Oral-History:Stephen Holditch

About Interviewee

Stephen Holditch, Professor Emeritus of Petroleum Engineering at Texas A&M University, held the Directorship of the Texas A&M Energy Institute, and was Head of the Harold Vance Department of Petroleum Engineering, where he supervised research in the areas of unconventional gas reservoirs, well completions, well logging and well stimulation, and hydraulic fracturing. Dr. Holditch is a recognized expert in tight gas reservoirs, coalbed methane, shale gas reservoirs, and the design of hydraulic fracture treatments. He has authored or co-authored three books and more than fifty technical papers.

About the Interview

Stephen Holditch: An interview conducted by Fritz Kerr for the Society of Petroleum Engineers, September 29, 2013.

Interview SPEOH000105 at the Society of Petroleum Engineers History Archive.

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Interview Video


Interview

INTERVIEWEE: Stephen Holditch
INTERVIEWER: Fritz Kerr
OTHERS PRESENT: Amy Esdorn, Mark Flick
DATE: September 29, 2013
PLACE: New Orleans, Louisiana


KERR:

How did you decide to work in the Petroleum Engineering industry and how did you get involved?

HOLDTICH:

Well, when I was in high school, I decided I wanted to be an engineer, and I actually started out my Freshman year at Texas A&M in electrical engineering, and that’s just because my older brother had been in electrical engineering. But one summer, I was out with my dad, and he was the exploration manager for a company called Lone Star Producing Company, and I was out on a well with him and talking to some of his friends and they said to me I should think about getting into the oil and gas business. So I decided after some thought that was the right thing to do, and I changed majors my sophomore year in college, and never looked back.

KERR:

What discipline within the industry did you work in and what drew you to that discipline?

HOLDITCH:

The discipline that I’ve worked in almost my entire career could be classified as production engineering, which is well completions and well stimulation. I had an advisor when I was in my Master’s degree who got me to start working on the reservoir simulation of hydraulic fracturing and that’s what my Master’s thesis was about, and I’ve been working in hydraulic fracturing and tight gas reservoirs for my entire career. The person who got me involved, actually, in that field was a man named Richard Morse, and Dick Morse was an SPE president in the 1960s, before he came back to the university as a professor. And he was my advisor for my Master’s degree and my PhD degree. And all of my work since I began working for Dr. Morse has really been on reservoir simulation of hydraulic fractures. Actually, it would be…the work I’ve done would be more of simulating hydraulically fractured reservoirs; wells that are drilled into unconventional tight gas reservoirs that are hydraulically fractured, and I’ve done simulations of both the fracture treatment, itself, and the reservoir. And I began that work as a graduate student, and here, over forty years later, I’m still working on it.

KERR:

Talk about your work in hydraulic fracturing and unconventional gas reservoirs.

HOLDITCH:

My work in unconventional gas reservoirs and hydraulic fracturing really needs to be discussed, in a way, separately. Unconventional gas reservoirs is a very broad term, and I have been discussing for many years what we call the “resource triangle,” which say all natural resources are distributed log-normally in nature. That applies to everything: gold, copper, silver, uranium, oil, or gas. And what it means is, the pure veins of gold, the really high quality oil and gas reservoirs are hard to find, they’re small deposits, but once you find them, they’re easy to extract and make money on. As you get to lower quality reservoirs or ore deposits, these reservoirs become huge and more difficult to extract.

And what we’re talking about here is tight gas sands, coal bed methane, and, currently, the shale gas and shale oil reservoirs that are so predominant in the business here in 2013. The interesting thing about these reservoirs is that the amount of oil and gas is orders of magnitude more in the unconventional reservoirs than the conventional reservoirs. But in order to extract the oil and gas from these rocks, it takes higher oil and gas prices, and better technology. And the combination of the two is what allows us to produce reservoirs like the Barnett Shale in North Texas, the Eagle Ford Shale in South Texas, the Marcellus formation in the East Coast, and the Niobrara Shales in Colorado. And the higher oil prices are helping, but technology has really advanced over the last twenty or thirty years.

So, that brings us to hydraulic fracturing. Hydraulic fracturing is one of the technologies that’s allowed us to produce oil and gas from these unconventional reservoirs. That, combined with the long horizontal drilling; those two technologies are the primary reasons for the resurgence in oil and gas production in the United States. We couldn’t drill these long, horizontal holes ten or twenty years ago the way we can now, and the hydraulic fracturing is just a way to open up the reservoir to these horizontal holes. So, we’ve had a big increase in…we’ve had a big improvement in technology that’s allowed us to go deeper into the resource triangle.

KERR:

Can you please elaborate the best you can about tight gas sands?

HOLDITCH:

My work in tight gas sands actually began in 1970, which turns out to be like forty-three years ago, I think. And the title of my Master’s thesis was “The Use of Hydraulic Fracturing to Develop Low Permeability Gas Reservoirs.” And this, again, was an idea of my advisor, Dr. Richard A. Morse. And in the 1960s, the US government had set off two nuclear bombs in tight gas sands in the western part of the US, trying to shatter the rocks to produce the gas. It turns out those experiments didn’t work for a variety of reasons, and my advisor, Dick Morse, said he thought long hydraulic fractures would get more gas out than these nuclear explosions. So, I actually built a reservoir simulator, or actually, used one of the reservoir simulators we had built at Texas A&M, and did some reservoir simulation, comparing long hydraulic fractures to nuclear cavities, and concluded that he was right.

These long fractures could be used to develop low permeability gas reservoirs, which was a new concept in 1970, and I wrote a paper on it and submitted it to the SPE, and the reviewers of the paper said, “That’s cute, but nobody can create long fractures like that,” and so they refused to publish my paper, and that’s always been something I’ve remembered about when we review papers in SPE: don’t count out ideas, just because you don’t think they might not happen. The tight gas sands and producing gas by hydraulic fracturing of these tight gas sand reservoirs was something that I worked on theoretically at Texas A&M. And then after I went to work for Shell Oil Company in 1970, after about a year they assigned me to be the production engineer for the McAllen Ranch field in South Texas. And I got to actually go out and design and supervise fracture treatments on probably a dozen wells where we pumped some of the largest fracture treatments that had ever been pumped on those South Texas wells.

The results of that was one of my first SPE publications, and it clearly showed that these long, hydraulic fractures where you pump a lot of sand in the well to prop open the fractures worked. I remember the first well I worked on was the Woods Christian # 11, and it had never been fracture treated, and it was producing about two or three million cubic feet of gas per day, and we went in there and ran a temperature log and found all the zones weren’t producing, so we re-perforated the well and doubled the production. And then we did a big fracture treatment on the well and doubled the production again, so it was now producing about--more than doubled the production--it was producing about eleven million cubic feet a day, and I was kind of proud of that because that one well would pay my salary at Shell for several years, so I earned my keep there on one of the first jobs that I ever did.

And so, after about four years at Shell, I decided very few people actually understood what was going on during a fracture treatment, and I took a leave of absence from Shell and went back to Texas A&M to study hydraulic fracturing in tight gas reservoirs. I spent two years there, getting my PhD, and they offered me a job as an assistant professor, and I decided to take that job, to both teach about production engineering and to continue my research in tight gas reservoirs and hydraulic fracturing, and I’ve been there ever since; except that I retired this past January.

KERR:

Talk to us, and elaborate, if you will, about your work with tight gas sands.

HOLDITCH:

After I was hired as an assistant professor, I continued my work in tight gas sands by organizing both a consulting company and a group of graduate students who could continue doing work. It was actually an ideal situation where I would go to the university and work with the graduate students doing research on how to stimulate tight gas sands. And so, I could go to the university and think and try to come up with ideas and solutions. Then I could—after that, I could go across the street with my consulting company, where we were working on real wells with real problems, and try to apply some of the ideas that came from the university in developing these tight gas sands.

So, over a period of twenty years as a professor and a consultant, the employees I had, and the graduate students I had—at one point in time, we calculated over two thousand technical papers that group had written and published in the Society of Petroleum Engineers, and almost all of those papers were on tight gas sands or hydraulic fracturing. And so, it’s been, as I mentioned earlier, a lifelong career that started in 1970 of trying to learn how to get gas out of these low quality reservoirs. It also applies to tight oil, too. I mean, the same principles apply that we’re producing oil now from low quality reservoirs, like the Bakken and Williston Basin and the Eagle Ford in South Texas and the Permian Basin. So the technology, the ideas are extending to both tight gas and tight oil.

It’s been very rewarding to see what has happened, especially over the last five years. The United States now is producing more oil than it did—than it has in like the last twenty years. And it’s really impressive how the industry has taken on the development of these low quality reservoirs, and it’s something that I’ve been looking at for a long time. One of the articles I published ten years ago in the SPE was the role of unconventional reservoirs in the future of the oil and gas industry, and it’s come to pass. And it’s going to happen, not only in the US, but it’s going to be a worldwide phenomenon for the next ten or twenty or thirty years.

KERR:

What were some of the important technological milestones in your discipline?

HOLDITCH:

There’s been…the important technological milestones in my discipline have, have really come lately in the last few years, or the last decade or so. I don’t know that there was any giant break-through. I think you’ve seen a lot of incremental improvements over the years. You’ve seen incremental improvements in propping agents, which are the granular particles that prop open a fracture. When we create a hydraulic fracture, we pump high pressure fluid down a hole—down the borehole, and we push the earth apart; we crack the earth and push it apart, and then we put these granular propping agents in there to prop open the fracture so the oil and gas can flow from the reservoir to the wellbore.

When I started work, the only propping agent we had was sand, and now we have a whole portfolio of possibilities of ceramic proppants. So, that happened slowly, over time. We have better fluids now; the recipes for the fracture fluids have improved slowly, over time, and we use seismic technology to map the fractures, and that’s improved slowly, over time. So, I would think that the two general areas is just drilling long, horizontal wellbores, and doing fracture treatments down those wellbores are the two technology break-throughs that has allowed the tight gas and tight oil development to continue the way it is. So, there…there’s no silver bullet that’s made a difference, but it’s been a lot of people in the industry working for oil companies, service companies, and universities that have done incremental improvements to the technology that allow us to be where we are today.

KERR:

What were some of the important technological milestones in your discipline?

HOLDITCH:

Some of the important technological milestones in the business—I’ve discussed some of the fluids, and the proppants, and the technologies that are used in the field, but there’s also been some basic engineering principles and technology that has improved. When I first started in the business of evaluating low permeability gas reservoirs, I typically would have a consulting job or even a research project where the client would say, “I drilled five wells, and here’s what I did, and the wells aren’t economic. Can you help me?” And so my team of consultants that worked with me and the graduate students, and a few of the other professors, like Dr. John Lee, we –we developed some reservoir engineering methods and software to analyze these wells that were not performing up to speed, and then developed work-over procedures, or new procedures to go out and improve those wells.

So, we did a lot of well testing work, reservoir simulation work, and field analysis work to understand the reservoirs. Not long after that a group of engineers that worked for Amoco in Tulsa, (which, one of them is Ralph Veatch, who I think you are probably going to be talking to today) they had a very good team of engineers at Amoco working on hydraulic fracturing in the seventies and eighties, and they developed some methods for analyzing the pumping data as you pump the well. So, that we--when you go to the field and you gather data, you can analyze what’s happening in real time, and maybe make some adjustments to the fracture treatment while you’re pumping. So, I think there was some very good work done by groups of engineers to analyze the data in the field and try to understand what the fracture looks like from the pumping data, and then to analyze the production data afterwards to try to understand the fracture treatment, and putting those two disciplines together in order to learn from the wells you’ve already fracture treated to say how can we improve on the next well?

And so, really, that’s another situation where we had incremental improvements over time. When I first started at Shell, we would go to the field for a fracture treatment, down in McAllen Ranch, and we’d sit on the back, the tailgate of a pick-up truck, and watch a pressure gauge and a rate meter, and that was really all we had was the injection rate and the injection pressure, to know what was really going on. Today, they have these elaborate computer vans that you can go sit in the air conditioning and you can see all kinds of information in real time. Or, in many cases, you can go to a Schlumberger or Halliburton or Baker Hughes office, and they have computer rooms where you can go in and watch a fracture treatment anywhere in the world or anywhere in the United States, and monitor what is happening. So the way we gather data and analyze data now, compared to several decades ago has really improved. Like a lot of other businesses, you have more data, you have better computers, and we do a lot better job now of designing, monitoring, and evaluating these fracture treatments.

KERR:

What were some of the challenges that you faced in your career?

HOLDITCH:

In my career, was having so many balls in the air at the same time. I was a professor, and I had graduate students, and I had courses to teach. Over time, I went from a full-time professor to a half-time professor because I was doing so many other things. I had a consulting company that I started in 1977 that in twenty years grew to where it had about sixty or seventy employees, and I had to run that consulting company and make sure we had enough money to make payroll every month. I had two daughters who were at home that were growing up at the time. And I decided at that time, on my tombstone I’m going to put, “He’s not here,” because if you talked to my graduate students, they’d say, ”He’s not here;” you’d talk to my wife, and she’d say, “He’s not here.” You’d talk to my employees, “He’s not here.” So, I was never anywhere, according to most of the people. I had so many balls in the air, it was just a—it was just a--a really busy time.

But that’s what it’s supposed to be when you’re in your forties and fifties, that’s the peak of your career, and I’ve slowed down a lot since then, and learned that there’s more things than just working hard. But at that time, and at that age in your career, that’s what you’re supposed to be doing, is working hard. So, just trying to get everything done that you need to be--to get done was a challenge—to schedule everything. In every sense, I went to work here in New Orleans in 1971 or so for Shell Oil Company, I’ve been on at least one SPE committee and many times two or three committees every year since then, including this year. So, I’ve always had a lot of commitments to the Society of Petroleum Engineers to go along with my consulting work, and my university work, and my personal life.)

KERR:

What were some of the challenges you faced in your career?

HOLDITCH:

One of the most interesting technical challenges that I’ve faced in my career is that no one has ever been lowered down the borehole to look around to see what a hydraulic fracture actually looks like. So, you have all of these experts talking about hydraulic fracturing and tight gas reservoirs, and everybody has a picture in their mind of what’s going on, but we really don’t know. And so, you can simulate hydraulic fractures in the laboratory with small blocks, you can mathematically model what might happen in a reservoir with a hydraulic fracture model, but you never have enough data to populate the model properly. So, what we try to do, is use our best judgment on what might the reservoir look like; the reservoir layers, and we put that into reservoir models, like hydraulic fracture models or reservoir simulation models, and we tried to do our best estimates of what’s going on under the ground for the purpose of let’s analyze the past wells so we can improve the future wells. But the truth is, we don’t really have enough data to understand that, and that’s always been a big technical challenge, is getting better data. In fact, if you ask any engineer any question, the answer usually comes back, “I don’t have enough data.” We need more information.

We’re making progress on that today with better logging tools and micro-seismic and seismic data, but it’s still the biggest technical challenge, is we can’t see what we’re doing. If an engineer wants to improve a compressor, they can make all kind of measurements and see what they’re doing to improve the compressor. If we want to improve our drilling and fracturing, we have to do it remotely, and it’s a very big technical challenge.

KERR:

What are some popular misconceptions about hydraulic fracturing, and what have been some of your challenges in overcoming those misconceptions?

HOLDITCH:

One of the biggest misconceptions about hydraulic fracturing actually drives me nuts, and it usually comes from reporters who don’t know what they’re talking about, and they say, hydraulic fracturing is a drilling technique where you pump toxic chemicals into the ground to release natural gas, which is absolutely false. Hydraulic fracturing is not a drilling technique, it is a completion technique.

We do hydraulic fracturing after the well is drilled. We’ll go in with a drilling rig, drill a horizontal hole, then we’ll set casing, cement the casing, the rig moves away, and then we do the hydraulic fracturing. So, hydraulic fracturing is not a drilling technique, to start with, and we don’t pump a toxic mixture of chemicals in the ground.

What we pump in the ground is 99.5% water and sand, and 0.5% of what we pump in is made of chemicals. The most prominent chemical is guar, which is a bean that gives viscosity to the fluid, and guar is used in all kinds of food products, to make ice cream, to viscosify ice cream, or almost any viscous food you eat will have guar in it. There are a few chemicals in there, such as bacteriacide, which is like Clorox. You have Clorox at home. Or surfactants, which is like Dawn dishwashing liquid. You’re not going to go around drinking Dawn dishwashing liquid, but you do have it in your house and you use it all the time. So there isn’t hardly anything we pump in the ground in the quantities that we pump it in that would be considered toxic or harmful any more than what’s under your sink in your house.

So, you can tell people that, and they go, ‘Oh! I didn’t know that! So it’s not dangerous!’ No, it’s not dangerous. But even though the industry has been saying all of what I just said for the last four or five years, it doesn’t stop the newspaper reporters in the Northeast for continually writing stories that just aren’t true. And so, it just drives me crazy every time I read those articles.

KERR:

What are some of the popular misconceptions about hydraulic fracturing? What have been some of your challenges in overcoming those misconceptions?

HOLDITCH:

A big misconception in hydraulic fracturing is that the hydraulic fractures can grow and contaminate an aquifer, a fresh water aquifer. In fact, that’s the way this whole anti-fracturing business started out, is a group in the Northeast United States was claiming that fracturing was polluting drinking water, and that’s absolutely not true.

The hydraulic fractures are, the reservoirs that we complete are usually eight to ten to twelve thousand feet below the surface, and the drinking water is always less than a thousand feet below the surface, and it’s physically impossible for the fractures to grow from ten thousand feet to one thousand feet and pollute the aquifers. So, we have been making measurements, called micro-seismic measurements, where we listen to the earth as it cracks, and we map the noise, and it’s definitively been shown that these hydraulic fractures don’t even come close to the surface of the earth.

There’s also a group that have said that these hydraulic fractures are causing earthquakes, and that’s not true, either. And so, we have to understand these misconceptions and try to scientifically show that what some people are publishing and putting out is just not true and physically can’t happen. There are polluted aquifers and water wells and sometimes there’s even natural gas in those wells, but it doesn’t come from hydraulic fracturing. In Pennsylvania, there’s a lot of shallow coal seams, and these coal seams have natural gas in them. So, if a rancher or farmer or just someone who lives in the country drills a water well, and don’t know what they’re doing, they’ll connect up the aquifer to a coal seam, and they’ll end up with natural gas in their water well, but it’s not from hydraulic fracturing. So, I don’t think we need to say that all aquifers that are polluted for whatever reason comes from ‘x.’ There’s a lot of reasons why water wells get to be polluted, and I’m very, very certain it’s not from hydraulic fracturing. It could be from many other things, but not fracturing.

KERR:

What have been some of the challenges in overcoming those misconceptions?

HOLDITCH:

The challenges in overcoming the misconceptions in hydraulic fracturing is basically just communicating the message and having enough people hearing it to make a difference. I spent six months two years ago on a Department of Energy advisory panel, developing a report. It was actually two reports on how to safely develop shale gas reservoirs and protect the environment in the United States. We ended up giving twenty-one recommendations on how to do it right; how to develop shale gas reservoirs and do it correctly. And everybody that reads the report has liked it, from the environmentalists, to the large oil companies to the small oil companies, even the regulators think that it was a very balanced report. And in the report we said shale gas and shale oil, basically shale gas is what we had developed, but it also applies to shale oil, can be very, very important to the United States and will produce jobs, reduce oil imports, make us more energy secure, and we can do it, and we can protect the environment.

So I have spent probably over the last two or three years, I may have given twenty speeches to different groups, explaining what shale gas is, how important it is, and how we can produce it properly. And almost every time I finish the audience will say, “Oh! So it’s not all that bad, is it?” No, it’s not. I gave a talk to the Society of Military Engineers in San Antonio, and they had heard all kinds of evil things about hydraulic fracturing, and after the talk was over, a lot of them came up to me and understood it and believed it.

But once you tell them, they understand it, but then, the next week, somebody’ll publish something from a newspaper in the Northeast and just stirs it up again. So, it’s just getting the message out to the right people, and this is something that the oil and gas industry is just going to have to step up and do. They’ve done a better job of talking about, on television, the benefits of natural gas and hydraulic fracturing, but it’s still, most people don’t pay attention, and don’t know what’s really going on. But every time I’ve ever explained it to somebody, then their whole attitude changes, and they figure out that jobs are good, home-grown natural gas is good, and we’re doing the right thing, but it’s just…it’s just a battle. I think one of the—this doesn’t have anything to do with tight gas, but it does with unconventional reservoirs—heavy oil is down in the resource triangle as one of the huge deposits of unconventional resources, and one of the symptoms of what’s going on these days is the Keystone Pipeline. There’s no reason the Keystone Pipeline shouldn’t be built . There are thousands and thousands of pipelines now in the United States. One more is not going to make any difference, but it’s people don’t understand energy.

KERR:

What have been some of your challenges in overcoming those misconceptions?

HOLDITCH:

The challenge of overcoming the misconceptions is just getting the word out where people understand energy. Not just hydraulic fracturing, but energy. There have been several books published about how ignorant the American public is about energy, and ignorant just means you don’t know the facts. It’s not a derogatory term at all. You could be very intelligent, but there’s a lot of things that we’re ignorant about. And it turns out that the general public in the United States doesn’t know much about energy. If you ask them how much oil we import, they don’t know. If you ask them what are the main sources for generating electricity, they don’t know.

So, when I was SPE president in 2002, one of the articles I published was on the Public Energy Education Committee, which we started under my presidency because we saw the problem back then. In fact, the problem has been around ever since they had that TV show called “Dallas.” We’ve had a public image problem in the United States, because of J.R. Ewing. He did more harm to the industry than almost anybody I can think of. And we started this Public Energy Education Committee just to get the facts out, not about oil and gas, but energy. It’s now turned into the SPE website, called Energy4Me with a four; like three, four. Energy 4 Me, and I actually saw a poster when I was walking here this morning, there was an Energy4Me poster about hydraulic fracturing and go to that website to learn more about hydraulic fracturing. And somehow, we’ve got to do a better job of educating the junior high and high school students about energy; not just oil and gas, but solar, wind, biofuels, nuclear, oil, gas, the whole energy spectrum. And many universities now have a basic energy class for freshmen, and we’re starting to make a little bit of progress, but there’s a long way to go to educate the public on energy.

KERR:

What challenged you the most in your work at Texas A&M, and what was your greatest reward?

HOLDITCH:

The greatest challenge I had at Texas A&M is really hard to say. I mean, I don’t know that I ever really had a very large challenge there. It’s something that maybe we’ve talked about already, and that is just the time, devoting the time to the students, and balancing my other professional life and my life with the SPE, and just having enough time to do things correctly. The most rewarding part is clearly the students. I started at Texas A&M in 1965 as a Freshman in the Corps of Cadets, and then I left for four years to work for Shell Oil Company, and I came back as a graduate student, and then stayed on as a professor. And during this whole time, which is 1965 to 2013, I believe the quality of the student body has improved, substantially. I mean, it just keeps getting better every year. We have some very, very fine students, they’re very high ranking students, because the demand to get into Texas A&M is so high, as it is in many other universities, and we just have quality students at Texas A&M.

They understand the right things in life, by and large. It’s a conservative student body, and they work hard, and it’s just been a joy to be around them, and to see that we still have a lot of fine men and women that are going to be entering the workforce. In fact, it might be scary to some people, but we opened a campus in Doha, Qatar in the Middle East, and we have about five hundred engineering students over there in petroleum, chemical, electrical, and mechanical engineering. And we’re graduating about a hundred a year. Aggies. Engineers. In the Middle East. And one of the persons at A&M who helped get all this organized was saying, “Just wait for twenty-five years, and the whole Middle East will be run by Aggies” because of the entrepreneurialship. We’re a very entrepreneurial university compared to most universities, and we turn out high quality graduates, and it’s good to be around those young men and women.

KERR:

What do you consider to be the most important contributions you have made in your career and why?

HOLDITCH:

I think the most important contribution in my career has been making the industry aware of the unconventional reservoirs, and the distribution of how oil and gas reservoirs are distributed. And the resource triangle concept, that as you go deeper into that resource triangle, the resources get larger and larger, and we need more technology to develop it. And so, starting from my Master’s thesis in 1970, and then talking about tight gas reservoirs and hydraulic fracturing, and then publishing hundreds of papers on the subject.

And then in 2002, as SPE president, I was going around the world, giving speeches on the role of unconventional reservoirs in the future of the oil and gas industry. And now, seeing what is going on in the US and the world has been very rewarding to me; that these unconventional reservoirs are the hot topic; they’re what’s being developed today.

The interesting thing about what’s going on is these reservoirs we’re developing are source rocks, which means they’re the source of all the oil and gas. In the 1980s and 70s, we were developing the Austin Chalk formation in Texas, and everybody knew the source rock for the Austin Chalk was the Eagle Ford formation. Well, the hottest reservoir now in Texas is the Eagle Ford formation, which is a source rock. And you can say the same thing about almost every reservoir we’re dealing with: the Haynesville, the Marcellus, the Barnett. These are all source rocks. These are where the oil and gas come from. It’s the source of the oil and gas that has migrated to the shallow reservoirs that we call conventional reservoirs.

Two years ago, almost three years ago now, I gave a talk to the Saudi Arabian section of SPE, and the title of the talk was, ‘Unconventional Reservoirs: Go for the Source,’ and I told them to quit messing around with those little bitty reservoirs they have over in the Middle East, which is kind of “ha, ha, funny,” because they’re the biggest reservoirs in the world, but I said these reservoirs that you’re developing now had to be sourced from somewhere. Somewhere, there’s a source rock that generated all this oil that’s migrated, that you’re producing now, and that’s exactly what they’re doing.

Saudi Aramco has a big unconventional gas play going on to where they’re developing some of these low permeability reservoirs. And it’s going to happen all over the world. It’s going to happen every place there’s a lot of oil and gas that’s been produced in the last hundred years. We’re going to be going after the source rocks in those areas for the next hundred years. It’s amazing.

KERR:

What do you consider the most important contributions you have made in your career, and why?

HOLDITCH:

In my career, one of my most important contributions has been in the proper supervision and design of hydraulic fracture treatments. Now, I had a lot of help on this. I had graduate students working on it, and we had engineers at our company, so it’s not just me, personally, but the group that I’m associated with.

What happened in the 1970s and 1980s is we started a company that would evaluate older wells. Wells that had already been fracture treated, and they weren’t producing properly, and we wanted to find out why. So we started analyzing the production data, and the pressure build-up data, and the fracturing data to try to improve fracturing—hydraulic fracturing and make it more economic. What we learned along the way is, it’s not only you have to design the optimum fracture treatment, you had to pump the optimum fracture treatment, and it wasn’t being done all the time.

We—my company, the group I worked with—we started looking at quality control, and we actually built some vans with equipment that we would drive to locations of fracture treatments, and we would take samples, and we would monitor the treatment, and we would provide supervision to make sure that not only did we design the optimum treatment, but we pumped the optimum treatment. And we found out that probably twenty-five percent of the jobs were not pumped the way they were designed. But by being in the field and making measurements and understanding what’s supposed to happen, and making it happen, we really improved the production from wells that are fracture treated properly. It’s a matter of just taking samples of the chemicals, taking an inventory of the chemicals before and after the job, and testing the fluids, and testing the proppants.

So we were partly involved with that technology development. We also had a contract—we had several contracts—with the Gas Research Institute where we were developing the procedures for properly evaluating and fracture treating tight gas reservoirs and shale reservoirs. And so we combined what I’d say is outstanding office engineering, sitting in front of the computer and fracturing the well on your computer ten or twenty or thirty times to find out what the optimum job is, based on your computer. And then putting our boots on and going to the field and monitoring what really goes on in the field, and making sure what really goes on in the field is what you expected when you designed the treatment. So, the group I associated with, the Holditch and Associates Consulting Firm, we must have published hundreds of papers along those lines of how you design and pump the optimum fracture treatment.

KERR:

Which of the honors you’ve received over the course of your career means the most to you, and why?

HOLDITCH:

The honor that means the most to me based on my career is probably not the one that some people would expect, but it’s being elected to the National Academy of Engineering when I was forty-nine years old. I think when I was elected, the average age of the academy members was about seventy-two, and I was forty-nine, and I thought that was old, except now I’m getting close to that seventy-two number, and our friend, John Lee, is already past it.

But, the National Academy of Engineering only has about 2300 members—two thousand, three hundred members--of all the engineers that have graduated with engineering degrees that live and work in the United States. It’s incredibly difficult to get elected in that academy, and I didn’t realize it at the time, but since I--over the last number of years, trying to get some of my colleagues elected, it’s very difficult to be elected to that.

And being a National Academy member is a big deal on a college campus. When they rank universities, when they rank colleges of engineering on what’s the best college or what’s the best university, one of the big factors is how many National Academy of Engineering –or National Academy of Science members you have on your campus. So in the grand scheme of things, that is probably the one that’s, looking back, it’s incredible that I got elected, especially at that age. I’ve won several SPE awards, technical awards, and those mean a lot also: to be elected—to get those awards from a committee of your peers in the engineering. And so, I, I think that, I guess the top technical award, the Anthony Lucas Medal was a nice, a nice award to have, too.

KERR:

What do you consider to be the most significant changes that have occurred over the course of your career?

HOLDITCH:

The most significant change in the industry during my time in my career has unquestionably been the use of computers. When I started as an undergraduate student, we used slide rules, and about half of a test was how much you knew on a technical subject, and the other half was how good you were at using your slide rule. And even when I was— got out, got my Master’s degree, and went to work for Shell Oil Company, we used hand calculators.

So, if we wanted to analyze the pressure build-up test, it would take us probably six to eight hours to calculate all the numbers and graph it up by hand, and analyze the graph, and calculate the answers. Now, an engineer can do that on a laptop in thirty minutes, so.

We had a big downturn in the industry in the eighties, between 1982 or 3, and 1988, a lot of companies released employees, they let them go. They just didn’t have enough income from their oil and gas production to make payroll, so they had to reduce their workforce. It turns out that that’s about the time the big rise in computers came, in the 1980s. And what you find out is there wasn’t a large increase in hiring in 1990s, and I think the reason is the engineers were so much more productive. Laptop computers, desktop computers, and mainframes made everybody so much— the productivity of the workforce increased so much, you could do more with less.

And now computers just totally—and the internet— totally involve the whole industry. You can go to any major company and there’ll be a room full of computers and screens, and you can watch drilling rigs running all over the world. You can watch fracture treatments being pumped all over the world, you can send messages back and forth instantly, as we know, with phones and laptops, and it’s just the communications computer industry has totally changed how we do our work for the better. Until maybe cyber security comes in, and we have some big cyber security issues in the whole world right now that have to be addressed. But without question, it’s the computing power of the desktop computers, specifically, that has made the biggest difference in the business.

It’s kind of interesting: we still drill the wells the same way, we still use the same bits that were invented by Howard Hughes in the 1930s, we still turn the bit to the right and drill, and a lot of the technologies haven’t changed, but we do all of these technologies better because we can gather more data, and analyze more data in real time. The computing power has changed everything.

KERR:

What do you consider to be some of the biggest challenges facing the industry in the future?

HOLDITCH:

Some of the biggest challenges facing the industry in the future, in my opinion, is going to have to be with the travel and the global nature of the business. You hear a lot of people talk about the potential shortage of people, that we don’t have enough young engineers and geoscientists and scientists coming into the industry, and as the Baby Boomer age starts to retire, we’re going to have a personnel shortage. Sometimes they call that the Great Crew Change. I’m not all that worried about that because we have a lot of applicants in colleges. In fact, I think there’s a potential workforce there that can be hired and trained, and we might have to bring in engineers from other disciplines, and so I’m not all that worried about reinforcing the workforce.

But what I think is going to be one of the biggest challenges we face is the global nature of the business, and trying to drill wells in areas where you have terrorists and you have problems getting in and out of the country, and it’s going to be a real issue on how you manage oil and gas developments in some of these more remote areas where you have both security problems and problems with living conditions. You know, there’s a lot of places in the world that families don’t want to move to, and so you’re going to have to try to figure out how to staff those positions with either local residents—engineers—or some other way of getting in and out of the country.

You know, the problems that occurred like in the Middle East on occasion where it’s just real difficult to drill wells and do your business. And so I think there’s got to be some sort of real look at how to do business in today’s environment where terrorism is just part of the nature. One answer might be the communications, the computers, the satellites, the internet, and in fact, that’s already being done. A lot of West Africa fields are being run from Houston, and all the engineers live in Houston but they travel to West Africa periodically, but they don’t live there.

KERR:

What are some of your favorite memories about working in the petroleum engineering industry?

HOLDITCH:

One of my favorite memories has to do with the coalbed methane field in India. This was probably in the late 1990s. I got a message from a gentleman named Dr. Sonny with ONGC, which is the Oil and Natural Gas Company of India, state owned company. And he wanted to meet me at the Offshore Technology Conference, so I went down and met with him and he said (and this was in May), and he said, “I want to have a producing coalbed methane well by October for our fiftieth anniversary of independence from the UK.” And I said, “OK, we can try to do that.”

And the first thing I did is I had a gentleman named Dr. Walt Ayers, who’s one of the best coalbed methane geologists in the world, I believe. In my opinion. He went over to India and looked at all the coal maps that they had drawn, because almost every country knows exactly where their coal is because they’ve been using coal for hundreds of years. So he looked at all the maps of their coal seams, and found the place where he thought had the best chance of producing gas. And then I had some of our engineers, we had an office in Pittsburgh, and that’s in the middle of the coal country, so a couple of engineers that worked in our company there, they went over to India, got the rig in, drilled the well, got the fracture equipment in, did the fracturing, and by October, they had actually had a flare going, where this well was producing natural gas.

And this was Dr. Sonny’s gift to the country for his fiftieth anniversary, was a producing coalbed methane well, and it made the front pages of the papers, and I think there’s a plaque there where the well is now, and it just shows what you can do if you want to do it. So, in a period of about like six months, we went from nothing to something, and I think they’re developing coalbed methane now in India. So that’s one of the kind of special things that I remember, and other occasions, like for the Low Permeability Gas Symposium that SPE puts on, I think that one time, there was like two hundred papers and twenty of them came from either my graduate students or my employees. So we had like ten percent of the program in that meeting, and I didn’t have to hire an ad agency or a salesman to go out and get business. People would read those papers, and pick the phone up and call and say, “Hey, I want one of these,” or “Can you do this for my company?” so it was a—it’s always been—my career and SPE have always been just intertwined.

I was an SPE Distinguished Lecturer in like 1978 and 79 on hydraulic fracturing, you know, what else? And I really think that kicked off my consulting career. I went around the US giving lectures on hydraulic fracturing, and once you give lectures on something, you’re considered the expert, whether you are or not. And then for like twenty-five years, I was the SPE teacher of the two-day short course on hydraulic fracturing. So, just all my interactions with SPE during my whole career has been something that I think has been very influential in what I’ve done, where I‘ve ended up.

KERR:

What are some of your favorite memories of working in the petroleum engineering industry?

HOLDITCH:

One of my favorite memories is we always used to take the juniors on a field trip in the spring, and we would take a bus down to Galveston and get on a boat, and go out to a drilling rig, and then take that boat from the drilling rig to a production platform, and then have helicopters come out and pick us up from the production platform, and take us back to shore where we would have a barbeque, all sponsored by an oil company, and then we’d take the bus back to College Station.

The one year we took the group down, and we got on the boat, we went out to the drilling rig, we got off the boat on the drilling rig, and that’s where you have to climb in those baskets, and then they reel you up from a basket with a wire rope, and put you on the deck of the drilling rig.

So, we toured the drilling rig, and then we were going to take off and go to the production platform, and we had one of the student s refuse to get back on the boat. He had gotten so seasick, he was going to spend the rest of his life on that drilling rig before he got back on that boat.

And so, we went on to the platform, where the helicopters got us, and they had to send one of the helicopters to that drilling rig to pick up that one student and bring him back. And I remember talking to the pilot at the barbeque, he said, “I thought he was sick. I thought he needed to go to the hospital. If I’d known he was just seasick, I would never have gone out there to get him.” And so, but…he was not going to get back on that boat. He would stay on that drilling rig forever before he got back on the boat.

KERR:

How has being an SPE member affected your career and your work?

HOLDITCH:

SPE has been an integral part of my career ever since I began practicing petroleum engineering. In 1971, Shell Oil Company transferred the entire Houston division from Houston to New Orleans, and we became part of the onshore division. Shortly after that, I joined the SPE production engineering group program committee here to help bring in speakers for SPE.

Ever since 1971, I‘ve been on at least one SPE committee, and sometimes more than one. I’ve been the chairman of probably a dozen different SPE committees, and I was on the board of directors for SPE for six years, so it’s very difficult to separate my career practicing petroleum engineering and what I’ve done for SPE. In fact, probably everything I’ve done, worthwhile, practicing petroleum engineering, I’ve written an SPE paper about, and have published those papers.

One of the key turning points, I believe, was in 1978 and ’79. I was an SPE Distinguished Lecturer on hydraulic fracturing, and I went around the US and gave maybe twelve to fifteen lectures on hydraulic fracturing. First, talking about doing large treatments, and pumping large treatments (it was new back then), and after that, I think my career really accelerated because I was getting to be more known through…by giving SPE lectures. And so, I try to tell young students--in fact one of the articles I wrote as SPE president was, I told the students, or anyone really, who I was talking to at the time, if you want to be an expert in something, you need to read a paper a day. And that could be hydraulic fracturing, it could be drilling, it could be bass fishing, whatever. Just take a paper, and read it every day, about whatever you’re interested in, and you’ll become an expert. If you read three hundred papers a year, you’ll know more about whatever you’re trying to do than almost anybody else around.

So, it’s real easy to take the SPE literature and become an expert in anything you want to. But then I told them, tell them, “But don’t just read it. Write papers, and go to meetings and present papers, and become active in SPE, and that’s the way to further your career.” And I think that, that, that’s always the advice that I’ve given to young engineers for them to move ahead.

The other thing about SPE that’s really helped me, I think, is when I joined the SPE board. Some people don’t know it, but all SPE work is volunteer work. You don’t get paid for it, and you don’t get reimbursed for travel. All your travel costs, all your meals, all your hotels, all your airline pay are paid by either yourself or your company. SPE does not reimburse any of your travel as SPE members. So, at one point in time there were three Holditch and Associates engineers on the SPE board: myself, Dr. John Lee, and Mr. Mike Gatens, and it cost our company a lot of money to pay the travel costs associated with being on the SPE board. But, we met so many people on that board that led to future work and more consulting work, it actually was an income generator in the long run. Just getting to know more people, and becoming known in the industry through SPE.

And so it’s really been a lot of fun, and I’m still on about three SPE committees and enjoying doing the work, but I would encourage anyone who wants a really top notch professional career to be involved with SPE. One thing that we did back in the early 2000s-late 1990s, ‘98, ‘99, 2000- that I think was important is we started getting more top-level executives involved in SPE. If you look now at most major meetings, we have a CEO of a big company who’s in charge of the meetings because we found out that even though we could go around telling young engineers, “write papers,” you can’t write a paper unless your boss lets you, and if your boss lets you go to a meeting. So we decided in the—back when I was on the SPE board to—let’s just get the bosses more involved in SPE. Let’s put them in charge of the meeting, and then gradually, they’ll start letting their younger engineers attend. And I think that’s a strategy that’s worked out pretty good.

KERR:

What were some experiences that had an impact on you as SPE president?

HOLDITCH:

As the SPE president, one of the experiences I had that was--I thought was important was making the decision to open up an office in the Middle East. I’d been on the SPE board for three years as the treasurer, and then one year as the president-elect, and every year I was on the SPE board, the director we had from the Middle East would talk about we need an office in the Middle East, every year. And so, when I became SPE president, I made a list of about three things I wanted to do, and that was number one on the list. It’s make a decision. Let’s either open an office in the Middle East or quit talking about it.

And we put together a little task force, and as it turns out, we have an office now in Dubai, the SPE does, and it turned out to be a great decision that led to a reorganization of SPE to be more of an international organization, which it really is, anyway, because most of the members don’t live in North America. And so that was something that I thought was very significant. Kind of an amusing story that happened to me while I was travelling: we had the SPE Health, Safety, and the Environmental Conference, and it travels around. It goes to different cities, and it’s a very big, very well-run meeting.

KERR:

What were some of the experiences that made an impact on you during your time as SPE president?

HOLDITCH:

One of the experiences that made an impact on me that was a little bit on the amusing side, was when we were planning the SPE Health, Safety, and Environmental Conference that was going to be held in Kuala Lumpur, Malaysia. And I was in the area for some reason, I don’t know, but it was a planning meeting for that, and the SPE…the lady that runs the SPE office in Kuala Lumpur is named Cordella, Cordella Wong Gillette, and Cordella is very bubbly and opinionated, and attractive, and she’s fairly small. And we went to see the head man at Petronas, he ran Petronas, and Petronas was going to help sponsor the meeting, and they were more or less kind of run it, and pay for it, and everything else.

And we went in there, and Cordella sat down, and she just started barking out orders, “here’s what we’re going to do; we’re going to do this, we’re going to do that,” and he just sat there and nodded, like Cordella was the general, and he was the private. I mean, she just took over, and he agreed completely with it, and then we got up and left. So, I started to ask some people about it and she said, “Oh, yeah, all the leaders of all the oil companies in Asia, they know Cordella, and whatever Cordella suggests to them, they always go along with it.” So, she was--she’s the boss. I think she still is, over there in Kuala Lumpur.

One of the other aspects about my SPE presidency that will probably never be challenged is the year before I became SPE president, we had an annual meeting here in New Orleans, and at the awards banquet, which they always had back then on Monday night, the president before me, Bruce Bernard, who’s a good friend of mine, and a Shell retiree, and myself; they brought us in at the banquet, on a float, dressed up, and we were throwing beads and doubloons, and we went around the entire seating, where the tables, where the people were eating, in a mini Mardi Gras parade. So, there’s probably no other SPE president that’s done that, and then the next year, when I was the SPE president, we had one of our board meetings in Richardson, so that the SPE board could get to know the staff better and vice versa. And then they had me ride in on a horse at the Mesquite Rodeo opening ceremonies. So there’s probably never going to be another SPE president that’s been in a Mardi Gras parade and riding a horse in a rodeo, as part of their tenure. So, that’s something that I’ll always have.

Some people have asked me, “How do you plan your career?” and “How do you go about mapping out what you’re going to do?” And I never really did that. I just basically, I’m a list person. I get up every day and make a list of what needs to be done, and just try to do the very best I can do that day, on working on the most important projects that I have to do. And it’s a way to make sure that you earn your stripes every day; you earn your paycheck every day. And make sure you—there was something else I was going to talk about. Let me—can we just stop that? You mentioned something there, and it flashed through my mind, and so I…

KERR:

The importance of your work or the largesse of your work or..?

HOLDITCH:

That’s it. Ok, yeah, yeah, yeah. Ok.

In the big picture, I want to get up every day and make sure that I accomplish something that day that’s meaningful. But in the big picture of what we’re doing in the oil and gas industry, it’s missing, sometimes, from the general public. If you look at the quality of life in the United States, it’s because we have an abundance of affordable, clean energy. We have a lot of energy for lighting our houses, heating and cooling, and transportation, and that’s what makes the United States great, is having an abundance of affordable, clean energy. And the rest of the world, if we’re going to increase the standard of living in the rest of the world, they need the same thing. We need more energy.

Going forward in the next twenty or thirty or forty years, we’re going to need twice as much energy in the world as we need now. And that’s one of the things I’m really proud of, is that oil and gas industry has made life better for almost everybody on the planet. And sometimes we get criticized for this or that, but nobody, or very seldom do we get credit for the energy we provide for the world and allow people to fly from continent to continent and city to city, and enjoy life. It’s because of energy, which is maybe, in addition to water, the most important thing we have, is water and energy, and for some reason, water costs a whole lot more than energy. And energy is very affordable, and it’s very good for improving the standard of living, not only in the United States, but in the rest of the world.