Over Christmas break, I spoke with a journalist at a well-known newspaper in New York — it’s on Times Square. He wanted to know what I write about. I told him that my readers and I follow broad trends and look for investable energy and resource ideas. But as I noted, “energy and resource ideas cover a lot of waterfront.”
We had a long talk. The discussion went all over the place and hit on several themes that I’d like to amplify for you…
At root, we’re looking for oil and natural gas plays, uranium ideas, gold, silver and copper miners and more. We want to preserve and grow wealth in “hard” assets. No, we’re not looking to invest in banks, hotel chains, fast-food companies or such. That’s not my background, and other newsletters cover those kinds of investment spaces.
In a broad sense, what we talk about in these pages concentrates its effort within a limited number of sectors — all of which we strive to understand in depth. Yet at the same time, the investment style is not simple. Indeed, much of what passes for an investable energy or resource play anymore relies heavily on technology.
As long-term readers know, much of our focus is on technology that liberates a resource. In other words, tech that creates value.
The Seismic Revolution
Let’s look at one example of technology that has made leaps and bounds within the energy industry in recent years. That’s seismic processing — the use of reflected energy to determine the properties and dimensions of buried layers within the Earth’s crust.
Newer and better seismic was critical to Petrobras finding massive oil deposits offshore Brazil, beneath miles of water column, rock and salt.
Before modern advances in data capture and storage and signal processing, most of the world’s salt beds were just murky zones — data deserts into which one drilled at one’s peril. But with better seismic processing, Petrobras was able to de-risk the play beneath the salt and aim drill bits toward the sweet spots. The rest is history.
Onshore, seismic is critical to ultraprecise drilling that has released literally billions of barrels of hydrocarbons from the oil sands of Alberta. A couple of years ago, I witnessed mind-blowing drilling accuracy by oil service provider Halliburton — literally, within a matter of inches — in connection with the ConocoPhillips Surmont Project, near Fort McMurray. The entire billion-dollar project was premised on successful seismic, with which the Halliburton personnel steered the drill bits.
Closer to home, new and improved seismic is key to the shale gas revolution across North America. In the energy patch, as in Silicon Valley, high-tech means big money and successful resource development.
In western Pennsylvania, where I live, I’ve seen technology from oil service companies that make the deep underground almost transparent. Dramatically clear seismic processing guides drill bits within a matter of inches into zones of optimum placement in the Marcellus Shale. Then, after initial well completion, seismic helps control the critical, multistage frack jobs that lead to highly productive wells.
So when people ask about my “resource” investment thesis, am I just talking about finding the next big oil and gas play? Not exactly. It’s about the basic resource, to be sure, but the secret sauce includes high-tech capability to define the barrels or cubic feet and extract product.
The World’s Nervous System
The New York journalist and I discussed other aspects of technology as well. Why? Because if you want to know where energy and resource investing are headed, it helps to know where technology is headed. That part of the discussion took us to other of those really big ideas coming down the pike.
Let’s discuss “Big Data,” a term that has gained traction over the past year or two. Big Data is a shorthand way of describing the overall assemblage of all the data being collected and stored, everywhere, every day, covering just about everything. In many respects, Big Data comprises a nervous system for the modern world.
What makes up Big Data? The best I can say is that it’s comprised of mind-boggling arrays. It’s not your father’s database. Just to start, think in terms of what the Internal Revenue Service knows about the incomes and spending habits of essentially every household in the nation. Or what the Census Department knows about every aspect of national demographics.
Or consider what just your bank knows about your travel and spending patterns, based on your credit card purchases. Or ponder the (very) personal consumer information that lurks within that card you use at the supermarket checkout line — and they incentivize you to use it by giving you a few cents per gallon off your gasoline purchases.
Big Data is all this and much more. Look at the global success of Google, Facebook or Amazon, with their billion and more users, all placing sensitive personal and financial information online. With the right search engines, it’s all entirely mineable for insight into all manner of things.
Indeed, President Obama’s recent reelection effort spent immense sums to acquire and access databases — political rosters, magazine subscription lists, social and club memberships, personal websites and much more. The Obama campaign designed a Big Data-driven system of “personal” outreach, leading straight down to individual voters. It’s fair to say that President Obama won reelection because he convinced more people — one at a time, much of them electronically — to vote for him, via Big Data.
Big Data and Resources?
Looking ahead, what will Big Data mean to energy and resource investing? That’s a wide-open question. Will energy or mining companies ever make use of the Big Data side of people’s personal information? I wouldn’t dismiss the idea.
At the same time, the global array of Big Data includes more and more technical, geologic, geographic and related information. It’s all out there, stored and increasingly accessible.
In and of itself, information is an asset. It has value. When information is accessible, it can be mined and interpreted. Information is key to making good business decisions — using technology to improve overall return on investment.
In this fast-changing world, it’s difficult to make hard predictions even a few years out. Most businesses (and certainly most governments) don’t really know what’s going to be required in two or three years. Prepare to be surprised.
As I see things, it’s likely that the Big Data revolution will have a growing impact on business and personal productivity, including in the energy and resource investment space. People are more and more willing to place data online, while there are more and better devices with which to do so, and access that data. Big Data is becoming more and more integrated, and, of course, searchable.
Where are things headed? I suspect that with Big Data, we’ll be astonished. I also suspect that we’ll be able to make some money off of it.
That’s all for now. Thanks for reading.
Original article posted on Daily Resource Hunter
Byron King is the editor of Outstanding Investments, Byron King's Military-Tech Alert, and Real Wealth Trader. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. He has conducted site visits to mineral deposits in 26 countries and deep-water oil fields in five oceans. This provides him with a unique perspective on the myriad of investment opportunities in energy and mineral exploration. He has been interviewed by dozens of major print and broadcast media outlets including The Financial Times, The Guardian, The Washington Post, MSN Money, MarketWatch, Fox Business News, and PBS Newshour.
Addison Wiggin gives even more reasons why genius will fail again in part III of his series on Jim Rickards and the collapse of the financial market house of cards...
It is well known that the longer you live, the more likely you are to develop heart disease, stroke, osteoporosis and Alzheimer’s, to list only a few. But research out of the Salk Institute may be the clearest, most direct leap in understanding aging in the history of medical research and opens extraordinary possibilities for slowing down or even halting the aging process in humans. Stephen Petranek has more…
American's tastes are evolving. McDonalds is out. Shake Shack and Chipotle are in. Consumers are willing to pay a premium price for better food. And investors are willing to pay a premium for better fast food's stock. It's that simple.
Addison Wiggin traces the DNA of the financial system’s next great crisis… It looms closer than you might think…
Addison takes a look behind the curtain during a seminal moment in The Daily Reckoning’s history…
It's easy to lose your discipline when you've been waiting around all day with a rod in your hand and you finally get a slight tug on the line. Is it "the big one"...or a minnow? Many traders feel they're onto something big. And their aggressiveness can get them into trouble.