, after several years of industry hand-wringing that the nation and the world were running out of gas.

Back in the 1970s and 1980s, Hefner’s GHK company was the prophet of natural gas finds down, way down, below where anyone else had ever expected to drill. He raised a lot of money, had some success (at high drilling costs), and landed in a lot of money and a lot of litigation. Most conventional oil and gas drillers viewed Hefner as a kook and a gadfly.

Hefner was a kook who may have known what he was talking about, it appears. These days, according to The Economist magazine, Hefner said he “feels vindicated.” That’s because the U.S. now has plenty of natural gas, much of it way down below 15,000 feet. “I used to say we were awash in gas,” Hefner told the magazine. “Now I say we are drowning in it.” That’s not a bad way to drown.

The ebullient Hefner, 74, an Oklahoman with a long tradition of gambling on gas, is now a bastion of the eastern energy establishment. He is associated with the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government. He wears bow ties and tuxedo jackets with his Levis and cowboy boots, and underwrites Asian cultural projects with his Singaporan wife Meili (see photo).


Robert and Meili Hefner. Courtesy: Hefner Fund

Hidden Gas Getting Easier to Retrieve

In the 1960s, petroleum geologist Hefner, scion of a petroleum family, proposed deep drilling for natural gas, arguing that the gas resources in the U.S. had barely been touched. In 1969, according to Oklahoma State University, Hefner’s “Number One Green well, drilled to a depth of 24,454 feet in Beckham County, blew in at the highest pressure ever recorded.” Still, most exploration and production companies viewed Hefner skeptically, because his deep wells were considerably more expensive than the easier, shallower wells.

Since then, drilling technology has evolved, so that seismic analysis can provide a clearer view of the subterranean landscape, and drilling technology can reach the most promising strata. There’s a lot a gas, say the experts, and it’s getting easier to develop. The cheap plays have played out, but the more expensive plays that Hefner has sought are getting cheaper to develop by the day.