Harold Hamm on Oil, Climate Change, and His Divorce

As founder and CEO of Continental Resources, Harold Hamm controls the most drilling rights in the Bakken oil field.
National Journal
Amy Harder
Aug. 19, 2013, 3:30 p.m.

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.

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