This is a guest post by my good friend Mich from BeatingTheIndex.com. He believes that oil consumption is on the path of growth for the next decade and he intends to take every advantage possible of it.
The North American oil industry has been rejuvenated following the adoption of new drilling and completion techniques. It became possible to horizontally drill right into the flat shaped deposits and collapse the oil rich rocks by fracking (pumping sand and liquids at high pressure into the well bore) in order to allow the oil to flow back up.
Old oil fields that were once thought to be dead or uneconomic because oil was trapped in deep shales (fine sedimentary rocks) has been brought back to life as high oil prices turned this untapped source into profit for companies and their investors. As such, the new drilling techniques is helping the USA reverse a 2 decade decline in domestic production by opening up vast fields that previously contained out of reach oil.
According to oil executives and analysts, the new fields could yield as much as 2 million barrels of oil a day by 2015, more than the entire Gulf of Mexico produces now. Oil prices are expected to be firm in the coming years due to strong demand from emerging economies. Billions of dollars are being invested by companies to get at this oil across Canada and the USA.
One of the emerging oil plays being chased covers both Canada and the US; it is dubbed the Alberta Bakken oil play. It covers a huge area across Southern Alberta and Northern Montana. The potential is huge as it might hold as much oil as the North Dakota Bakken Shale (500 billion barrels). The play is gaining momentum in 2011 as companies have positioned themselves with land and started the drilling process.
BeatingTheIndex.com discusses the Alberta Bakken, the next hot emerging oil play in North America along with potential star companies that stand to be richly rewarded in Southern Alberta and Montana.
This goes for natural gas also. Sometime in the near future, I believe we’ll figure out a cheap way to extract oil from the oil sands.
I agree about natural gas. In fact I mention it as one of my unconventional investments for 2011 here: http://www.investitwisely.com/3-unconventional-investment-moves-to-make-in-2011/
It might be a bit later than 2011 before we see the benefits, but I really do think we should be taking advantage of the low prices and large supply to be building a new energy infrastructure.
The abundance of natural gas is what is making it so hated and cheap. I am surprised at why the US government has failed to build a national energy plan on this resource.
I still think we should continue forward with alternative energy. The US import a lot of oil and this is causing griefs all around the world.
If I was in charge I would raise gas tax by about $2/gallon so we can reduce fuel usage.
I agree with the idea behind reducing reliance on one energy source, especially a source that comes from troublesome areas in the world that necessitate increased military spending, adventurism, etc…. however, I also think that alternative energy sources need to stand on their own merit. It’s a waste of resources if they can only survive when heavily subsidized. Corn ethanol was and is a fiasco, for one.
Yeah, but if gas is cheap then there is no incentive to research alternative energy. I’m sure we can keep improving solar and wind energy generation efficiency if we keep working at it. There are many other type of energy that can use research money – wave energy, geo thermal, trash energy, who knows….
Where I think we can find common ground is that perhaps we are not paying the true price of the impacts of using oil — the costs of using the military to secure resources abroad, the costs of the problems that creates, the costs of “free” roads and highways and the effects that such subsidies create.
Unfortunately people can’t really choose where their tax money goes so they are forced to pay for many of these services whatever their personal consumption of oil is. Perhaps resources would be allocated more efficiently if these costs were borne more proportionately.
I would personally like to see high-efficiency solar become more widespread, but at the same time I think we should use our ample supplies of natural gas and domestic oil, so long as we exploit them in a responsible manner and in a way that does less harm than importing it from abroad. Importation is OK if it’s not propping up repressive regimes nor causing other problems.
The idea of ” high-efficiency solar ” is a good one. The only problem is that up to now there is no such thing.
True, the technology needs to advance. In the meantime there are still plenty of reserves, but the technology needs to get there since these reserves will dwindle over time which will eventually drive energy costs ever upwards (and also make the alternatives that much more attractive).
gas prices will rise anyways since it is a global market out there, don’t blame the USA for it. Demand is growing fast from emerging markets and higher prices will push more research into alternative energy.
Oil is a commodity that will fluctuate with supply and demand. My investments include energy through mutual funds. Why sn’t natural gas promoted for cars since we have a huge supply?
That is a question to be asked to the government Krant, why isn’t the administration doing something about the energy dependency if shale gas covers at least 100 years of supply?
I wonder about this too. A car I rented in South Korea was powered by LNG, and they had a lot of terminals over there!
I don’t know about a ten year time frame but I am bullish on oil as well for the next few years.
I’m sure oil will be heavily in use even beyond then, but eventually we will shift more and more to other resources I believe.
Nice read Mich!
I’m with you Biz, Kevin, Mich – demand (for oil) is growing quite fast from emerging markets, when folks feel enough financial pain, alternative energies will become not so alternative.