The U.S. shale oil boom -- especially Bakken shale oil -- has transformed North Dakota's economy. Just check out how hot this state is. Read more...
- Forget the Kneejerk Reactions, Oil Prices Are Going Higher
- Oil Companies Hope for New Opportunity in Energy-Rich Venezuela
- Why Bigger Isn't Always Better in the Oil Business
- Chinese Firms Increase Stakes in U.S. Shale Oil Projects
- The Next U.S. Shale Oil Boom Could Be in California
- Australia Shale Oil Discovery Continues the Country's "Lucky" Streak
- The Arckaringa Basin Could Be the Largest Shale Oil Find of All Time
- After Nexen's Buyout, How Should You Play Canadian Oil Sands Stocks?
- Two Reasons to Expect Greater Volatility in Oil Prices
- Will the New U.S. Shale Boom Kill Oil Prices?
- The Impact of Shale Oil Means the Tables Have Turned in Our Favor
- Put These Shale Oil Fields on Your Radar for Energy Profits
- The Top Five Eagle Ford Shale Oil Stocks
- Iran Talks: A False Dawn for Oil Prices?
- How to Profit from the "Shale Oil Bubble"
- Small Shale Oil Companies Make Prime Take Over Targets
Today (Wednesday) an analyst from Citigroup became the latest lemming to declare the death of peak oil.
In a report entitled "The End is Nigh," Seth Kleinman says a combination of flattening demand and rising supply will cause oil prices to slide slightly by the end of the decade to $80-$90 a barrel.
But while oil companies have made many large new discoveries over the past few years, including big shale oil finds in North America and Australia as well as deepwater finds in the Gulf of Mexico, that doesn't mean oil prices will fall.
In fact, according to Money Morning Global Energy Strategist Dr. Kent Moors, it's far more likely that oil prices will continue to rise over the next decade.
Moors points out what most other analysts seem to be missing - that all of the new oil finds present many challenges that will add to the cost of extraction.
"None of this new volume is light, sweet crude," Moors said. "The average wellhead costs continue to go up, and that moves its way downstream to processing, wholesale, and retail."
The doomsayers are once again predicting a crash in oil prices. These oil price bears must really be getting desperate. Dr. Kent Moors explains why oil is only going up.
Despite some 300B barrels of oil reserves, the nation has failed to unlock the profit potential within its borders. But news of President Hugo Chavez's passing this month has sparked speculation that it's time for an energy renaissance.
Traditionally, size has determined the impact and profitability of an oil company. But today the stage is set for smaller, well-positioned companies. Energy investors should keep an eye on these "non majors." Here's why.
According to Bloomberg News, Chinese energy companies, both state-run and private, are seeking to invest more than $40 billion in U.S. shale energy.
Readers may remember the Chinese oil and gas producer CNOOC Limited's (NYSE: CEO) $19 billion bid for U.S.-based refiner Unocal, which was rejected by federal regulators in 2005. (Unocal later merged with Chevron Corp.)
Although CNOOC was recently able to complete a $15.1 billion purchase of Nexen Inc., a Canadian oil and gas company with assets in the Gulf of Mexico, outright takeovers of U.S. energy assets by Chinese companies are probably still not welcome.
Chastened by its experience with Unocal, CNOOC has not attempted to buy any U.S. company outright.
However, after developing a relationship with Chesapeake Energy Corp, (NYSE: CHK), CNOOC has purchased stakes in specific Chesapeake projects in Colorado and Wyoming.
"They didn't come over here and try to buy Chesapeake," Chesapeake CEO Aubrey McClendon told The Wall Street Journal. "They came over here to buy a minority, non-operating interest in an asset and not take the oil and gas home."
So why do the Chinese want to invest billions of dollars to fund shale oil and shale gas projects in the United States when it won't be able to export the energy products back to China?
The Monterey Shale under California is huge - "15.42 billion barrels of recoverable oil" huge. So far, though, geological challenges have made it difficult to get Monterey Shale oil out of the ground; it's just too deep down. But thanks to new fracking technologies, companies are starting to have success there. Is it time to invest?
Investors are well aware of the shale oil revolution in the United States. But the "revolution" does not end here; it is spreading globally to countries as diverse as China and Poland.
There is one country in particular though that may experience circumstances similar to the United States, if not greater.
I'm talking about Australia, which has often been called "The Lucky Country." That description was first penned in 1964 by Donald Horne and he actually meant it negatively at the time.
But in recent decades, the term has been given a positive spin thanks to Australia's abundance of natural resources and its geographical location near the world's biggest consumer of commodities - China.
And Australia may have struck luck again thanks to the recent announcement of a massive shale oil discovery.
Today I've got new information on what could be the largest shale oil find ever recorded - an estimated 233 billion barrels of recoverable shale oil.
This has got the entire energy world abuzz.
That's more that all of the oil in Iran, Iraq, Canada, or Venezuela. And it’s just 30 billion barrels shy of all the reserves in oil-rich Saudi Arabia (or at least what they claim to have).
It's a very exciting find for the (surprising) country where it was found. It means decades of energy independence. Not only that, but the nation will probably begin to export oil in the next few years, too.
But it's perhaps even more exciting for investors. You see, one small company controls what is shaping up to be the biggest worldwide oil project to hit in 40 or 50 years. And they won't be the only ones who get rich from this. Far from it.
Take a look
The purchase of Calgary-based energy company Nexen Inc. (NYSE: NXY) for $15.1 billion by China's CNOOC Ltd. (NYSE ADR: CEO) is the largest overseas purchase ever by the world's second-biggest economic power.
But it will likely be the last time China, or any other country, takes a big chunk out of Canada's oil sands - the world's third-largest proven reserves of crude oil.
That's because after Canadian Prime Minister Stephen Harper approved the Nexen deal in December, he banned further foreign firms' investment in Canada's oil sands and will allow them only under "exceptional" circumstances.
"The government's concern and discomfort for some time has been that very quickly, a series of large-scale controlling transactions by foreign state-owned companies could rapidly transform this [oil sands] industry from one that is essentially a free market to one that is effectively under control of a foreign government," Harper said in December.
"Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada," he added.
But foreign government control isn't the real problem facing Canadian oil sands companies.
The upward pressure on prices is building, reflecting higher revisions in forecasted demand. And this week we got two "outside" signals that mean more volatility ahead.
These days everybody wants to extol the virtues of rising U.S. domestic crude oil production.
From decades of increasing reliance on foreign providers, some hardly sympathetic to American interests, the new prospect of having significant unconventional oil reserves here at home has been a major development.
The assumption advanced says that domestic sources will be cheaper. As a result, this should comprise a positive boon to consumers of oil products but a problem for producers and refiners. In short, the mantra among some commentators is to proclaim the end of the oil market as an attractive option for investors.
As with most such simplistic observations, however, it turns out not to be true.
A number of these "analysts" are actually talking down the prospects of oil prices because they have already shorted the commodity and will benefit their own investments if they can continue the downward push.
Well, oil prices are now going up, with both West Texas Intermediate (WTI) in New York and Brent in London at more than three-month highs.
In addition, the spread between WTI and Brent is narrowing.
The narrowing of that spread is occurring while both benchmarks are rising in price. The mantra of the pricing doomsayers would expect it to be going in the other direction.
There are two broad categories of reasons why matters are not happening as the doomsayers had expected (aside from the obvious - they misunderstood the dynamics from the beginning).
And once you understand both, you'll be in position to profit as prices continue to rise.
We've witnessed how the oil activity is boosting the local economy with solid-paying jobs, a healthy housing market and strong consumer sentiment, as oil giants such as Schlumberger and Halliburton take a bigger stake in the area.
After seven long decades of importing oil, the U.S. seems only a few years away from reversing the flow, largely from shale technology not only in Texas but several areas around the country.
In 2005, the U.S. reported net imports of 13.5 million barrels per day, or almost two-thirds of its oil needs, according to Raymond James. By the end of 2012, net imports are projected to fall to 8.6 million barrels per day, which is about half of the country's current consumption.
By 2020, the estimated gap between supply and demand narrows considerably. Take a look...
The shale oil fields in the two states remain largely unknown to energy investors.
As Money Morning reported Nov. 27, fracking technology has opened vast shale oil and gas fields that previously had been uneconomical to exploit.
With rapid growth in recent years, so-called unconventional oil has accounted for about 2 million barrels per day of production in 2012.
In Oklahoma, where oil was discovered in 1897, conventional oil production peaked in 1927, and the state's fields were thought to be exhausted.
Oklahoma's main field, the Anadarko Basin in the western half of the state, has yielded most of Oklahoma's oil and natural gas in recent years.
Now drillers are targeting the basin's Woodford shale layer.
One of the Most Unknown -and Promising - Shale Oil FieldsOne of the companies drilling in the Woodford shale layer is Continental Resources (NYSE: CLR), who told Reuters the site is "one of the thickest, best-quality resource shale reservoirs in the country."
Continental is known for its success drilling in North Dakota's Bakken, one of the best-known shale oil fields.
At 3,300 square miles in area, the Woodford shale layer is smaller than the 13,000-square-mile Bakken shale oil field or the 5,000-square-mile Eagle Ford field in Texas. But the Woodford shale reservoir is thicker, at 150 to 400 feet thick, compared with Eagle Ford at 100 to 250 feet and Bakken at 10 to 250 feet.
The U.S. Geological Survey estimates Woodford contains 400 million barrels of recoverable oil. The site is also believed to contain 250 million barrels of condensates and lots of natural gas.
Continental Resources is one of the bigger players in the Woodford reservoir. The company has increased its acreage holdings in Woodford at an even faster rate than it has in the Bakken. From 2009 to October 2012, Continental's net acreage in Woodford rose 1135 to 316,000 acres while its net acreage in the Bakken increased by 51% to 915,000 acres.
Shale Oil: Moving South from the BakkenAnother developing shale oil play that is relatively unknown - the Tyler formation - is in the Dakotas.
Recently Money Morning told you about the Bakken oil shale boom. The Eagle Ford shale oil formation in south Texas is nearly as large, and production there is ramping up rapidly.
Eagle Ford is among the largest U.S. shale oil deposits, with recoverable reserves estimated as high as 7 billion to 10 billion barrels.
But Eagle Ford is also "liquids-rich." That means it has a high concentration of oil versus gas -- a major attraction at a time when oil prices are high and natural gas prices are at historic lows.
Many oil companies are eager to get in on the action at Eagle Ford, and expectations are running high.
"We are evaluating a series of projects ... that could literally double our company's earnings over the next few years," Curt Anastasio, CEO of NuStar Energy (NYSE: NS), told Reuters.
Another oil company CEO, Bill Klesse of Valero Energy Corp. (NYSE: VLO), thinks Eagle Ford could have an impact even beyond bigger profits.
"It's going to back out sweet crude imports into the United States, and that's going to happen by 2014," Klesse predicted, speaking at Valero's annual meeting earlier this month.
Indeed, the statistics coming out surrounding the Eagle Ford shale oil operations are impressive.
Data from the Texas Railroad Commission, which regulates energy in the state, tells an amazing story. Shale oil production increased nearly seven-fold from 2010 to 2011, from an average of just less than 12,000 barrels a day to about 83,400 barrels a day.
And that could explode to 500,000 barrels a day by the end of 2012, Klesse said, with output expected to double to 1 million barrels a day "in the next few years."
Impact of Eagle Ford Shale Oil UnderestimatedEagle Ford has progressed so quickly that a forecast of its economic benefits became outdated almost as soon as it was issued last year.
A study by the Center for Community and Business Research at the University of Texas San Antonio's Institute for Economic Development in early 2011 projected the Eagle Ford formation would directly and indirectly contribute $21.5 billion and 68,000 full-time jobs to the 20-county South Texas region by 2020.
Last week UTSA released a follow-up study.
It found the Eagle Ford contributed $25 billion to the local economy in 2011 -- $3.5 billion more than the 2020 projection.
The new UTSA study says Eagle Ford will pump about $62.3 billion into the local economy by 2021. The job creation number increased to nearly 117,000.
"We view the Eagle Ford activity as an economic opportunity of a lifetime," said Mario Hernandez, president of the San Antonio Economic Development Foundation. "The key goal is the increase in investment and jobs. And if the communities will partner with the private companies that are creating these jobs, it can be a win-win for everybody."
Growth that outruns forecasts is good news for investors. Money Morning has sorted through the many choices to zero in on five Eagle Ford shale oil stocks that could do particularly well: