The Most Shocking Stat About the U.S. Shale Boom
America’s energy renaissance is in full bloom…in the unlikely foothills of North Dakota.
Drill rigs are spinning 24 hours a day and well pumps are bringing oil to the surface every second, giving North Dakota a stronghold as the second highest oil producing state in the country.
A while back, I got my boots muddy in North Dakota’s booming Bakken oil formation with one of the big producers in the area. With oil still trading at lofty levels, there’s plenty of money to be made in the hills of the Roughrider State, that’s for sure. Today, I want to show you why this boom ramped up faster than most people thought and give you a firsthand look at how to cash in…
Before we get to one of the most exciting investment opportunities in the Bakken, we need to cover the basics of this American energy boom.
It’s an amazing tale that follows the storyline of America’s shale-patch. Indeed, we’ve always known about the loads of crude oil hidden beneath U.S. soil but we simply didn’t have the technology to produce it.
By now you’ve probably heard the shale story, but just to make sure we’re on the same page, the enabling technology came in the form of two breakthrough techniques: horizontal drilling and hydraulic fracturing.
These two technological marvels allow oil production to occur in shale and tight oil formations – which is having a profound effect on North Dakota’s Bakken formation.
“In four years,” the Wall Street Journal reports, “oil output has quadrupled in North Dakota. In March 2008, the state was the No. 8 oil-producing state at 144,000 barrels a day.”
Today North Dakota is the No. 2 oil-producing state. But the most shocking statistic is that by year’s end the Bakken could be producing 1,000,000 barrels per day – etching it’s mark in America’s historic shale boom. If you’re keeping track at home, here’s the score:
Top 5 Oil Producing States (Onshore)
|1.||Texas||2,600,000 (barrels per day)|
(Source EIA, 2013)
In 2012 alone, over 1,700 Bakken wells were completed. Just to put that number in perspective it’s up from around 550 in 2010 – and represents a huge jump from the 25 completions in 2005. More rigs, quicker drilling and faster completions… it’s all culminating in a lot of oil flowing through the pipes in the Bakken area.
Today, around 1,000,000 barrels per day are flowing from the ground in North Dakota. Over the next five years this number could grow even higher.
Fact is, as recently as 2012 analyts were calling for one million barrel production for “as soon as 2018.” Well, news flash guys! According to recent data, we’re set t hit that number in 2013. It makes sense, too. In January of 2010 the state was producing a mere 238,000 b/d — and since then it’s been a near straight-up level of production.
To put this in global perspective, North Dakota’s current production is nearly the same as the total amount of oil America imports from Mexico. So yeah, it’s like we found a Mexico in North Dakota. Mucho Bueno!
Truly, this boom is far from over. Just this year (in April) the U.S. Geological Survey (USGS) doubled its estimate for recoverable oil, now the USGS says 7.38 billion barrels could flow from the formation.
Virtually overnight the USGS “found” an extra 3.7 billion barrels of oil in North Dakota — at current production levels it’s like finding an extra 12 years of production! That’s a huge upgrade, but over the years I bet we’ll just see it as a sign of the times — more oil is on the way in America’s shale patch!
As I type, 192 drill rigs are spinning in the Bakken. To get a feel for the action, take a look at this:
Nearby you’ll see today’s map of North Dakota oil production. The Bakken formation is located in the North West section of the state – the numbered circles and star indicate active drill rigs, 192 in total (compare that to the total oil rig count in the U.S. and you’ll see that the Bakken accounts for nearly 14% of all onshore oil drilling activity in the U.S. – that’s massive!)
Along with 192 active rigs, there are over 5,000 wells producing from the Bakken formation, according to data from the North Dakota State Oil and Gas Division. The red dots on the map indicate producing wells, the overwhelming majority and most productive of which are in the Bakken formation.
Add it all up and we can plan on a continued boom from the Bakken.
But enough from the numbers, let’s get back to the dusty roads of North Dakota.
I made the 4-hour drive from Bismarck. The roads were straight, the landscape was static (rolling hills of amber grain, beaten down farm houses) and traffic was sparse. That is, until I got 40 miles outside of Williston. That’s when the boomtown hit me.
Trucks hauling machinery…diesel…food…trailers…water and more rule the road. Even 20 miles outside of Williston there were some severe ruts in the road from constant truck traffic.
Driving through the area you’re hard-pressed to not see a producing well or a rig. Here’s a typical shot from the road…
Drill rigs are all over the place and tower above the flat landscape. Plus, the vast amount of production wells start to blend in with the scenery…
Closer to the epicenter of this boom the traffic got very dense. But roads got surprisingly better. Road work is happening everywhere: new roads, extra lanes, impromptu traffic lights and the new addition of a bypass truck route.
Road work isn’t the only construction going on here, either. I’m witnessing the middle of an enormous buildout of housing and hotels – you could call it the Bakken Bed Boom.
On top of Williston’s population of around 25,000 there are nearly 10,000 migrant workers. That means over 25% of the people here are in temporary housing.
“Man camps” are everywhere. For $120 a night you can get a bed and three meals a day – plus, access to showers, a pool table and your own flat screen tv. The interior décor may be appealing, but from the outside these camps are an amalgam of housing trailers strung together in makeshift shanty towns.
I lucked out and got a room at the only chain hotel in town. But the price I’m paying here is about the same I’d pay in downtown Chicago or Manhattan. Prices are jacked up everywhere.
Heck with less than 1% unemployment and the local taco shop hiring for $15/hr I’d assume the locals aren’t too worried about higher prices.
I’ve also heard in passing that Williston has the busiest Wal-Mart in America and the McDonalds is second to only that of Time Square. These could be urban legends, but I wouldn’t be surprised if they were accurate either.
This place is booming like no other town I’ve seen.
Back to business, the last mile or so into town was a who’s who of the oil business. Consider it a strip mall on steroids. Huge buildings one after the other… oil service providers like Schlumberger (SLB), Halliburton (HAL), Weatherford (WFT), FMC Tech. (FTI), National-Oilwell Varco (NOV) and more, all lined up and running full tilt.
To say the least this boomtown is going to keep these companies busy for a long time. And other unconventional energy plays across the country will be following suit. The resource boom here in the U.S. is for real (and just getting under way.)
With North Dakota’s production milestone in mind, it’s a good day for American energy. And it couldn’t have come at a better time for investors looking to cash in…
Keep your boots muddy,
P.S. I’ve made it my mission to know first-hand how this U.S. energy boom will play out – both through extensive research and boots-on-ground investigation. What I’ve found is pretty incredible, and in addition to the analysis I shared above, I gave readers of my FREE Daily Resource Hunter email edition a unique opportunity to learn about specific, actionable investment plays that could mint them a fortune, right now. If you didn’t get it, not to worry… The Daily Resource Hunter gets sent every weekday morning at 11AM, so your next issue could just be a few hours away. Don’t wait. Sign up for FREE, right here.
Original article posted on Daily Resource Hunter