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Enhanced Oil Recovery Investment Opportunities

Just Killed OPEC

Written by Jeff Siegel
Posted October 29, 2012

It's never really been about ending our reliance on foreign oil.

To be blunt, that's just not going to happen.

I don't care how many rigs you put offshore... how much shale you produce... how much untouched Alaska oil you chase...

There's simply not enough of the black stuff within our borders to quench America's thirst for petroleum.

And don't let any of these politicians fool you, either. The illusion of energy independence is just that — an illusion.

That being said, we can still end our reliance on foreign oil from OPEC nations. And every year, we get a little closer to doing just that...

Whether it's an increase in domestic shale production, increased fuel economy standards that will ultimately cut our oil demand by more than 800 million barrels per year, or transitioning our buses and trucks to run on natural gas instead of diesel...

Little by little, we've been aggressively taking the necessary measures to displace a total of about 1.45 billion barrels a year.

Why 1.45 billion barrels?

Because that's roughly what we import from OPEC nations, most of which are openly hostile to our nation's interests.

But next year is when we finally get access to the final nail that will close the coffin on OPEC for good.

That's not to say that in 2013, OPEC gets its walking papers — but next year will mark the beginning of the end for OPEC's best customer.

430 Billion Barrels

If you're a regular reader of these pages, you've heard us talk about enhanced oil recovery (EOR) before.

It's not some new technology — and it's not something oil companies have dismissed, either.

In fact, the market for EOR has more than doubled since 2007. Last year it was valued at more than $126 billion, and by 2020, it's expected to more than quadruple.

And the reason is pretty simple: We have roughly 430 billion barrels of “abandoned oil” that can finally be tapped.

You see, what most people don't realize is that when it comes to crude, oil companies typically recover only about 10% to 20% of the oil in proven reserves. That's it.

The rest has always been too costly to extract — that is, until now.

Because today the economics of aggressive EOR finally make sense, thanks to two technological advancements...

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The first is CO2 injection.

It has been a strong instigator of growth over the past few years, proving to be much more effective than some of the older chemical and thermal processes used in the past.

And new seismic methods are also proving to be quite lucrative for oil companies. Some have even suggested this technology could be the holy grail for EOR.

The seismic method was actually discovered by a group of physicists that noticed whenever an earthquake hit Alaska, oil production in the Western Canadian Sedimentary Basin soared.

They realized massive waves of energy moving at hundreds of meters a second were breaking apart rock formations containing oil. So, in an effort to mimic the results of earthquakes, engineers developed a mechanism that essentially pounded nonstop injection pressure into an already produced well...

The result was thousands more barrels of oil being forced to the surface than any other enhanced oil extraction method before.

Insiders Are Bullish

According to a company memo at BP, the prize in enhanced oil recovery rates is enormous, with a 5% increase in recovery — a conservative increase thought to be achievable — yielding an additional 300 to 600 billion barrels.

Think about that for a minute.

The United States, the largest consumer of oil on the planet, plows through about 6 billion barrels per year...

Even at the low end of BP's estimates, you're looking at one company's ability to produce enough oil to meet demand for more than 50 years — and all this can be done without drilling a single well!

Much of the success of future EOR methods is riding on seismic technology.

Now interestingly, there are only a few companies operating in this space. And quite frankly, there's really only one that's been able to get in bed with the major oil companies.

It's a small firm based out of Alberta, Canada, and its technology is currently being used at more than 175 wells across North America by Chevron, Penn West, Apache, BP, and Halliburton.

It's actually been one of our most lucrative plays this year, and we expect to see the stock more than double in 2013 as Big Oil doubles down on enhanced oil recovery.

Bottom line: This is an under-the-radar oil play for investors because it doesn't get the same media attention as all those hot shale plays.

Yet it's quickly becoming a household name for Big Oil insiders — and that's all that really matters.

So if you want to see why companies like BP, Chevron, and Halliburton are bullish on this single enhanced oil recovery play.

Mark my words: This will be one of the most profitable domestic oil plays of 2013 — and now is the time to load up!

To a new way of life and a new generation of wealth...

Jeff Siegel Signature

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks, a private investment community that capitalizes on opportunities in alternative energy, organic food markets, legal cannabis, and socially responsible investing. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.

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