Page 2 of 2
There was an error finding data for one of the linked stories. (nid: 20881)

Who Fracked Mitt Romney?

Meet his top energy adviser: billionaire oil tycoon Harold Hamm.

Continental would rather not discuss its role in these growing pains. The company's workers in North Dakota are not allowed to speak with the press, a secretary in the company's Tioga field branch explains as she hands over a card with phone numbers for an Oklahoma PR office. When I turn it over, I realize the card was meant not for reporters, but Continental employees. It counsels against providing the press with "unnecessary elaboration," details on "extent of injuries/fatalities" from accidents, or "statements reflecting fault or blame."

"When it's all said and done," one business owner says, "there will be an oil well here every 1,000 feet. It will look like Odessa, Texas."

For an uncensored view of the Bakken, I head over to Whispers, a strip club and blackjack house in Williston, an hour to the west. According to the Census Bureau, Williston is the nation's fastest growing "micro area"­—its 2011 population was up 16 percent from the 2010 census. One of the owners of Whispers, a rotund man in a Harley shirt, says business was so slow five years ago that he and the bartender would spend most of the night playing cribbage. "Now I look around at the customers, and I don't recognize anybody." He claims Williston's male-to-female ratio is around 120-to-1 nowadays. In any case, the strip club is booming: "They said they will be drilling here for the next 30 years," he says as a dancer across the bar pretends to suffocate a guy with her breasts. "They said when it's all said and done, there will be an oil well here every 1,000 feet. It will look like Odessa, Texas."

Troy, a baby-faced 20-year-old from Oklahoma who's nursing a Bud Light longneck, is the same age as Hamm was when he started the company that became Continental. He hasn't heard of his fellow Oklahoman. Then again, pulling down six figures as a rig worker doesn't leave him much time to scrutinize the Forbes 400 list. "I'm the little guy making good money right now, but I'm still the little guy," Troy says. "I'm working my ass off."

OVER AT THE North Dakota Heritage Center, a popular field trip destination on the leafy grounds of the state Capitol, the fossilized mastodon and stuffed buffaloes have a new neighbor: a shiny 55-gallon drum labeled "Crude Oil." It's part of a permanent oil industry exhibit under construction thanks, in part, to Hamm's recent $1.8 million donation.

The exhibit will inhabit a new Continental Resources-sponsored "Inspiration Gallery." "The more we look at it, the more it kind of relates back to the homestead era," says Claudia Berg, who is coordinating the expansion, as she shows off a fancy scale model. "There's families living in small little trailers and whatnot; they're the same size as what a homestead shack was."

Harold Hamm "wouldn't be giving that contribution unless he wanted something for it," says a local environmentalist.

Hamm and his company also have doled out school backpacks with Continental logos, donated $50,000 to the Tioga fire department, and regraded miles of public roads needed to service Continental's wells. A renovated emergency room in the town of Crosby will bear Continental's name. But Hamm's largesse has also raised eyebrows in this fiercely independent state. "He wouldn't be giving that contribution unless he wanted something for it," says Don Morrison, executive director of the Dakota Resource Council, an environmental group representing farmers and ranchers.

Hamm's top political priority here is to reduce North Dakota's 11.5 percent oil tax—fairly high by national standards—which accounted for most of the $50 million Continental reportedly paid in state taxes last year. He has joined forces with Ed Schafer, the state's former GOP governor, who in January 2011—just as the Legislature was debating how to dole out the budget surplus—founded a one-cause advocacy group called Fix the Tax. "If you've had enough about high taxes allowing more spending each year, then join us," Schafer beckons in a YouTube clip. Late last year, he joined Continental's board of directors with a compensation package worth more than $770,000.

IN JULY 2011, Hamm flew to Washington to join Bill Gates and Warren Buffett at a philanthropy conclave organized by the White House. Hamm later told the Wall Street Journal that he had pitched the president on the merits of more drilling, arguing that America has enough oil in the ground to replace what it buys from OPEC. According to Hamm, Obama was unimpressed, stressing instead that the nation's future lies with alternative energy and predicting that battery-powered cars would soon get the equivalent of 130 miles per gallon. "Even if you believed that," he told the Journal, "why would you want to stop oil and gas development? It was pretty disappointing."

Click here to see more fracking-related charts.Click here for more fracking charts.Obama is hardly a foe of oil and gas. While opposed to industry tax breaks, he pledged to open more of the Arctic to offshore drilling, gave a nod to fracking in his convention speech, and fast-tracked federal permitting for drilling in the Bakken. Hamm has made a good chunk of his fortune during the Obama presidency. Still, he is justifiably concerned about what comes next. Continental, which has vastly outperformed its rivals in the five years since it went public, has shed more than a fifth of its stock value since February—costing Hamm and his family some $2.5 billion.

Hamm is lobbying hard for the Keystone XL pipeline, which could reduce his costs dramatically.

The company is now in a bit of a pickle. It can no longer hope to ink sweetheart mineral leases like the ones Hamm snatched up early on, and it faces far higher operating costs than its rivals with conventional drilling operations. Lacking sufficient pipelines, Continental exports much of its Bakken crude by truck and train, which adds as much as 30 percent to its costs. Fixing that, Hamm seems to have concluded, merits a bit of arm-twisting. He has hired political operatives including Mike Cantrell, a veteran of oil industry trade groups, and Blu Hulsey, a former spokesman for one of Big Oil's favorite senators, Oklahoma Republican James Inhofe. And he came out swinging in the media last winter, after the Obama administration announced that it would delay approval of the environmentally controversial Keystone XL pipeline linking Canada's tar sands to Texas' oil refineries. (The pipeline would also carry oil from the Bakken, allowing Hamm to cut his costs substantially.) Asked on CNBC's Squawk Box to comment on the "dirty" reputation of tar sands oil, Hamm brushed off the concerns, insisting that North Dakota needed the pipeline to export "the best-quality oil anywhere."

Hamm is also leading the fight against Obama's proposal to close oil industry tax loopholes. His Domestic Energy Producers Alliance has spent more than $500,000 on lobbying, with the tax issue as its top priority. In written testimony for a June Senate hearing, Hamm claimed that eliminating the subsidies would force his company to cut back production by one-third. "The unintended consequences if we are not careful, by changing these rules, could be devastating," Hamm said. "We could stop this energy renaissance."

"I don't mind the man camps," Darrington adds, but "our roads are crap and our grass is gone."

Like other fracking tycoons, such as super-PAC high roller Trevor Rees-Jones (read my profile of him here), Hamm has thrown his full weight behind Mitt Romney, speaking out on his behalf and hosting a $1,000-a-plate fundraiser for him in Oklahoma City. (As of September, the fossil fuel industry had given Romney and his super-PAC some $14 million.) In return, the candidate became a full-throated cheerleader for oil and gas interests. "My view is that we don't know what's causing climate change on this planet," Romney said during the primaries. "And the idea of spending trillions and trillions of dollars to try to reduce CO2 emissions is not the right course for us."

One thing is certain: Whoever is in the Oval Office next year can bank on the Bakken boom. A rig every 1,000 feet and a millionaire every mile might not be that far away. "A lot of people who've had a hard time in our community are now doing very well for themselves," says Nikki Darrington, the wife of a farmer and water-well driller whom I meet at a street festival in Watford City. She cradles her 11-month-old, Gavyn, who has just wowed the festival's baby pageant with his seersucker onesie. "I don't mind the man camps," Darrington adds, but "our roads are crap and our grass is gone. I used to get a wave from every single person, and now I know that they are not going to wave because they are too busy focusing on the street because they know they are going to get run into by a semi. And the bar fights! We've never had stabbings and shootings. With all the good, there comes a lot of bad too."

Just ask the newcomers. "This place is a shithole, and it's a really expensive shithole," says Pepper, a veteran roustabout from Oklahoma who is loading up her car on the crowded gravel lot where she and her husband pay $900 a month just to park their Prowler. They were hoping to save up enough money to open a bar and grill, but not in North Dakota. "Who really wants to move up here?" she adds as her husband drags on a Marlboro Light, his thick denims caked in red dust from a long day servicing oil tanks. "When all these guys are gone—maybe not this year or next year, but 5 years down the road, 10 years if they are lucky—what's going to happen? The economy is going to go right back down where it was."

Page 2 of 2