Energy Leaders Today: Minard Run: Oil Pioneers of Pennsylvania

Minard Run: Oil Pioneers of Pennsylvania
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Rebecca Rodriguez on 05/03/2010 22:28:00
 
The history of the Minard Run Oil Company is the history of the oil industry
itself.
Its prestigious beginnings stretch back to 1859 when its founder, Lewis Emery,
helped Edwin L. Drake drill the famous Drake well. It became the world’s first
commercial oil well and launched the modern petroleum industry.
The prestige continues into today. Minard Run is now the world’s oldest,
family-owned, independent oil company.
The company’s fortunes have risen and fallen with the rest of the industry,
but these days, Lady Luck is smiling on this small, independent oil producer.
And shallow oil and gas are the main reasons.
“We get associated gas. It used to be a nuisance, but it’s not a nuisance
anymore. It has some value and we’re glad to deal with it,” said Fred
Fesenmyer, president and CEO. “It comes with the oil, like an apple with a
peel.”
Minard Run, based in Bradford,  Penn., is strictly a shallow oil and gas
producer.  Since 2000, it holds 700 operating wells, producing 500 barrels a day
and 2,000 Mcf of natural gas.
The company now finds itself with an exciting new prospect on the horizon.
The Marcellus Shale rock formation that underlies much of Pennsylvania, New
York, Ohio, and West Virginia has created an explosion of drilling and leasing
as a result of recent technologies known as hydrofacing and horizontal drilling.
Minard Oil could stand to make big money from this geological discovery by
leasing land that it owns above the formation.
Large oil companies, such as Exxon, are beginning to come into the area buying
up land for drilling purposes.
“They just don’t go out into any area,” said Fesenmyer. “They bought it
for a reason,” adding that the result could mean a huge economic boom to the
region.
The formation is thought to contain about 50 trillion cubic feet of natural gas,
which is enough to supply the United States for two years with a wellhead value
of one trillion dollars.
At about 5,000 feet deep, Marcellus is out of reach for Minard Run’s shallow
drilling, which drills to about 2,500 feet.  But Minard Run owns about 15,000
acres above Marcellus and is looking to team up with an Exxon-like company to
lease the land, Fesenmyer said.
The result could be lucrative, but Fesenmyer is playing it safe.
“I’m trying not to get too excited. I don’t want to put the whole farm on
Marcellus,” he said.
Fesenmyer is actively looking for a partner, but does not plan on selling the
land.
“If it doesn’t work out, I’ll still have land to produce shallow oil.”
Being prudent and forward-thinking has kept his company strong throughout the
past 134 years.
“We do our homework, we’re professional,” said Fesenmyer. “We don’t
cut corners or take a lot of risks. It’s a cyclical business and you have to
weather the storms and not get too greedy when things are good.”
Fesenmyer has been head of the company since 1976, taking over for his father
who ran the business before him. He is the fourth generation to head Minard Run,
although the law school graduate from The University of Denver never imagined he
would lead the company.
“I thought I’d stay five or six years and then go back to Colorado,” he
said. “That was thirty-four years ago and I’m still here and I don’t
regret it. I didn’t start out with this in mind and I didn’t think I had it
in my blood. But as time went on and I became more familiar with the industry,
it began to grow on me and I jumped in with both feet.”
The oil blood runs strong in Fesenmyer’s family. Six generations of the
Fesenmyers have been a part of Minard Oil. His son, Rick Fesenmyer III, is in
the business, and his grandson works on an oil rig. Fesenmyer III recently split
off from Minard Run to head his own subsidiary servicing wells.
“It’s a way for my son to break away and show me and himself whether he
wants to be in the business and can handle the business,” Fesenmyer said.
“He’s been with me for over twenty years and has the desire.”
The plan, Fesenmyer said, is to keep the tradition going and have his son take
over the company someday. But at 70 years old, he said he doesn’t plan on
retiring any time soon.
“The kids won’t let me,” he said with a laugh.
Fesenmyer’s daughter, Meredith, is head of environmental and safety issues,
and Fesenmyer’s two sisters and older brother sit on the company’s board of
directors with him.
Fesenmyer has served as the chairman of the Pennsylvania Oil & Gas Association
for about 25 years.
Lewis Emery, the founder of the company, was Fesenmyer’s great-grandfather.
Emery was a Pennsylvania state senator and maverick oilman.  He challenged and
“outsmarted” J.D. Rockefeller who monopolized the railroads in the mid
1800s, Fesenmyer said.
Emery established the U.S. Pipeline Co. and piped the oil underground and under
the railroads.
“When J.D. heard about the pipeline under his railroad he was not pleased. He
put men there and fights ensued,” Fesenmyer said. It got to the point where
Rockefeller brought in a steam engine and “steamed” Emery’s men.
“So my great-grandfather got a steam engine and steamed them back,”
Fesenmyer said.
That feistiness has carried over to today as Fesenmyer finds himself battling
environmentalists and the U.S. Forest Service over use of the Allegheny National
Forest, comprised of about 530,000 acres in Pennsylvania.
In December 2009, Minard Run won an injunction in federal court allowing them to
drill after having been banned for more than a year.  The government argued that
Minard Run should not be allowed access to the minerals underneath the national
forest. However, Minard Run claimed the land was sold in the 1900s to the
government as “surface” owners with a stipulation that the oil companies
wouldn’t be denied access in the future.
“We lost millions, and jobs were lost as well because of this,” Fesenmyer
said. “We lost six  to eight good months of drilling and we’ll have to wait
until May or June to drill again,” he said explaining that the company would
need to wait until after March’s mud season which can wreak havoc on equipment
and tear up logging roads.
“I sometimes get very frustrated when environmentalists stand in our way and
shut us down when we’re trying to produce a valuable commodity,” he said.
Oil and gas are necessities for a society that demands comforts, he said. And he
sees them as a bridge to developing new energies like wind- and solar-power. Oil
and gas are in finite supply, Fesenmyer explained, adding that the future
depends on alternate energy sources rather than fossil fuels.
“Remember the ‘70s embargo when everyone was scrambling for energy? We
don’t need to do that again,” Fesenmyer said. “We can use the resources
here if we’re allowed to do so. And that means less dependency on foreign
countries.”
A solution that is all-American, just like his company.