October 13, 2008

“At current national rates of oil consumption,” he told me, “the amount of oil we’ve found should last about an hour and a half.”

STILLWATER, OKLA. (Fortune Small Business) — The drilling rig rose incongruously over the peaceful college town of Stillwater, Okla. It roared and screeched with activity. Roughnecks, slathered head to toe in mud, scrambled and cursed a blue streak as they threw chain and tripped out two-ton stands of pipe. D.G., a.k.a. “Stretch,” a good-natured chain hand, weighed in with a salvo of riotously profane slander, largely addressed to his fellow oil drillers. It could have pinned back the ears of the most depraved drill sergeant on earth. It could have peeled paint.

“There, write that in your magazine!” he yelled with a grin.

I had joined these characters on the Stillwater Project oil rig because, against the back-drop of a global energy crisis, I was hoping to witness the moment when a rock hound named Mark Herndon found out whether he could actually strike oil by drilling horizontally beneath a small Oklahoma city.

Everyone is here because of Herndon. There’s the full hierarchy of the oil patch - from the lowliest worm hand to the studly directional drillers with their black books and their azimuths, rocking out to Neil Young in their air-conditioned trailers, to Bob Graves, 48, the drilling superintendent, whose job is to keep the rig running at all times, to Jess Porter, 56, president of EEC Inc., who found the 17 investors from Oklahoma and as far away as Indiana.

They’re all here because Herndon, an independent oil geologist, had a thought - a fleeting moment of inspiration - while driving down the road in the middle of the night two decades ago. The “unconventional stratagraphic play” Herndon dreamed up was about oil hidden in a tight, ten-foot zone of sandstone a mile deep that nobody had ever bothered to drill for, perhaps because it lay beneath a city. But what if somebody drilled, horizontally, beneath the Wal-Mart (WMT, Fortune 500) and the Applebee’s and the Starbucks (SBUX, Fortune 500), beneath the campus of Oklahoma State University, winding up directly under Boone Pickens Stadium? What if the fancy new tools of directional drilling could bore a mile into the earth, make a 90-degree gradual bend, and hit a target the size of a beach ball?

“Drill bits can oscillate,” Graves explained to me over dinner. “They’ll wobble like a cowboy’s lasso, making a circle as much as ten feet in diameter, and you’ll never know until it’s too late.”

On the evening when the bit was scheduled to hit its target, Herndon determined that it was coming in too high. Without adjustments, it would miss the Skinner Sandstone entirely. Several times that night, like an air traffic controller, he directed the drillers to adjust their course.

Then, at 3:45 A.M., with the drill 88 degrees from vertical, Herndon made the call of his life - the bit was still coming in high…