Back in the times of the California gold rush, people didn't need to work out how to invest in the bonanza. They simply grabbed some basic mining gear and headed up into the hills.
Today California is the home of yet another wealth-creating boom - the oil contained within the Monterey Shale formation.
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The Next U.S. Shale Oil Boom Could Be in California
The U.S. shale oil boom has hit Texas and North Dakota - and is now looking to take over the Golden State of California.
California's Monterey Shale formation covers 1,750 square miles from southern to central California and is believed to contain more shale oil than North Dakota's Bakken and Texas's Eagle Ford combined.
The potential of the Monterey Shale formation is enormous. According to IHS Cambridge Energy Research Associates, Monterey may hold about 400 billion barrels of oil - roughly half the amount of conventional oil that Saudi Arabia has.
The energy research director at IHS, Stephen Trammel, told CNNMoney, "Four-hundred-billion barrels, that doesn't escape anyone in this [oil] business."
Even if that is an overly optimistic estimate, there is enough recoverable oil there to make it worthwhile.
Occidental Petroleum Corp. (NYSE: OXY): The Best Way to Profit From the Monterey Shale
It has been a long time since California seen a profit opportunity like this.
The state's Monterey Shale formation may hold as much as 500 billionbarrels of oil making it more valuable than the gold rush of 1848.
With oil prices expected to hit $150, if not $200 a barrel this year that means the profit potential is limitless.
After all, peak oil isn't a myth - it's a reality.
Traditional oil production is plateauing, while demand in emerging markets continues to rapidly increase.
Meanwhile, turmoil in the Middle East has threatened supplies even further. And the war with Iraq didn't end up being the energy bonanza many thought it would.
And now the Arab Spring and tensions in Iran have escalated to the extent that military intervention there seems to be a foregone conclusion.
That's why the Monterey Shale - a rib-shaped formation that extends from Northern California down through the Los Angeles area and then offshore to outlying islands - is getting so much attention.
And unlike other shale plays in the United States, the Monterey is primarily oil, not gas.
That means Monterey shale does not require hydraulic fracturing, which has come under fire from environmentalists.
It also means companies can extract much of the oil using simple vertical wells, rather than the more expensive horizontal drilling needed for shale gas plays. Some horizontal drilling will be used, but it is not required in all fields, greatly reducing operating expenses.
In fact, in large parts of the formation, production costs are less than $10 a barrel.
Think about what that means for profit margins with crude prices currently near $110 a barrel.
So how can investors profit?
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