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A Clear Winner in the Shale Boom

Keith Kohl

Written By Keith Kohl

Posted June 4, 2013

I can’t decide which I hate more: inaction or incompetence.

We’re getting plenty of both with the U.S. government’s handling of energy production.

I’ve lost count how many times a politician has touted the energy boom taking place on U.S. soil. You and I practically know the speeches boasting our unconventional oil resources by heart.

It’s true U.S. oil production averaged 6.49 million barrels per day last year, the highest yearly average since 1995.

But can we really pat the U.S. government on the back for the tight oil boom taking place?

I’ll let you decide — though I have a feeling you’ll feel a little disappointed once you know the whole story…

Dropping the Ball: Missing the Shale Boat

For all the talk of U.S. energy independence — specifically, when it comes to casting off the shackles of OPEC — the U.S. government has done a poor job of capitalizing on it.

Back in March, it was reported that oil production on federal lands fell nearly 20% since 2010.

Federal land production

This production decline is understandable, given BP’s Deepwater Horizon incident and the subsequent drilling moratorium put in place in the Gulf of Mexico.

What’s troublesome is how minor a part the government played in the onshore oil rush — as well as how they failed to capitalize on it. This much was painfully evident when the EIA released a report last week on the sales of fossil fuels produced on federal lands.

Take a look at the following chart.

Talk about putting all your eggs in one basket…

Crude oil and lease condensate production from both onshore and offshore federal lands accounted for more than 82% of sales during 2012.

Sales of oil on federal lands

Of course, this occurred during one of the strongest onshore oil booms we’ve seen in decades.

How much revenue did the government capitalize on in the unconventional drilling rush?

In Texas, reported revenue from crude oil sales on federal onshore lands was slightly over $28 million from approximately 916 barrels per day — all from a state that averages more than two million barrels per day.

Revenue from federal lands in North Dakota was a tad higher: A whopping $127 million was made from the sale of about 33,270 barrels per day. That’s only about 5% of the state’s average production that year of 663,000 barrels per day.

Unfortunately, revenue goes downhill from here…

The government pulled in a trivial amount from the next three highest-oil producing states: California, Alaska, and Oklahoma.

A Clearcut Winner Emerges

It should be clear by now that the U.S government is so bogged down in red tape and bureaucratic nonsense that their chances of pulling in a decent chunk of revenue from the shale boom we’re currently enjoying is practically non-existent.

But is this really a surprise, considering how long the Obama administration has been dragging their feet on a decision regarding the Keystone XL Pipeline?

They’re a day late and a dollar short.

But hey, that’s how things work on the Hill. The shale boom is no exception, and you’d do well to remember that.

One of the best examples of this is in North Dakota. Prior to the USGS’ 2008 Bakken reassessment (before the Bakken became a household name), I was hard-pressed to find anyone outside a small circle that had even heard of this play.

Individual investors smart enough to pick up shares of a relatively unknown company named Continental Resources in 2007 — before the media frenzy over the Bakken started — were rewarded handsomely:

CLR EAC Chart

My point is that you’ll never find the best investment opportunities in the mainstream media.

Chances are good that if some pundit is touting it on television, Wall Street already knows about it — and has capitalized on it.

The most profitable growth stories usually take place before they’re thrust in the limelight…

That being said, even though the tight oil boom is well underway, you might be surprised to learn that these opportunities still exist.

In fact, I’ll prove it to you.

I’ve come across an up-and-coming tight oil play that is quietly being developed as we speak — and in one of the least likely places you’d expect to see an oil boom.

We’re talking about the early stages of yet another shale formation — and this time, insiders believe that up to 30 billion barrels of oil are on the line!

The kicker is this potential blockbuster isn’t located in any of the largest oil-producing states I mentioned earlier.

We’ll dig into this burgeoning opportunity on Friday.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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