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Harold Hamm on Oil, Climate Change, and His Divorce Harold Hamm on Oil, Climate Change, and His Divorce

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Harold Hamm on Oil, Climate Change, and His Divorce

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As founder and CEO of Continental Resources, Harold Hamm controls the most drilling rights in the Bakken oil field.(Amy Harder)

WILLISTON, N.D.—Washington's fixation on Harold Hamm, the onetime top energy adviser to Republican presidential candidate Mitt Romney, has waned since the former Massachusetts governor lost the 2012 race. But as long as America is booming with oil, as it is here in the Bakken shale-oil fields of North Dakota, Hamm will be more relevant than he ever was in Romney's campaign.

Hamm is founder and CEO of Continental Resources, the independent oil company with the most drilling rights in the Bakken and Three Forks oil-formations spanning Western North Dakota and bits of Montana and South Dakota. That makes him one of the most influential oil-industry executives and one of the richest people alive. Forbes ranks him the 90th-richest person in the world with a net worth of $11.3 billion. (For a profile of Hamm, click here.)

 

In an interview over biscuits and gravy at a Holiday Inn Express off an ugly industrial-lined highway in the heart of America's oil boom, Hamm weighed in on fracking (doesn't want federal regulations), climate change (suggests population control), and wind power (he's not a fan).

In a follow-up phone interview from his company's Oklahoma City headquarters, Hamm commented on his divorce—which could involve the world's most expensive settlement ever—and why he doesn't think he'll get back into national politics.

Edited excerpts of both interviews follow.

 

NJ: One of the biggest concerns within the Obama administration and among environmentalists is that the oil and natural-gas industry is not clamping down enough on flaring, the burning off of natural gas at drilling sites instead of capturing and processing it. What's your response to these concerns?

Hamm: We have takeaway capacity for natural gas and have had it all along. What does take time is to build the gas plants and also put the gathering systems together. That is slow. You don't have imminent domain in North Dakota. That slows the process.

But I can say this: 10 percent of Continental's gas is flared. We're gathering 90 percent.

NJ: The Interior Department is finalizing rules that will strengthen regulations on oil and natural-gas drilling operations on federal lands. This includes hydraulic fracturing, or fracking, the controversial technology environmentalists have blamed for water and air contamination. How will these regulations affect your business?

 

Hamm: State regulators have done an awfully good job. [North Dakota] is no exception. Finest regulators that exist anywhere.... You have to comply with [the regulations]. Getting leases from the federal government in some places is just nonexistent. We've got instances where we've been waiting on leases to be put up for sale. We've been waiting two or three years.

NJ: Will the fracking regulations slow drilling in the Bakken?

Hamm: It all does. It needs to be left to the state. The geology differs state by state. The conditions differ state by state. Most of the rules we're involved with from a regulatory aspect have been adopted from the early producing states—Oklahoma, Texas.

NJ: How is the Obama administration doing overall with its energy policies?

Hamm: I think there has just been a bias against fossil fuels. They think if we don't produce it here, it's not going to be used, which is totally wrong. It'll be imported from some place we're not going to like. Or exported—it's going to be burned somewhere.

It would be very, very good if we didn't have a government that was intent on putting us out of business. They don't like oil and gas. They don't like fossil fuels. They want to end us. That's the belief out here in the industry. If we didn't have that overhang, it'd be a lot easier to work with the federal government.

NJ: Do you think [Interior Secretary Sally] Jewell's recent visit to North Dakota could help change that?

Hamm: That was huge. I think Secretary Jewell can help move the needle and basically get rid of the hostility … that we've put up with for the last four and a half years now.

NJ: What do you think of the climate-change agenda Obama unveiled earlier this summer?

Hamm: I don't listen to him a whole lot. Everybody is concerned with the environment. The thing about the Bakken oil: This is the best, highest quality, clean oil ever produced.

I don't know if you noticed a difference in diesel prices over the last two years. Diesel prices are down about 50 cents a gallon. A big reason for it is the light premium oil that has been fed into the markets from the Bakken.

Is it helping consumers? Is it helping the environment? Sure.

NJ: Is it better than other kinds of oil?

Hamm: Heavy bitumen, for instance—it takes a lot of energy to put that into a form you can use.

NJ: You mean oil sands, like those being developed in Alberta, Canada?

Hamm: Yes. You have to change its electrical content to use it.

NJ: In 2007, you testified before a congressional committee that developing renewables that are cost-effective is a "no brainer." Do you see a role for renewables today, as the country confronts climate change?

Hamm: I think we should always be aware of the environment we work in. Nobody wants to damage the environment that we're working in.

Does mankind affect the environment? Well, yeah, we all do. Should we talk about a lot larger things to control it? Probably. Overpopulation—that probably hurts the environment more than anything. Are we going to provide rules to stop overpopulating areas in Africa? Middle Eastern countries? Probably should. China did. Stop overpopulating areas with people. Should we in the U.S.? Maybe we should think about that, if we're truly concerned about that. Overpopulation is probably the biggest concern for the environment.

More people, more energy.

NJ: Does renewable energy have a role?

Hamm: Sure, we're seeing wind. I've had some concerns. Without being subsidized, it's uneconomic. We have more clean-burning natural gas. Wind doesn't blow all the time. It doesn't turn those generators all the time. So you have to have a backup, and that backup is natural gas. We have 100-some years' supply of it. As a geologist, I think you have a 200-year supply of natural gas.

Should we be subsidizing wind? No. But we are.

NJ: Would you support wind as long as it's not subsidized?

Hamm: If it's economic and people want to do it, fine. I frankly don't like to see a wind turbine. Once they're there, they haunt you. That's your viewshed. That's what you look at. All those things standing out in the distance, we have them all over Oklahoma. And it doesn't look very good. I frankly don't like it.

NJ: So Continental doesn't have any plans for expanding into the wind sector?

Hamm: That's not my business. We're not going to do it.

NJ: Do you think the oil boom raises legitimate environmental concerns and other worries, such as infrastructure?

Hamm: There is usually a negative to development and growth. If you want to look at one side or another, like the traffic in North Dakota, that is a negative. Heavy traffic, you might have to wait in line a little longer, but, yeah, we're building four-lane roads.

There is [a] negative to just about everything. It's like flying. [The plane] crash that happened in San Francisco. Do we want to stop flying? I don't think so.

Somebody wants to plow through the weeds, they're going to keep looking through the weeds. It's all a matter of perspective.

NJ: Have you kept in touch with Mitt Romney since the presidential campaign?

Hamm: I have. We're not talking regularly or anything, but I talked with Mitt since the campaign. Mitt's a good guy. He's probably a better candidate than we deserve.

NJ: You're heading the reelection campaign of Oklahoma Attorney General Scott Pruitt. Do you see yourself getting back into national politics?

Hamm: My little stance was very limited, short and over really quick. I thought we did a good job, and the work that was done with the governor, he delivered it very well. It certainly was what we needed. He is the first one to really pick up the thought that energy independence was going to be possible, probable, and was going to mean so much.

I don't think my political future is bright. [Laughs] I just have so much that I have to do, and if I can help, certainly I'd be glad to if I needed to help out. I've got a full-time job.

NJ: Your company lobbies on the federal level very little. Continental has spent just $60,000 on federal lobbying since 1992, according to data compiled by the Center for Responsive Politics. Why is that?

Hamm: We do lobby very little. We're not involved in everything. A lot of things don't concern us, a whole lot. So we try to pay attention, keep our focus on the stuff that really does matter.

I'm an "oil-o-crat," instead of a Democrat or a Republican. I try to pay attention to really what concerns us in energy and about our business.

NJ: Should natural-gas vehicles be taxed similar to how gasoline faces a tax?

Hamm: When you fill up, you're paying 45 cents a gallon of tax to build highways, and yet natural gas shouldn't? Those cars weigh the same amount. Those trucks weigh the same amount, maybe heavier. And yet they're getting a free ride, and how long is that going to last? Until all the bridges are gone? Until all the roads are torn up?

It's going to have to be [taxed]. How else are you going to repair roads? And why should they have a free ride? They shouldn't.

NJ: On tax breaks, do you think independent oil and gas companies like yours should be treated differently than the major oil companies like Chevron and Exxon Mobil?

Hamm: It's a different business. The independents drilled 95 percent of the wells in this country. Major oil companies, integrated [oil companies], [and] refiners [are] basically what they are; they're not the ones that caused this energy renaissance. They didn't do this. All this came from the independent sector.

NJ: So do you think you should differentiate tax breaks between independents and the integrated companies?

Hamm: The industry doesn't like to put ourselves in a situation of us against them. Because we need them. I need them to refine our oil. So we haven't put ourselves against them. Likewise, they're not pointing fingers over at us. I'd be very hesitant to do that. It is a different situation. It's not the independent sector out there with obscene profits. I'm not saying there are obscene profits, because they're not. Big companies have to make money to hire people and do all the things they have to do.

NJ: There is a ban on exporting U.S. oil overseas except from Alaska. Do you think we should begin exporting crude oil, now that we have so much of it?

Hamm: Absolutely. We'll have more come on in different places and certainly being able to export in some areas of it makes all the sense in the world. We're not a closed society here. So that doesn't work.

[The ban] ought to be lifted altogether. It doesn't need to be there at all. We need to go ahead and approve these applications on exporting natural gas. It could go to a lot of countries today that are depending on the Soviets, for instance.

NJ: How has your divorce settlement, which could be the most expensive in U.S. history, affected you both personally and professionally?

Hamm: I don't know how much I want to talk personally. I've tried to seek a balance in life, like everybody does. I'm very focused on my work. And I've been able to remain focused on my job and the work that I have to do here, the company, at Continental. I want the company to do well, and it is. That's maintained my focus. I'm glad.

NJ: Are you surprised your divorce is getting as much attention in the media as it is?

Hamm: Yeah, there have been folks blowing it out of proportion.

NJ: What goals have you set for Continental?

Hamm: We've got a new goal this year, sure enough, five years from 2014 going forward, and that is to triple the company again. Every time you get bigger, that [mountain] gets a little bit taller and harder to climb. So we hope to be at 300,000 barrels oil-equivalent a day in five years from 2014, and we're well on the way. A lot of it will come from the Bakken.

NJ: Any last thoughts you want to drive home?

Hamm: There's been one thing that's caused this whole boom, and it's horizontal drilling. It's created something here that is so important, more so for oil and what oil means for the U.S., than natural gas. We're not importing natural gas from the Middle East. We're not fighting wars over there for natural gas. We're fighting wars over there and have troops there and being very intense on security over oil. That's what it's all about.

It's hard to understand why the administration isn't embracing this great renaissance of oil.

This article appears in the August 20, 2013 edition of NJ Daily.

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