#004: It Runs in the Family: Tom Stewart’s Lifetime Career in the Oil & Gas Industry[podcast src=”https://html5-player.libsyn.com/embed/episode/id/7271723/height/200/theme/standard/autoplay/no/autonext/no/thumbnail/yes/preload/no/no_addthis/no/direction/forward/” height=”200″ width=”100%” placement=”top” theme=”standard”]
Tom Stewart joined his father in the family oil and gas business. He got started as a roustabout, a place he says everyone who begins in the oil and gas industry should start: in the trenches.
His family has built a legacy in the oil and gas industry from his grandfather to his father and five uncles and then Tom joined at 23 years old and moved up to run the family business, and then eventually became head of organizations like OOGA, the Ohio Oil & Gas Association, and took a vested interest in getting laws passed through Congress to further the oil and gas industry.
Each guest that we have on the podcast references the dramatic use that technology plays in moving the oil and gas industry along at a rapid pace. Stewart is no different.
Highlights from his interview:
>> He calls himself a “fracking baby” because he grew up as a toddler in the early fracking age in 1953, where wells in the Clinton formation were being discovered and reworked with incredible success, giving his family new opportunities in a new state, that still exist today.
>> His father was the first person in Ohio to fracture a well that he believed to be a dry hole with only water and sand, which turned out to be a great well using this new technique. Up until that point, the industry had been using gelled crude oil to shoot back into the well to break it up and he didn’t want to waste hundreds of barrels of that on a dry well.
>> In 1977 in Hocking County in Ohio, men rushed to join the industry because of the tax advantages and the obvious success those already participating were having. But all of that competition meant it was harder to find acreage. A lot of them didn’t know what they were doing which ended up causing a host of environmental issues that would come into play later in their careers.
>> In the 1980s, Ohio had the highest drill rate in the nation with more than 5,000 wells drilled each year. It’s also known for water production with crude and natural gas and managing produced waters became a real issue with so many wells being drilled. Citizens and government officials stepped in to enact House Bill 501, which was highly controversial at the time. The bill primarily focused on banning putting water into pits and mandated that all brine be managed by Class 2 wells.
>> Working under his father, who he fondly labeled Old Guard and old-school, he said he took his role of introducing new technology and ways of drilling the wells seriously because it was something his father couldn’t understand. His father would give him advice about what it took to really be in the oil business. He admired those that kept to themselves, worked hard, honored their commitment and made agreements on handshakes.
He told him one thing that has carried him through his career in the industry for the past 45 years:
“Ninety-five percent of being in the oil business is reputation. Only 5 percent is finding oil. If you’ve got your reputation, you’ll succeed. If you don’t, you will not.”
>> He eventually became involved in OOGA and was appointed to be a regional producer representative and became engaged in the advocacy process. In 1991 he was asked to run the legislative committee. The industry was in a difficult place in Ohio at this time, so it felt like a good opportunity to try something new.
>> Nancy, known for her role as Director of the Department of Commerce under George Voinovich, ordered him over for drinks to talk about his future and outlined how I should apply for the executive vice president position at OOGA, and so he did.
>> His goal with joining the industry was to be known as an aggressive policy advocate. It meant going into the Legislature on a regular basis and make clear that when it came to oil and gas and energy issues, that OOGA was the preeminent voice and that we knew the issues. Several policy issues that were passed that were significant but not highly publicized.
>> In 2005 Stewart decided to take on a highly controversial topic with preemption and dealing with local government. In northeastern Ohio, we were dealing with surface development that was in conflict with well development, which led to unreasonable local regulations which weren’t designed for health and safety, but for the development movement. The tension was between landowners who wanted access to the mineral rights and their neighbors who didn’t want to be touched by that activity.
A significant court case was happening around this time, State vs Newbury, which decided that Ohio’s oil and gas division had predominant authority over most authority. Local authorities would use certain health and safety exemptions to get around this ruling and essentially ban oil and gas wells.
The bill Stewart began pushing in his role at OOGA was complete state preemption over local decisions on mineral development and it was difficult to get conservatives who believe whole-heartedly in local government on board.
“When they would bring this up with me about local government, I would agree and say, Local government is best, but what’s even more sacred is property rights and you’re forging property rights.”
This bill became House Bill 278, which is unlike what any other state has been able to pass.
>> One of the biggest frustrations in his career has been dealing with people who are against the oil and gas industry but simply don’t understand what they’re arguing against. The concept of energy and how they are using the very thing we’re drilling for in their day-to-day lives, but because it’s oil and gas, it’s wrong. HB 278 brought with it what Stewart now calls “well haters” that came in droves to protest the oil and gas industry.
>> The fracking debate that has sparked in the last decade has become political instead of safety-related and boils down to who should control the resources in the states, and who should benefit from the control over those resources.
>> His biggest fears for the future of the oil and gas industry is that the industry will be regulated to the point that entrepreneurship is a significant factor. Soon the only people who will be able to handle it will be largely capitally-funded businesses. “Being able to successfully navigate the regulatory structure on a federal and state level, is so challenge it often seems impossible to be in compliance with the law, and that’s an authentic threat,” Stewart says.
>>On the flip side, a driving force for the future of the industry is the technology that makes drilling for wells more affordable and successful. Where the limit was once 1,000 ft to test the capacity of reservoirs using wooden rigs, then cable tool rigs came along, then rotary development. Drilling technology made it deeper, safer and gave the industry the ability to find better reserves.
> Operators and producers in Ohio are already beginning to look at how to take the technology being used in horizontal drilling to boost production and how to implement that in conventional wells.
Connect with Tom
Tom Stewart is the immediate past executive vice president of the Ohio Oil & Gas Association, a state-based trade group representing the Ohio oil and gas exploration and production industry (www.ooga.org). In December 2014, Stewart retired from the OOGA after leading the Association since September 1991.
In January 2015, Stewart founded Oilfield Policy Advisors LLC, a firm providing consulting services related to public policy activities impacting the oil and gas exploration and production industry operating within the Appalachian Basin.
Prior to joining OOGA, Stewart had fifteen years of formal experience in the oil and gas industry as an oil and gas producer and provider of contract drilling services. He is the third generation of his family to make a livelihood in the exploration, development, and production of crude oil and natural gas. The family heritage extends back to the original oil regions of western Pennsylvania and southeastern Ohio. Stewart currently is a board director for Stewart Brothers, Inc., an Illinois-based family partnership that manages non-operating oil and gas working interests in four states.