300 Million Barrels of Oil or Bust
Iran learned a very important lesson last week.
It’s a lesson that Venezuela has painfully come to realize over the last 10 years.
The oil you have underground is useless unless you can extract it.
Until you get that resource out of the ground and into the pipeline, you might as well forget about it. So when Iran’s president announced the country had suddenly found a 53 billion-barrel oil field, it was easy for us to call bullshit on it.
Within a day of this huge announcement, Iranian ministers quickly walked back their excitement, saying that just 2.2 billion barrels of crude can be extracted with current technology.
Lesson learned? Probably not.
But I’m not here to tease you today.
I told you I’d show you what a true oil boom is like, not just some sham announcement made over the weekend that had to be retracted soon after.
More importantly, it’s taking place where you’d least expect.
300 Million Barrels or Bust
If I were to ask you what the biggest oil-producing states were, I’ll bet a few of them immediately pop into your head.
Texas, North Dakota... these are the easy ones.
Some of you might even throw out a few names like Alaska, California, or even Oklahoma. That’s understandable considering that for decades prior to the shale boom, both Alaska and California were the second and third largest oil-producing states on the list.
Peak oil hit both of them hard, and oil output from both states has continued to decline. In Alaska’s case, oil production is reaching dangerously low levels. If the Last Frontier’s output falls below a certain point, the massive Trans-Alaska Pipeline requires a flow of at least 350,000 barrels per day during the winter season to avoid major operating issues.
In August, oil production from the North Slope averaged 368,000 barrels per day.
Just for a moment, I want you to close your eyes and think of what you think our third largest oil-producing state is.
Don’t worry, I’ll wait.
Ready for the answer?
Out of the dozens of investors I’ve asked recently, less than a handful knew that New Mexico even produced oil!
When I told them more than 300 million barrels of crude oil will flow out of New Mexico’s wells in 2019, their eyes lit up right away.
I knew they finally saw the opportunity that the rest of the market has missed.
The Countdown Is On
Back in 2014, I remember the excitement that surrounded North Dakota’s Bakken shale.
When would the state’s oil output reach that coveted benchmark of 1 million barrels per day?
That countdown caused a media frenzy, and it finally happened in May.
Want to see what a real oil boom looks like?
Here you go:
In 2007, just as the first round of the U.S. shale boom was getting underway, New Mexico’s oil production averaged just 162,000 barrels per day.
In August, New Mexico’s oil production averaged an eye-popping 936,000 barrels per day!
This flood of oil has filled the state’s coffers, and it’s only a matter of time before drillers in the Land of Enchantment hit seven figures.
Personally, I think they’ll top 1 million barrels per day before we ring in the new year.
Even more interesting is that the market is missing another monster oil discovery right next door.
In fact, not only does one company control the ALL of the acreage in this new blockbuster oil basin, but it’s currently trading at a fraction of the price of companies like Exxon, Chevron, and major independent Permian drillers like Pioneer Natural Resources.
At stake is nearly 4 billion barrels of crude oil.
Right now, it’s all up for grabs.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
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