Jay Ewing was in the middle of a job interview with a manager at Mitchell Energy in its North Texas field office in 1982 when the office phone rang.

On the other end of the line was company president George Mitchell, calling from The Woodlands. What ensued was an argument over whether to continue testing for natural gas in a formation called the Barnett shale — a concrete-like formation that was widespread throughout the company's vast lease holdings.

“In the field the stance was that it wasn't economical, the formation wasn't viable and couldn't make enough gas,” said Ewing, who was eventually hired by Mitchell and now works for Devon Energy. “But this was Mitchell on the phone saying. ‘This is what we're going to do.' ”

It's a conversation that likely happened hundreds of times in the years that followed, with Mitchell facing constant resistance from some staff, board members and industry analysts in his efforts to make the shale pay off.

In 2002 it paid off big for Mitchell Energy, when Devon Energy realized the potential of the shales and paid $3.1 billion to take over the firm.

And now Mitchell's persistence in trying to coax energy from the common-yet-stubborn formations could be paying off for others, as shale natural gas is being embraced as a potentially huge energy source.

In just two years the country's estimated natural gas resources rose 39 percent, from 1,320 trillion cubic feet in 2006 to 1,836 trillion cubic feet, largely due to the new outlook for shale gas, according to the Potential Gas Committee. A study by IHS Cambridge Energy Research Associates calculates that the recoverable shale gas outside of North America could be larger than the entire world's gas discovered to date.

Dan Steward, a former geologist and vice president with Mitchell Energy who wrote a history of the company's development of the Barnett shale, said industry eventually would have figured out how to make shale gas profitable.

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“But George Mitchell is responsible for making it happen right now, when we need it,” Steward said.

Mitchell and his brother, Johnny, started the firm in 1946 in downtown's Esperson Building. While Johnny met with potential investors in a drug store downstairs, George, the Texas A&M-trained geologist, worked geology maps upstairs.

In the early days the company couldn't afford to buy the maps, so the brothers would borrow them from a blueprint company overnight and return them by 8 a.m., Mitchell said in a recent interview at his office in the JPMorgan Chase Tower downtown.

The company got busy in North Texas drilling for and finding oil and natural gas. By the mid-1950s George Mitchell had worked out a long-term deal to ship natural gas to Chicago via pipeline, providing Mitchell Energy with a steady customer for years.

The company got busy in North Texas drilling for and finding oil and natural gas. By the mid-1950s George Mitchell had worked out a long-term deal to ship natural gas to Chicago via pipeline, providing Mitchell Energy with a steady customer for years.

Looking at Barnett

But in the late 1970s Mitchell became concerned about the longevity of the gas flow in his fields. He didn't want all the wells and other infrastructure he'd built to go to waste. So he told his workers to find out where else on their leases they could find gas.

A technical paper by one of his geologists, Jim Henry, suggested that a shale formation in the area, the Barnett, might be the source for hydrocarbons. Shales typically weren't viewed as reservoirs for oil and gas but rather as the source of oil and gas elsewhere, “the kitchen” where hydrocarbons are created.

Mitchell noticed when drilling through the Barnett that well logs would register “a kick in gas,” but engineers told him the formation wasn't porous enough to give up whatever it held.

“I'd say, ‘Let's fracture it anyway,' ” Mitchell said, referring to hydraulic fracturing — pumping hundreds of thousand of gallons of water mixed with sand and chemicals into underground formations to break them apart and release more oil and gas.

“I'd say, ‘Let's fracture it anyway,' ” Mitchell said, referring to hydraulic fracturing — pumping hundreds of thousand of gallons of water mixed with sand and chemicals into underground formations to break them apart and release more oil and gas.

The early efforts weren't always fruitful, but Mitchell took advantage of the ongoing drilling in better-known formations as a way to conduct regular tests in the Barnett and gather data.

Eventually the company extended 36 wells into the Barnett to try out different mixes of fracturing fluids and different drilling techniques, Steward said. Many were barely commercial enough to cover the costs of completion.

One example of Mitchell's persistence was the company's first exploratory well in Denton County. The well was supposed to test whether the shale there was good enough for the company to continue to lease more land.

The team drilled in a dome structure, figuring it would likely be an accumulation point for conventional gas that would be worth producing even if the shale proved poor. But the first review of the well logs indicated neither conventional gas nor good shales, so the team decided to plug the well.

The following Monday morning, Mitchell listened to the team explain its decision.

“He then told us in no uncertain ways with a number of expletives that we weren't that smart,” Steward said. “He asked, ‘Have you really succeeded in what you set out to do with this well?' And of course he was right, we hadn't.”

A core area

So the team ran casing into the well and tested it further. It didn't have enough gas to be commercial, but provided additional data which, when swapped for readings from a different company's well, convinced Mitchell to expand into Denton County. Today the area is considered a core area of the Barnett.

Mitchell said he spent $7 million to $8 million experimenting on the wells, trying to make shales work.

His efforts, and the use of horizontal drilling that Devon applied in the Barnett after the takeover, sparked the surge in shale gas production in the last two years. Activity in several shale formations — including the Fayetteville in Arkansas, Haynesville in Louisiana and Marcellus stretching from West Virginia to New York — now is feeding high hopes for gas as a key toward energy independence, as well as worries about the possible environmental effects of fracturing.

All the new production, along with a recession-driven drop in demand, has sent the price of gas into single digits from highs of more than $13 per million British thermal units in the middle of 2008.

“Some people have said I'm to blame for driving the price of gas down from $11 to $2.50,” Mitchell said. “Well, too bad.”

tom.fowler@chron.com