Innovative thinkers

Vol. 233  No. 5

Harold Hamm
The Bakken shale black gold wildcatter

If it only takes one man to start a revolution, then that man is Harold Hamm and his revolution is the Bakken shale play. Although Hamm, Chairman and CEO of Continental Resources, began his career as a one-man-pump-truck operation, his foresight in developing the largest oil find in America in the last 40 years has created a new hope for U.S. energy security and proven that there is no limit to thinking big.

Hamm started out by learning the oil business—literally—from the ground up. He began working as a roughneck in Oklahoma’s oil fields at the age of 17, hauling water and sludge out of oil tanks. After working for Champlin Oil out of high school—for a monthly paycheck of $500—Hamm founded Continental Resources, originally named Shelly Dean Oil Company, in 1967 at the age of 21.

Initially, it was a simple business venture—Hamm, one pump truck and a lot of hours out in the field, but he saw it as a starting point to dream big. “I always wanted to find oil,” Hamm told the Wall Street Journal. “It was always an irresistible calling.” As his client base grew, Hamm added more employees and equipment.  He drilled his first well in 1970 and began taking courses on geology and chemistry at a local college.

A decade later, the company drilled 16 horizontal wells and started to create a buzz. The complexity and depth of horizontal wells cost six times as much as traditional vertical wells. Additionally, operators were shifting to gas-directed drilling; Hamm, however, kept to his oil strategy. “In America, people lost the will to drill for oil. But I’m a little more hardheaded than other people,” he told Businessweek.

In an effort to look for new oil resources, Hamm decided to pursue “higher-risk, higher-potential plays” and began researching the geology and well logs of Wyoming and North Dakota fields. The results were very promising, and Hamm began leasing acreage in southwestern North Dakota, amassing 300,000 acres by the mid-1990s.

While Hamm had a gut feeling that the Bakken area held an oil oasis beneath it, the complex formations and dense rock posed a challenge in extracting it. In the early 2000s, he went full-force on deploying the fracturing technologies his team had been developing. In 2004, Hamm had his first glimpse at the oil oasis that he dreamed of for so long, when the company’s Robert Heuer 1-17R well in Divide County became the first commercially successful well in the North Dakota Bakken to be both horizontally drilled and fracture-stimulated.

The Heuer well, which flowed 120 bopd, was the beginning of the biggest U.S. oil discovery since Alaska’s Prudhoe Bay in 1968. Currently estimated to hold 24 billion bbl of oil, the Bakken shale play stretches from North Dakota and Montana into the southern regions of Saskatchewan and Manitoba. If the estimates are correct, the discovery could double U.S. proven oil reserves.

As if overnight, Hamm had launched the Bakken revolution, and the world took notice. Whereas Hamm paid $15-50/acre for his initial leases in 1995, the few leases available today go for $1,500-5,000/acre. Officials estimate that more than 30,000 additional workers could descend on the Bakken oil fields over the next several years.

Continental Resources’ revenue has tripled since 2009 to an estimated $1.76 billion in 2011, and the company has 900,000 acres under lease in the region. Hamm’s family holds a 78% controlling interest in the company. In April 2012, Hamm, who also acts as an advisor to presidential candidate Mitt Romney, was named one of TIME magazine’s “100 Most Influential People in the World,” an honor he takes to heart. “As we work to significantly increase our nation’s energy supply, this distinction adds to the momentum of our mission to help make America energy-independent within the next decade,” Hamm said.