Bruce Benson has served as the President of the University of Colorado (CU) for the past 7 years, making him the longest-serving CU president in more than half a century. During his time at the helm of one of the nation’s top-tier universities, CU’s research funding has reached record levels, supporting the university’s research strengths in a variety of fields including energy.
Long before accepting his position at the University of Colorado, something he repeatedly said he never dreamt of doing, Benson started out with one oil rig in the back of his truck, working to build Benson Mineral Group, which still owns royalties in assets today.
With 50 years of experience in the oil and gas industry, and seven as the president of a nationally respected university, Oil & Gas 360® asked Bruce Benson to share his start in oil and gas, as well as education, and his thoughts on today’s markets in the first part of OAG360®’s exclusive Top Minds in the Business interview with the President of the University of Colorado.
OAG360®’s Exclusive Interview with Bruce Benson:
OAG360: Bruce, you spent most of your life in the oil and gas industry, what made you decide to go into education?
BENSON: Well, there is a long history on this because it isn’t like I just popped in here seven years ago. I’ve worked with my kids in schools, and served on boards and everything else through many, many years. I helped start the foundation down at the Auraria Campus, which is Metropolitan State University, the University of Colorado Denver, and the Community College of Denver. And then I went on the commission on higher education. I chaired that for several years. So that was over-coordinating of everything, all higher education, private, public and proprietary in Colorado.
Then Colorado Gov. Romer came in and he asked me to do some transition for him for higher education for Colorado. Then Gov. Owens had me chair a committee to reform higher education so we changed a lot of governing structures, put on a lot of other governing boards, made a lot of cuts, all kinds of things. Then Gov. Ritter had me chairing, or co-chairing, his P-20 counsel with Barbara O’Brian and that was pre-K all the way up thru graduate school. On top of that, I was on the first big financial campaign for the University of Colorado. Then I co-chaired a $1 billion campaign and a $1.5 billion one, and so I’m pretty conversant with all of this through the years. And never dreamt of doing this [becoming president of the University]—it never crossed my mind. Two presidents ago, when they hired that president, I was asked to be president during the search, and I said ‘you’re out of your mind. I’m not going to do it.’
Then I had lunch with one of the past presidents, and he said ‘I guess you’re it.’ And I said ‘for what?’ and he said ‘For president of CU.’ And I said ‘John, don’t even go there.’ And he said ‘No! You’re gonna shut up and I’m gonna tell you why.’ Well he made sense—you have business connections, community connections, fundraising, knowledge of higher ed from a volunteer point of view: finding, funding, financing, Washington, politics. So I came over to talk to Hank Brown about it, who is the current president, and he endorsed me. Then I talked to the chairman of the search committee for the regents and he said ‘ I’ve been telling you for the last several years you should be doing this.’ I said, ‘I’m thinking about it’ and he said ‘do it!’ so, that’s how I got here.
OAG360: They wore you down, huh?
BENSON: Yeah, kind of. Never dreamt of doing it. Just not on my agenda.
OAG360: So, can you tell me a little bit then about how you got your start in the oil and gas industry?
BENSON: Sure. I was back east studying agriculture at Cornell University, and I couldn’t stand it so I said I’m gone, and I headed west.
My car blew up in Iowa. I grew up on farm, so I knew a mechanic, so I hitch hiked to town and I got my car to the junk yard; they gave me three $10 bills and I gave them the keys and I hitch-hiked to Wyoming. And after digging ditches and cutting timber, I got a job on a drilling rig and I pretty much have been there ever since. I decided when you’re sitting there [at a well site] at two o’clock in the morning, things are a little slow, and you’re talking to a geologist, and he’s telling you about all the stuff that’s coming up out of the ground—what the rocks are and what they tell you—I got pretty fascinated and decided I ought to go back to school and study geology.
OAG360: And what does your involvement look like in the industry these days with Benson Mineral Group?
BENSON: Pretty slim. You know I started the company in ’65 right out of school with one little broken down drilling rig, and built it up till we were 16 rigs. We had 10 divisions of the company and a lot of debt in ’81. In ’80-’81, I started selling down, paying off all the debt, kept a few hundred wells, like 400 I think, and sold everything else off, and stayed that way and did not go back into the service business because we had drilling rigs, supply stores, trucks, salvage operators (we were the biggest salvage operators in Oklahoma). We were wrecking oil wells, plugging them up, cleaning them up, selling the equipment, so we did all of those kinds of things. And I said okay, we’re going to get out of that and just be in oil and gas.
So about that time the rig count went from 4,530 down to about 2000 in about a year and I was getting like $15 a foot in Kansas drilling, and then I went back to drilling, and all the extras were paid by the operator, not the drilling contractor. When I went back to drilling it was $7.50 a foot, everything included, and that was quite a change, so we went back and we probably drilled another few hundred wells, roughly 500 or more I suppose, I don’t know, and built up again. And then I decided that I would change the MO of the company, started going to royalties and overrides and non-operated.
We used to operate everything, but [we decided to] make it a simple company. So it’s still there, that’s why it’s still sitting over there, and it can run pretty well by itself, and I’m over here [running the University of Colorado system].
OAG360: So you’ve had the chance to see several price cycles now, what’s your take on this one? Is it any different?
BENSON: No. I just think it’s another one. I’ve seen it back when oil was $3, and when we corrected all this stuff out for gravity and royalties and taxes, it was $2 and that stayed that way from the time I started until about ’73 when it started going up. By ’80 it actually hit $40 a barrel, they put in windfall profits, taxes. Look at natural gas: the first gas I ever found, they offered me $0.07 a thousand cubic feet, provided I take it to them—build the pipeline—I said plug it. So we’ve been through all those bad prices.
And then it started changing, I drilled 60 or 70 wells out in the middle of the Hugo field, an old abandoned section, got prepayment funding, all kinds of stuff. So we built back that way. That $40 oil then corrected back down real quick and windfall profits taxes came in so that’s 1980, and we’ve seen a couple more in the 80’s. So we’ve weathered the storm and it’s just part of the cycles of this business. You know, in ’08 oil hit $147 a barrel, end of June I believe, and by the end of the year it was $35, or something like that. So yeah, then it recovered back up to $105. It depends on who you read but you’ll see some people saying that it will never come back. Well, it’s already come back from $42 or something, up to, I wrote it down,$58.14 today and it’s been over $60 in the last couple of weeks. So who knows?
OAG360: What’s your take on the OPEC involvement in this? Do you think it was done intentionally to get shale out of it?
BENSON: Sure. Forget OPEC—it is the Saudis. The Saudis just said ‘we’re tired of losing market share and we’re going to stay in there and somebody else can cut [their production] for a change. And I don’t think they are particularly happy with the United States, I don’t think they’re very happy with Iran and they’re not very happy with Russia.
Their attitude was: let’s force these other guys to do something. Well, you’ve already seen that we’ve got 800 and something rigs running now and a year ago we had 1900 or so—1850-1900 I think. We’re down to less than half. Contractors are cutting their costs again, we’re still drilling as non-operators, I think we’ve drilled 20 wells as non-operators through [Colorado’s] Western Slope. But you know, they send you the AFE, you look at it, you sign it, you send it in, you send your money, they start drilling, they start giving you reports, and pretty soon you get production, so you’re not sitting there on top of it hiring people, buying the equipment and everything else. So it’s non-operated overriding royalties.
So we had those cycles. I can’t keep track of them all. This is just part of the business. For those of us that have been around a long time, with no debt, we’ve survived. For those who built up a lot of debt, you’ve seen some companies here in pretty serious trouble. Cause they built on debt.
OAG360: So do you expect that they’ll continue this program of ramping up production in Saudi Arabia or in the OPEC countries?
BB: I don’t think they’re ramping it so much as holding their own. I think you’re gonna see some stuff cut. You know, we’ve already gone up 4 million barrels a day in this country to 5-9 million barrels per day production; that’s going to start coming back down. When you drill a well, once it’s on production you’re gonna keep producing [from that well] even though you may not be drilling more.
OAG360: Do you think the U.S. should lift its export ban on crude oil?
BENSON: I’d get rid of all these damned stupid controls. I’m not exactly a liberal. I just think that, you try to force economies and you end up in trouble. And that’s what’s happening.
OAG360: What’s your take on liquefied natural gas?
BENSON: Great. Again, we get into price dynamics. You know, I’ve sold gas for $12, natural gas for $12 or so, I don’t remember exactly, now we’re back to under $3, we’ve been through all of it.
Like I said earlier, the first gas I found I got offered $0.07 [per Mcf] for it. When I went out to western Kansas, the Hugoton and all that, the reason I got into it was because an old curmudgeon at Wichita Falls said you’re so high on this stuff, you think it’ll go to $0.50. I’ll show you where [to look] in this section of the Hugoton. So I gave him an override, we did it, and we ended up drilling 70 wells or something. We never sold gas below, $1.40-something. So it went up very rapidly.
Something that no one ever talks about is gas hydrates. There’s a hell of a lot of gas in gas hydrates. Just figure out how to get it out. And there are a lot of people working on that.