A Tidal Wave of Oil Is Coming
All this has happened before, and all this will happen again.
I’ve been having some strong déjà vu lately.
But that intense feeling only came to me whenever I stared at a certain set of oil charts. I couldn’t quite place it at first, and it took a while for the revelation to come to me.
At this point, it’s safe to say that nearly everyone has heard of the Bakken. Not only did it singlehandedly put North Dakota back on the map for oil drillers, which led to the state’s oil output surging nearly 600% between 2008 and 2015...
But, as with all great oil booms, it quickly became apparent that there were some serious hurdles to overcome.
Just three years into the now-famous Bakken oil boom, drillers found themselves in a tight situation.
Pipelines were quickly overwhelmed, and the infrastructure to get their oil to market simply wasn’t in place.
Those drillers were forced to use costlier forms of transportation.
Is history doomed to repeat itself today?
If it does, it could prove to be incredibly fruitful for oil investors.
Stranded Oil, Missing Profits
According to the Dakota Pipeline Authority, nearly 700,000 barrels of crude oil were being shipped out of the Bakken via railway by early 2014.
That’s not a yearly average, mind you.
We’re talking per day.
Naturally, the smart money was already on board that railway explosion.
In 2009, long before North Dakota’s pipelines reached max capacity, Warren Buffett shelled out more than $44 billion to buy Burlington Northern Santa Fe (BNSF), which included $10 billion of BNSF’s outstanding debt.
You see, Buffett saw what was about to happen, and that insight paid off handsomely.
By 2014, the bottleneck in North Dakota was a very real issue, and shipping your oil by rail came at a premium.
More than half of BSNF and Canadian Pacific’s 6663,000 railcars were transporting crude oil.
Look, I understand how some investors can feel like they’re late to the party, especially considering the fact that U.S. domestic oil output has more than doubled over the last 10 years.
And it’s easy to make a case that many are.
But here’s the dirty little secret: you aren’t.
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All This Has Happened Before, and All This Will Happen Again
History is about to repeat itself again, but are you paying attention this time around?
Today, the media has focused its attention on West Texas.
That’s not too surprising, right? At last count, production in the Permian Basin was around 4 million barrels per day.
That’s one out of every three barrels of oil extracted in the United States right now.
And this massive amount of oil flowing out of West Texas is overshadowing another boom taking place right next door.
It’s one of the quietest oil booms in American history, and it’s happening in New Mexico.
A few months ago, the USGS released a game-changing report that stated 46.3 billion barrels of undiscovered, technically recoverable oil resources were contained in the Delaware portion of the Permian Basin.
I would wager that most people don’t realize that the Delaware Basin extends beyond Texas and into New Mexico.
Did you know that New Mexico is currently our third-largest oil producing state? More than 800,000 barrels of crude are extracted there every day... and that number is growing by the day.
Drillers there are finding themselves in an eerily similar situation to their Bakken counterparts.
And Buffett’s BNSF bet is still paying off in spades.
Rail activity has grown threefold since this quiet oil boom began.
There’s one major catch here, however.
Certain events are taking shape that will propel New Mexico’s oil industry out of the shadows and into the limelight. Thing is, by the time the mainstream media finally catches wind of it, it’ll be far too late.
The real question is whether individual investors like us plan on sitting this one out.
We'll talk more about this opportunity soon.
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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