John Mork's grin gives him away. It's a gambler's grin, the kind you see on certain gamblers who enjoy the play and aren't afraid of losing. Not the tight wolfish grin of the sharpie, or the sloppy, too friendly smile of the fish: this is a Doc Holliday grin of big white teeth under a brown mustache that tells you nothing about his hand except he's going to play it to the limit.
He probably ought to tone the grin down - especially when he's discussing efficiency, technology, profits and personnel. It's not the kind of grin to encourage the cautious investor. But then Mork is only 31 and in this wild business he is plenty young enough to bounce back from a bankruptcy or two. Or three.
As his father did. But John's wife Julie, 29, hopes and prays it doesn't turn out that way because John's father was a hard-core wildcatter out of California who was broke and rich so often he just...well, it scares her. She doesn't need those kinds of peaks and valleys, with everything they own hanging on the turn of a drill.
To be a real wildcatter you have to believe that every well could be the big one. You need the kind of faith that enabled the greatest long-shot artist of them all, C. W. ("Dad") Joiner, to get through 17 years of dry holes and hundreds of thousands of borrowed dollars before he finally hit the giant East Texas oil field in 1930. Julie Mork has seen the dark side of that, where the faith ends up being all you have and gets a little twisted in the process.
Right now, though, Julie's grin is almost as cocky and confident as her husband's. They rate as pretty successful so far their move from Los Angeles (pop. 2,816,000) to Glenville, W. Va. (pop. 2,200), about an hour northeast of Charleston, where the Little Kanawha River twists through the virtual cradle of this country's natural gas and oil industry.Their little business (grandly called Pacific States Gas and Oil Co. because, after all, the Morks did come from there) has climbed out of the red and is now worth $4 or $5 million in natural gas reserves and equipment. Footsoldier John Mork is right on the firing line in the only war we've got now (or at least the moral equivalent) - the Energy Crisis. Right where he wants to be. They're happy, for the time being at least. Of course it's entirely possible, due to a glut in the gas market, that he will sell none of the gas he found and be back in the red next year. Or out of business completely. We'll get to that.
Classic wildcatting involves an exquisite combination of luck, skill and intuition, (luck being the only real essential) that made the fortunes of men like H. L. Hunt and Edward Doheny. Usually the big money, though, was not made by the wildcatter but by the man who bought him out...like John D. Rockefeller. The wildcatter was (and is) too compulsive a gambler to sit still for the mundanities of production. What he likes to do best is travel way out into the middle of nowhere, where no one has even dreamed of drilling before, and sink a well.
Strangely enough, in this era of big business and big government, the wildcatter is still essential in finding more reserves. He can drill more cheaply than the majors, for one thing. For another, he's not afraid to take a gamble. In fact, he loves it. From 1969 to 1973 small wildcatters drilled 89.2 percent of this country's exploratory wells and discovered 53.8 percent of all new reserves, excluding the huge pool on the North Slope of Alaska, which was found by a major, Atlantic-Richfield.
We might be able to send men to the moon, but we still haven't discovered a foolproof way of telling how much oil and gas is left to us in this country, or exactly where it is. As Tom Bethell pointed out in Harper's Magazine, most of the scare figures on dwindling gas reserves are based on wells that have already been drilled. Great numbers of potential fields have never been drilled at all.
Independent wildcatters are the people who are going to be finding most of these undrilled fields. "Young, bright, enterprising gamblers like Mork are the cutting edge of this country's petroleum production," says Elmer Telpleton, former head of the petroleum department at Marietta College in Pennsylvania, who knows Mork's work. "If I were James Schlesinger, I would want to create an environment that encourages Morks." Under a depreciation allowance (that has been discontinued for the majors) 22 percent of Mork's production is tax-free. But the rat's nest of regulations, which now forces producers to spend thousands of dollars in man hours and Xerox paper filing forms in Washington to fix the price of their gas, consumes a higher percentage of his profits than a major's. Since he can't afford to truck his gas as they sometimes do, his access to the market is limited to whatever pipeline is closest.
Still, the real definition of a wildcatter is a man who drills because he wants to...if it makes him rich, so much the better. Wildcatters are augmenting the majors' exploration in remote, exotic areas like the North Slope, the Baltimore Canyon, offshore California and the Gulf of Mexico, but they're also looking in drilled-over areas such as the Appalachian basin of West Virginia, where one might think everything had been discovered years ago.
It hasn't been. For 120 years, since Col. Edwin L. Drake drilled American's first oil well in Titusville, Pa., to open up the basin producers have really just been skimming off the surface. On the basis of these shallow wells West Virginia was estimated to have 2.4 trillion cubic feet in gas reserves, enough to supply the Washington metropolitan area for about 24 years and ranking the state 12th of 26 producing states. John Mork's father was going to help increase that.
In the mid-1960s, while John Mork was getting a degree in petroleum engineering from the University of Southern California, his father was following a hunch into Glenville. It was the end of a heartbreaking string of gushers and dry holes that started around Encino, Calif., and led through oil country in Texas, Oklahoma, Colorado and Kentucky. The hunch was that deep down under the already explored fields around Glenville was another level of gas-producing sand. The old wildcatter's instinct. When he first got to Glenville, though, John's father didn't have the capital to drill his way out of a paper bag.
For every wildcatter there are usually several people with enough money to appreciate the tax write-offs and who get enough enjoyment from the high stakes and romance to invest. Banks might frown on it, but doctors love it; dentists too. They always seem to have money. Even in tiny Glenville there are stories about the same well being sold to the same investors five times over, wells being salted with water and a skim of oil on top - the Great Fossil Petroleum scam. A West German came to Glenville with millions of dollars of West German investments, charged his company four times the actual cost of drilling and disappeared with whatever was left. Money has always been fast and loose in the oil business, both coming in and going out.
Here's how Ferrell Prior of Parkersburg, who has probably promoted more well deals in northern West Virginia than anyone else, describes the way it worked for him:
"Go to your family doctor. Tell him you're drilling in this area you'd like him to see. Explain the figures to him. Offer him a 16th of the deal at $10,000. He'll have friends who want in. You raise $120,000. The well will cost you $90,000 to drill, so you're $30,000 up right there. Plus you've got a quarter of the proceeds after payout. Say the well makes 100,000 cubic feet a day. At $2 a thousand, that $6,000 a month. And there's the tax write-off and the depreciation allowance."
In his heyday Prior would haul investors up to wells in rough terrain in a Cadillac dragged by a D-8 bulldozer. He'd dress up in a white suit and let a little oil (from the well, if there was any) splash around on it. He'd look like Jett Rink after the gusher in "Giant." "I'll guarantee you," he says, "If that first well came in, they'd be good for 10 more."
Anyway, John Mork's father raised enough money in Glenville to drill a few shallow wells down to the Big Injun sand at 2,000 feet, which even after all these years is still so dependable that your chance of drilling a completely dry hole is only three percent. By 1972 he had enough capital to begin the big deep wildcat he had been dreaming about. Then he had what his son calls "a little heart attack." And his wife got cancer.
At that time John Mork himself was starting out as a drilling supervisor for Union Oil in Alaska. He took a leave to help his father complete the deep wildcat and met Julie on a blind date while passing through Los Angeles. She had studied American history at UCLA and hated her job at a savings and loan association. When John got to Glenville, he and Julie talked long distance about the wildcat. It was a whole new way of thinking for her.
But it was also a disaster: $5,000 in profit, $285,000 in construction costs. The costs were boosted by faulty pipe (about which they later won a lawsuit) and they had to stop at 7,400 feet, 600 feet short of their goal. The radioactive scanner they had lowered down the well showed some interesting "horizons," but at the low price gas was fetching in those days, they decided it wasn't commercially viable to explore them. Their stockpile of cash was drained. Their stockpile of faith was also a bit depleted.
John faced a tough choice. He needed the kind of experience he had been getting in Alaska. On the other hand, Pacific States Gas and Oil, with his mother sick, his father discouraged and the company's capital looted by the bad wildcat, looked very shaky. He decided to stay and help. One of the first things he did was hire Julie.
The main reason it took someone like Mork's father to try the deep wildcat was that gas prices then were so low you had to strike a big field for any kind of payout. The odds against a big strike were prohibitive to all but the most hard-core wildcatters.
The low prices resulted from two things. One was government regulation, which began in 1954 seemingly under the theory that low-cost energy is an inalienable American right: the right to hop into your prairie schooner and head for the wide-open spaces. Freedom of movement. The other is that small-time independents who drill most of the gas in West Virginia are pretty much tied to three pipeline companies for a market and, with little bargaining power, had signed long-term leases with no escalation clauses.
Not that the independents in Glenville are wimps and lily-livers. Far from it. Taken as a group, they're recognizable right off as a basic type: heavy but not flabby steak lovers who seem to burn off twice the normal amount of calories a day in the pure nervous energy of acquisition. They all meet at 6 for breakfast in the coffeeshop of the old Conrad Hotel to talk about new operations and play a numbers game for cups of coffee. If a gas company man or an official of the Federal Energy Reserve Commission happened to walk in there by mistake, one gets the feeling his life wouldn't be worth a plugged nickel.
A few years ago these independents joined forces with about 300 others throughout the state in all-out war against what they considered to be unfair pricing by the gas companies. Their complaint, filed with the energy people in Washington, cost them $250,000 to follow through on and dragged out for two years, but they won. It was a unique victory. Prices for their gas doubled and tripled. As of 1976, most of them are doing well enough just drilling what they know is there.
Take Ike Morris. When he arrived in Glenville 17 years ago with a rusty service rig from Illinois (used for maintaining already operating wells) he was so broke he had to borrow money and clothes from the people who worked for him. Now 42, Glenville colleagues say he's worth several million dollars. Morris is not a wildcatter at all. He made his money getting more out of old wells, old gas fields and old equipment than anybody else. It can still be done there, even after 120 years of production.
John Mork wanted to break new ground, in effect to vindicate his father, but the first few years after he arrived were lean ones. John, his girl friend Julie, his father and mother and one well-tender were all there was to Pacific States Gas and Oil. "We were just making enough from the wells my father drilled in the '60s to break even," he remembers. "We did almost no new drilling. I didn't draw a salary for four years."
There was something about it, though, that began to suck Julie in almost in spite of herself. She still can't quite believe it happened. "I gave it about a 25 percent chance when I first came out to try it," she says. "I mean this is as far from L.A. as you can get." She was the company's bookkeeper, title researcher, assistant well-tender and secretary, and somehow with all that involvement she began to believe...a little bit...in the deep wildcat. Yes. John would show her the radiation scan (the "log," it's called) from the '72 drilling, and she could see the squiggly faint "horizons" for herself. It was a heady feeling, believing in it together, and she started to see how it might be carried through.
John and Julie were married in 1974, a year after she came to Glenville. In 1975 John's father took his mother back to California for treatment at Stanford University Hospital, where she later died. His father went into semi-retirement. John and Julie were then almost completely in charge of Pacific States, and they were right in the middle of the West Virginia independents' drive against low gas company prices.
The effort against the gas companies paid off. Suddenly they could afford to drill. The feeling, Julie remembers, was like being on a roller coaster just beginning to roll down the first dip.
They drilled three shallow wells, mainly with their own capital. Two were very, very good.
The chairman of the board of Pacific States, an old friend of John's father and a former vice-president of Continental Oil, arranged backing for a second package of wells.
One of them, called the S. C. Simmons No. 1 (after the landowner), was a deep wildcat.
"The horizon at about 4,500 feet on the '72 log looked like it might be Benson sand...which had been drilled in other areas but never around here," John says now with a certain insouciance. "Our geologist said we were crazy. So did everybody else." Naturally he went ahead and drilled anyway in spite of the cost, which was about double that of a routine 2,000-foot well.
There was a very uncomfortable sense of deja vu when the pipe broke at 4,500 feet and blocked the well. The drilling contractor tried to fish the broken pipe out, but only lost more equipment into the hole. He sent down a second recovery tool: no dice. He packed up what was left of his rig and split, saying the well was beyond saving. Mork didn't think so, though by then he had poured $100,000 into it. There was more than money at stake.
He hired expensive consultants from Louisiana and another contractor and started the tricky business of drilling a second shaft, at a slight angle to the first. He still had no idea what was there, but above ground it was the worst winter in 20 years. His holding pit for well waste broke, causing a minor environmental disaster. When it came time to "fracture" the well (by forcing sand in under high pressure to carve channels in the rock and free up the gas), one of the pressure pumps gave out.
It was too late in the process to begin again, so in effect they had to leave it half done. In the middle of it all, John's mother died in California. "I was just physically sick to my stomach," he says. "I remember sitting on a truck bumper watching the blowoff from the well just trickling out, when if it had been done properly it would have been roaring out about 25 feet in the air. I really thought we'd had it, that there was nothing there, that we'd lost the whole thing. I went down to fix the pit and when I got back up, it looked like the well was flowing a little harder. By that time I was so down I thought I was projecting the whole thing in my mind because I wanted it to happen so badly. I just couldn't believe it.
"It really was happening, though. About half an hour later she was just screaming."
A core sample of what he found down there now sits in the place of honor on his desk, encased in clear plastic and labelled "BENSON SAND."
The S. C. Simmons well went into an estimated 25 billion cubic feet in reserves (one of the larger new fields) and started something of a gas rush into Glenville. Everybody's drilling Benson now. "It was," Mork pauses, looks for the right way to put it, "I don't know. I guess you could call it an all-American success story. I guess you could say my father was pretty happy."
The Morks' operation now resembles something out of a Harvard Business School textbook. He's got three computers (three more than anyone else in Glenville) to analyze well logs and conduct business. There is a computer man to run them. Cathy and Frank McCullough, old friends from Los Angeles with MBAs, have bought in, moved out, and are applying what they learned in corporate financial analysis to oil and gas. There's even a company lawyer.
Out of 60 more wells he has drilled into the Benson, John estimates about a third are exceptional...can be counted on to produce about a half-billion cubic feet of gas over a 30-year period. A year and a half ago they drilled even deeper, a wildcat down to the Oriskany Sand at 6,500 feet, and that came in too.
"When we got here technology and business methods were 20 years behind the time," John said to explain his success. "We brought it up to date." Baloney. He knows, and Julie knows, that what really did it for them was his willingness to gamble on the long shot. "This is the greatest line of work to be in in the world," he said later in an unguarded moment. "Where else could you see a bunch of idiot kids come and make a fortune in a few years?"
The Morks haven't drilled a single well this year, in spite of all their new capital. It's going to be hard for them even to sell the gas they have found. These days, thanks in part to the 1978 National Gas Policy Act, which is raising the price ceiling drastically, especially for smaller producers, there's too much gas around. Never mind the crunch at the nation's filling stations, this part of the energy market is so glutted that energy chief James Schlesinger has estimated if the excess was burned in the country's power plants and factories it would cut our need for imported oil by 8 percent.
A few years ago, gas conservation was the word. There was a shortage. Power companies were asked to switch from gas to oil or coal. Now Schlesinger wants them to switch back. It's one of those weird inconsistencies that seem to crop up all the time as energy travels its tortured route from source to customer, like those huge tanks of stored gasoline you keep hearing about.
It's ironic, too, that John, who has discovered more reserves than most other small wildcatters, is caught more tightly by the glut than most. All his mineral rights were leased from the Equitable Gas Company of Pittsburgh. Unlike producers who deal with a variety of companies, he can only sell to them.
Recently Equitable informed John and about 260 other small West Virginia producers it was getting all the gas it needed from big companies in Texas and Louisiana and would take none at the new high ceiling allowed for small companies, at least not until next winter. Selling below that ceiling would not actually ruin Mork, but he and the rest of the West Virginians tend to see it as the thin end of a wedge driven between them and the prices they ought to be getting.
Equitable's letter to the producers warned that if they continued to send gas after July 9 it would be construed as a waiver of any claims to the new price ceiling, which could be triple what they're now getting.
When queried, Equitable people say they are doing the producers a favor offering to take any gas at all, because they're not obligated to under the contracts. "No, the contracts do not permit the gas to be sold elsewhere," said a spokesman. "It's safe to say that we're going to need it sometime. We're sorry if it causes hardship, but they do have the option to sell at the lower price, and anyway, the situation only applies through October."
Mork and most of the others say they're going to keep sending and claim the price anyway. If Equitable shuts them in (seals off their wells), they will "take appropriate action." In the confrontation that might easily follow, Mork stands to lose more than anybody else because he's entirely dependent. But he's making a point now of reassuring his staff: "We going to fight this. We're going to squirm around one way or another, and I think we'll get through. Your job is safe, whatever happens. We won't cut back, even if Equitable forces us out of West Virginia."
Julie could see the writing on the wall. Right now John is doing exactly what his father would have done. Almost, anyway. He's not risking everything on another wildcat, but pretty close to it.
The new area he's leasing isn't in the Appalachian Basin at all. It's in the oil country in Montana, stretching tiny Pacific States Gas and Oil thinly over thousands of miles. The 8,000-acre lease cost all his earnings for last year. Only one other well has ever been drilled in the area and its performance has been mediocre. The rest is virgin ground.
"I don't think it's an unreasonable gamble," John says. "It's the difference between shooting crap and playing roulette."
Based on logs, geological survey,s advice from the chairman of the board in Denver and a hunch, John figures the odds are 75 percent he'll break even in Montana, 50 percent he'll make a profit, 10 percent he'll make a windfall. Obviously it's that 10 percent chance that makes it all worthwhile.
What if the worst happens? What if the area is a total loss?
"The worst never happens," John grins.
And what happens if the big one's really out there, somewhere on those 8,000 acres?
If the long shot comes through, the Morks say they'll buy an island near Hawaii and retire. Professor Templeton thinks otherwise. "Every state has its Morks," he says. "H. L. Hunt was really a Mork. I think if you see John Mork in 10 years he'll be in the West and he'll have found one heck of a lot of oil. But wherever he is, we're goddamn lucky to have him. Why, you know, it's pretty trite, but I'll say it anyway. He's the kind of man that made this country great. You say: Solve the energy crisis? Without people like him around we don't have a chance. He goes out of business, it's like killing the proverbial goose." CAPTION: The cover photograph is by Bill Snead.; Illustration, The illustration shows the location of known gas and oil fields in West Virginia. The light blue areas represent natural gas deposits and the darker blue areas show oil reserves. By Allen Carroll; Picture 1, A typical gas drilling rig in West Virginia is dragged to the site by bulldozer and assembled, then disassembled to be moved to another location after the well is drilled.; Picture 2, John and Julie Mork have drilled more than 70 wells in West Virginia. After the drilling is completed, most, like the one above, are represented by little more than some pipe sticking out of the ground and a storage tank. About a third of their wells have not been commercially viable. Photographs by Bill Snead; Picture 3, Waco Oil and Gas was started about 17 years ago by Ike Morris, who came to town with little more than a service rig.