Years before Rep. Paul Ryan (R-Wis.) married into the Oklahoma aristocracy, the seeds of his future wealth had been planted.
In 1996, Dan Little, a lawyer in Madill, Okla., who would soon be Ryan's father-in-law, was setting up companies that would deal in oil and natural gas leases. The plan was to collect mineral rights from around the state, then market them to oil and gas producers. The payoff: cash up front and royalties for as long as the land produced fuel.
Fifteen years later, these companies are handsomely profiting from the land grab that has accompanied the shale gas and oil boom in the middle of the country. They are multimillion-dollar enterprises and provide a steady source of family income for Ryan and his wife, Janna Little Ryan, as the GOP nominee for vice president spends the next two months on the stump pressing the campaign's fossil fuel-friendly case for more domestic energy production.
Although Janna Ryan's interests in her family business are small -- 0.8 percent of one venture, 7.8 percent of another -- the business brought the couple $20,000 to $65,000 in income last year, according to Ryan's most recent financial disclosure. They earned more in past years. Those earnings pale next to presidential nominee Mitt Romney's investment earnings. But even so, the Ryan family business ties the Republican campaign to unseat President Obama to a rarely seen but lucrative corner of the energy world: the land business.
For a Republican ticket looking to hitch itself to small business, land fits the theme. Romney and Ryan exalted small business as the engine of the economy at last week's GOP convention, banging the drum that small businesses are burdened by debt and regulation under Obama.
Romney presented himself as the small-businessman who made it big, by going it alone, by taking risks and by failing sometimes.
"That's what this president doesn't seem to understand," he said. "Business and growing jobs is about taking risk, sometimes failing, sometimes succeeding, but always striving. It is about dreams."
He could well have been talking about the land business. Field landmen -- those who don't work directly for an energy company -- are small businesses often named after their founders. Many don't have so much as a website to identify them. One land firm said it is one of the largest in the United States, because it has more than 20 landmen on staff.
Their business is hyper-competitive; they jockey on behalf of energy companies constantly striving to outbid each other for acreage. At the same time, to succeed, they have to be likable salesmen who can inject a touch of folksiness to close a deal.
GOP energy plan, 1 acre at a time
In Romney's energy plan, they would be an essential cog. In a white paper issued last month, the Romney campaign laid out a goal to make North America energy independent by 2020. Through cooperation on oil, gas and coal, he said, the United States, Mexico and Canada could free themselves of foreign fuels, all while creating 3 million U.S. jobs.
The model project would be something like the Keystone XL pipeline, the proposed oil pipeline expansion that would bring more Canadian crude to U.S. refineries. Republicans have pilloried the Obama administration for unnecessary bureaucratic holdups. But with or without the pipeline, the Romney-Ryan plan would require vastly expanded U.S. energy production -- a goal that would boost the landman business and Paul Ryan's bank account.
Yet as Romney and his No. 2 talk energy independence, walking the same rhetorical path that so many presidential campaigns have walked in the past, Ryan's place as the party's up-and-comer is built on a deficit reduction plan. And that's where the No. 2's prominent role as an architect of Republican fiscal policy runs headlong into the oil and gas industry's tax treatment.
Obama has repeatedly pressed Congress to end 12 tax breaks for fossil fuel companies, saying it would save $46 billion over 10 years. Last year, a story by Newsweek and the Daily Beast said that the budget plan authored by Ryan, which he calls "Path to Prosperity," would keep these tax breaks. The story revealed Ryan's stakes in the Oklahoma oil and gas lease and, in its judgment, a potential conflict of interest.
Environmentalists have also highlighted Ryan's connection to the Koch brothers, kingpins of the oil industry who have made their presence known in political campaigns. Ryan has been invited to the brothers' top-secret conservative strategy meetings. And over Ryan's career, the political action committee connected to Koch Industries has donated $68,000 to his campaigns, according to Federal Election Commission data.
On the stump, Ryan calls for an energy market free from government intrusion, one where the most competitive fuels prevail. Environmentalists believe that's code for supporting fossil fuels, while clean energy sources are left to die. Both Romney and Ryan have opposed the federal tax credit for wind power, for example.
Ryan's vice presidential campaign offered some clarity to EnergyWire: Ryan is willing to cut the tax breaks for the oil and gas sectors, too, if it helps repair the whole tax code.
"Congressman Ryan supports comprehensive tax reform, which means that everything should be considered in the context of how to make the tax code fairer and simpler and our businesses more competitive," spokesman Brendan Buck said in an email. "This couldn't be more different from President Obama's approach, which is to single out the oil and gas industry with a targeted and punitive tax hike."
Landmen at work
While Washington vigorously debates offshore drilling, leasing of public lands and tax subsidies, the land business has quietly thrived. The driver is energy companies' constant, occasionally ravenous, appetite for new plays under privately held land.
It starts with a hunch: An energy firm's well-researched, considered, scientifically backed, but fundamentally uncertain sense that an area holds oil and gas that's worth drilling.
"A company has a geologic idea and says, 'OK, we'd like to drill in this area to test an idea,'" said Scott Stone, a landman with Spartan Resources and a former president of the American Association of Professional Landmen.
But before an energy producer drills, it has to find whoever holds the rights to drill there. In practice, this can get complicated. Mineral rights are separate from surface rights, so the owner may live hundreds of miles away from the desired drill site. Another problem: Even a small site may have dozens of different, neighboring owners. Sometimes, an owner has died, passing the rights on to multiple heirs.
To resolve these issues, energy companies hire a field landman, a sleuth with experience in local land practices. He or she visits the county courthouse and pores through records until it's clear who owns, and who has owned, the rights to every acre.
It can be painstaking. Charles Stanford, an Oklahoma landman who spent 50 years in the industry, remembered one 40-acre tract he worked on. One owner held the mineral rights to a minute space -- 62 percent of 1 acre. But it was essential to complete the drilling area, so Stanford still had to devote plenty of time to it.
It wasn't his favorite task as a landman.
"It takes a special person to be able to do that, actually," he said.
But if one can do it, the energy company will be ready to talk business. It will direct the landman to visit each of the landowners with an offer: cash up front and a small royalty on any oil and gas that may be produced.
The exchange? A lease that lets the company drill on the property, usually for three to five years, longer if the property is still yielding oil and gas.
To close the deal, a landman has to shift gears; negotiating a lease is more art than science. Famous landmen, from Chesapeake Energy Corp. CEO Aubrey McClendon to former President George W. Bush, are known for bringing their charisma to the bargaining table.
Extracting fossil fuels is about geophysics and engineering. But those skills are worth little if the mineral owner is resistant to the very idea of drilling, landmen say.
The best landman, they say, is a "people person."
"You're just negotiating a deal. It's like going to a car dealership. Does the guy know how to set the timing on a carburetor? Not really," said Ken Morgan, a geology professor and director of the Energy Institute at Texas Christian University, which offers a certificate program for landmen. "You want somebody who you think you're really getting a square deal from."
Doing business with Big Gas
In nearly 15 years of running his businesses, Dan Little grew familiar with these meetings.
But he was rarely sitting on the landman's side of the table, trying to strike a deal with a reluctant landowner. Instead, he was on the landowner's side of the table, signing leases with landmen sent by the likes of Chesapeake, Devon Energy Corp. and Range Resources Corp.
It is not clear how Little obtained the land that allowed him to start his business. Little did not respond to requests for comment for this story.
One possibility is that he started with inherited family properties from around the state.
Stone, of Spartan Resources, said it's not uncommon for Oklahomans to have gathered mineral rights in far-flung places, sometimes over generations.
"We have been producing oil and gas here since almost back to statehood," he said in an email. "In most cases, minerals here have been severed from the surface estate and there are people and/or companies that have acquired numerous mineral interests scattered across the state and even in other states."
Stone said he didn't know whether that was the case for the Little family. But county records show that in January of 1997, Little and members of his family transferred dozens of mineral deeds, from around the state, to an entity called Ava O Ltd. Co. By March, Little had already leased a 10-acre property, in a three-year covenant with Chesapeake Operating Inc. It gave Ava O a three-sixteenth cut of any oil and gas produced there.
The family business was just a few years old when Paul Ryan met Janna Little, a popular Washington, D.C., lobbyist, and was spellbound. The couple were married in Oklahoma City in 2000. According to The Oklahoman, the reception was held at the Petroleum Club.
With that, Ryan entered a storied Oklahoma family -- of Democrats. Janna Ryan's uncle by marriage, David Boren, is a legend of Oklahoma politics, having served the state for 30 years as a state lawmaker, governor and U.S. senator. His father was a congressman; David's son, Dan Boren, is serving his last term in the House.
"They're one of the most politically decorated families in state history," said a prominent state lawmaker, who asked not to be identified so he could speak freely.
As for Janna Ryan's direct bloodlines, they trace back to the days before Oklahoma statehood. Her grandfather, Reuel Little, studied law at the University of Oklahoma before starting his own practice in Madill in 1927. Little was an entrepreneur who patented a technology to inject fluids into trees. He also had political designs, though these were less successful. In 1970, as a gubernatorial candidate from the American Party, he was routed by establishment candidates.
His law firm continued on. Today, its descendant, Little Law Firm, is in Madill's town center, a block from the county courthouse. One of its five attorneys is Dan Little.
County records show that over the last decade, he has arranged hundreds of oil and gas leases with energy producers and their landmen. Little did much of his business in Atoka and Marshall counties -- ranked among the state's most active on shale drilling, according to the Oklahoma Geological Survey. But he also leased properties in other counties, such as Choctaw and Bryan, that have seen very little shale activity as yet.
Separately from her father's businesses, Janna Ryan holds mineral rights in her own name, worth $50,000 to $100,000, according to Paul Ryan's financial disclosure.
Looking over the Ryans' investment portfolio, one financial adviser said the oil and gas leases seem structured as a regular source of income, while other investments seem aimed at breaking even.
Clark Hodges runs Hodges Capital, a firm that advises well-heeled individuals and institutional investors on how to manage their money. Looking through Ryan's financial disclosure to Congress, he noted Ryan's holdings in multiple mutual funds and in companies like Home Depot, Verizon and Apple.
For a lawmaker who says he wants to return daring, risk-taking and entrepreneurship to the U.S. economy, Ryan displays little of it in his assets.
"I would say it's a portfolio to preserve capital, by and large, by being in blue-chip names," Hodges said. "His income is coming off the oil and gas stuff, so he's very probably dependent on that as it relates to his income. But his investments appear to be very conservative to me."