New Oil: The Giddings Gamble
The Austin chalk is the most perverse, contrary, incorrigible oil field known to man. The big oil companies tried it and gave up. But one man learned the way to make the chalk yield its secrets—and its oil.
James says: Who is that on the cover of the February 1981 publication ? I think his name is David Perkins, anfriend of my brothers from younger years. IF that’s him where is he now ? (October 21st, 2009 at 4:22pm)
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These early days, Holloway observed, were “a curious mixture of war and peace.” Competition for leases was fierce among the three Holifield clients, Humble, U.S., and Windsor, with each badmouthing the others in an effort to win over the landowners. “I’d cut their throats to get leases,” Holloway recalled, “and they’d stab me in the back.” Bennie Jaehne soon adopted the practice of leaving courthouse books open to pages for an area completely different from the one he was interested in so that the competition, who were always looking over his shoulder, would be misled. Holloway would not discuss business with Williams or Deal. Having started out as coventurers, Williams and Deal now became archrivals. But for all the bad blood in the triangle, the three companies also came to each other’s aid. If one of them had a blowout, the others would send men to help get it under control. If one operator was short of mud or pipe or equipment —— and shortages were the rule in the early days —— the others would swap and share.
Besides competing with each other, all three fought together against the pipeline companies. At this stage there were still relatively few pipelines in place, so much of the oil was picked up from the storage tanks by truck. Field operators suspected that some pipeline company well gaugers stole enough oil to cover their salaries each month, allegedly by cheating on the amounts of oil they reported finding in the storage tanks. Since one inch of oil in a five-hundred-barrel tank was the equivalent of twenty barrels, worth $600 to $800, the corrupt gaugers could play a game of fractions, pinching a very small amount from each well by misreporting the numbers on the measuring reel they dropped into the tanks. The field operators countered by dispatching their own gaugers to check up on their storage tanks’ contents.
Of course, the greatest common fight for Humble, U.S., and Windsor was the war against the field itself. Even when Ray Holifield’s geology was right on the mark, drilling the Austin chalk was difficult. Since the wells, if they were good wells, often started flowing fast and unexpectedly, they had to be watched closely 24 hours a day throughout the drilling process. And because of the high pressure in the Austin chalk, there was the constant threat of a blowout or a fire. Twice, huge balls of flame from Humble wells filled the Giddings sky.
With the going rate per barrel of new oil soaring to nearly $40, a new drilling boom had commenced in the United States. There was not only a shortage of rigs and equipment but also a shortage of competent, experienced drillers. In the tradition of the wildcatters of yesteryear, Pat Holloway did the lion’s share of his company’s work himself. He spent the daylight hours out in the field, leasing bulldozers to clear locations, renting drilling rigs, and supervising drilling operations. At night he would drive back to Dallas and do his own title work. For Humble, the development of the Giddings field truly became a family affair. While Holloway’s wife, Robbie, continued to do the secretarial work in Dallas, his 24-year-old daughter, Marcy, left her job at an Austin bank to join her father’s Giddings operation. At the time Marcy was the only woman in the area who actually worked out in the oil fields. As a gauger, her job was to drive a route of fourteen producing wells and check the tank batteries and production equipment of each. Though she had no previous experience in the oil business, she soon picked up all the tricks of starting heater treaters, climbing storage tanks and operating oil tank measuring reels. Marcy’s teenage brother, Patrick, later joined her in the field. It was definitely an exciting, adventurous enterprise for the Holloways, but it was also the sort of work that would take its toll on the family in the months to come.
Though Irv Deal tended to delegate more work at Windsor, Max Williams did almost as many jobs at U.S. as Holloway did at Humble. Williams customarily spent his nights on his oil rigs, then changed out of his Levi’s and into his business suit and returned to Dallas to raise money and do paperwork during the day. As he remembered, “I got about two or three hours’ sleep a night.”
Ray Holifield also worked like the devil. With three clients active in the field, he had a never-ending stream of seismic data to analyze and locations to pick. After putting in fourteen-hour days in Dallas during the week, Holifield would drive to Giddings each weekend and visit every well in the field.
By mid-1978 several other wily competitors were eyeing or had already entered the Giddings field. Thomas D. Coffman of Austin brought in his first Lee County well in the summer of 1977, then drilled seventeen more producing wells in the next eighteen months. Though not a client of Ray Holifield’s, Coffman and his in-house geological staff were developing their own parallel method of seismic interpretation for finding the sweet spots in the Austin chalk. The most flamboyant competitor was Clayton W. Williams of Midland. A dashing, wealthy oilman and rancher, Williams was a devout Texas A&M graduate. He owned a swimming pool shaped like an Aggie boot and flew an Aggie banner atop all his drilling rigs. He was also reputed to be his alma mater’s largest individual benefactor. Williams swooped into Giddings in the summer of 1977 and started spudding wells on the leases he had acquired a few years earlier. He talked to Ray Holifield, but the two could not come to a working agreement. Relying on guesswork and closeology, Williams proceeded to drill four wells in 1977 and 1978. Two of the wells were dry holes, and a third was marginal. Only the fourth turned out to be a decent producer. Undaunted, Williams determined to drill more wells in the area.
Houston Oil & Minerals also tried to retain Holifield. But when Holifield asked for a 2.5 per cent override, HO&M balked. The company’s next drilling ventures resulted in still another string of poor holes in the Giddings field, and shortly thereafter, HO&M came back to Holifield and agreed to pay him his override.
The demand for Holifield was understandable. By the end of 198 there were 150 producing wells in the Giddings field; three years earlier there had been only 1 to speak of, the No. 1 City of Giddings. Of those 150 wells, 75 belonged to Holifield’s three principal clients. Counting all the wells in the area, the Giddings Austin chalk field was now producing more than 14,000 barrels of oil each day. Together Humble, Windsor, and U.S. were already producing an average of 9615 barrels of oil, or the equivalent of $350,000, each day. With only a few exceptions, those who did not have Holifield’s services drilled mostly dry holes. But Humble, U.S., and Windsor hit oil on an unheard of nine out of ten wells; seven of every ten wells they drilled were commercial producers. As most everyone acknowledged, the reason for that phenomenal success rate was the genius of Ray Holifield.
The Boom Is On
In early 1979 the oil people finally descended in force upon the little town of Giddings. They came by airplane, automobile, and freight train, in Cadillacs, Broncos, pickups, pumper trucks, and tractor trailers. Some even came on foot from hundreds of miles south. They represented every class and station of the industry. There were promoters, geologists, geophysicists, landmen, lease hounds, lawyers, tool pushers, completion men, pipeline crews, logging crews, mud crews, frac crews, and acid crews. There were also droves of plain old ordinary rough necks, most of them young men in their twenties or early thirties, many of them long-haired Anglos and undocumented Mexicans, some of them veterans of drilling booms in Alaska, Louisiana, and the Rockies. By the time the word was out: the Giddings Austin chalk oil boom was for real.
The people of Giddings could hardly believe their eyes. The city’s four small motels were overflowing; so were the two trailer parks. Ever rent house was occupied. Out in the oil fields, people were sleeping in tents, in their cars, and in every halfway suitable shanty. To accommodate his employees, Clayton Williams built his own trailer-park town just outside the city limits. It had an office building, a helicopter pad, and a gravel road marked with a sign reading “Williamsville, Speed Limit 15 mph.” Later, Dub Dixson, the owner of Schubert’s restaurant, installed a row of turned-over oil storage tanks next to his restaurant and began converting them into motel rooms, intending to rent them out for $24 a night, including board at Schubert’s.
Up to this time, the Giddings field had been the province of fewer than thirty companies. Now the number of operators swelled to more than one hundred. Though most of the newcomers, like those before them, were independents, their ranks eventually included no less than mighty Exxon. By trial and error the new players learned what Ray Holifield and his clients had already discovered—that the Giddings field was like no other they had ever encountered. Usually oilmen find gas “up dip,” closer to the surface, and oil and water “down dip,” or deeper. This pattern occurs principally because gas and oil are lighter than water. But in the Giddings Austin chalk play the laws of nature seemed to be reversed. The drill bit found water and oil up dip and gas down dip.
The newcomers realized that the Giddings field was not a continuous underground layer of oil-producing areas but a garden of sweet spots, some interconnected with other fracture systems and some more or less isolated. Each well was like its own separate field. Instead of being either horizontal or vertical, fracture systems containing oil tended to lie at an angle like the fingers of an upreaching hand. The fracture systems could be two hundred feet thick, depending on the thickness of the chalk, but they were a very narrow target, perhaps only two hundred to three hundred feet wide. For that reason wells had to be drilled exactly above the spots where the seismic data indicated the fault or fracture systems to be. Closelogy did not necessarily work. A dry hole could easily be drilled within a few years of a terrific producer.
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