The Government Said I Lied About the Bakken
Why Being Ahead of the Curve Makes the Establishment Uncomfortable
"We are the music makers, and we are the dreamers of dreams."
— Arthur O'Shaughnessy
"Brian, what you're saying is wrong. It's a lie. We never published that."
The gentleman on the other end of the phone was from the U.S. Energy Information Administration. He was polite enough, but I could tell he was aggravated — and trying to put out a fire I had started...
This was in June 2008. His office had become inundated with calls and emails concerning a research report I had published a few months earlier.
The title of the research report was "Shale Shock," and it was sweeping the Internet, the blogosphere, and media headlines like wildfire.
We had a made a bold and shocking prediction in the report.
The third sentence in our "Shale Shock" report reads:
"It’s the largest domestic oil discovery since Alaska’s Prudhoe Bay and has the potential to eliminate all American dependence on foreign oil.”
I was, of course, referring to the Bakken Shale in North Dakota and Montana.
You see, in January 2008 I commissioned my research staff to investigate and to produce a report on the Bakken. I gave them two months to give me their findings. They did it in one.
We had written about the Bakken before (in 2007) because of local news stories we were hearing coming out of Williams County, North Dakota. But even then, nobody took what was happening in North Dakota seriously... It was just a novel idea, a feel-good story for Americans that would soon flicker out in a giant bust like the housing market.
But we disagreed — and we decided to see if this was the start of a tectonic shift in America's energy landscape.
It didn’t take us long to hit pay dirt...
My staff came across a little-known report published in 2006 by the EIA. And there was a paragraph in the EIA’s report that literally knocked everybody’s socks off. Here’s the paragraph verbatim (click to enlarge):
Now, the EIA's report wasn't a secret. In fact, it was available to everybody and anybody who searched through their website.
The difference was how we interpreted the data in their report.
What caught our eye — specifically — was the "271 to 503 billion barrels potential resources in place."
As any true investigative reporters worth their salt would do, we asked ourselves: "Why did the EIA put these figures in there if they didn't believe it at least a little bit?"
We presented those findings in our groundbreaking research report, and almost instantly the firestorm of controversy began.
Here's just one sample of the reporting regarding our bold predictions (click to enlarge):
You can’t blame the mainstream sheep for being skeptical. After all, at the time our report was released to the public, North Dakota was producing only 150,000 barrels of oil a day — not even close to the amount needed to meet the daily oil consumption of New York City!
Again, let me remind you this was in the early spring of 2008.
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Now take a look at a chart of North Dakota’s oil production since the original release of “Shale Shock”:
I’m guessing if I'd published this chart as a prediction back in the spring of 2008, I would’ve been committed to the loony bin — or worse, prison...
But I’ve been proven right beyond my wildest dreams.
And even our prediction of “eliminate all American dependence on foreign oil” is coming true. That’s because every shale formation in the United States is open for business.
A couple years after we released “Shale Shock,” oil companies headed south to the Eagle Ford Shale in Texas. In just a few short years, Texas oil production has skyrocketed:
And now companies are heading to West Texas to the legendary Permian Basin, where it’s estimated there are billions of barrels leftover that can be extracted via hydraulic fracturing.
On the backs of just two oil shale booms — the Bakken and Eagle Ford — U.S. oil production has taken a sudden U-turn:
Now that our “Shale Shock” thesis is being vindicated before our very eyes, every Johnny-Come-Lately is jumping on the bandwagon.
Last year the former boss of British Petroleum told a conference in Oxford, England, that America’s shale revolution was a game-changer...
Lord Browne said, “The U.S. will be completely independent of imported oil, probably by 2030.” He also said the amount of shale gas in the U.S. was “effectively infinite.”
Read that again, dear friend: "effectively infinite."
Even the super-conservative International Energy Agency (IEA) can no longer ignore the technological miracle occurring in the States. According to the IEA’s World Energy Outlook 2012, the United States will surpass Russia as the biggest gas producer by 2015, and Saudi Arabia as the world's largest oil producer by 2017.
The Paris-based agency said there had been a marked shift in assessments, given that earlier predictions saw Saudi Arabia remain the top producer until at least 2035...
"Energy developments in the United States are profound and their effect will be felt well beyond North America and the energy sector," IEA Chief Economist Fatih Birol stated.
The IEA said the reason for this was the big growth and development in the U.S. of extracting oil from shale rock (so much for the pipe dream). The organization added that this has enabled the U.S. to gain significantly more extractable oil resources.
As a result, the IEA predicts the U.S. will become "all but self-sufficient" in its energy needs by around 2035.
The IEA predicts the United States will be producing 11.1 million barrels per day by 2020, compared with 10.6 million from Saudi Arabia.
Think about this for a second...
My tiny research firm was not only five years ahead of super-connected and well-funded institutions like the EIA, IEA, and Lord Browne — but we essentially front-ran the government for substantial profit.
Because in our research report, we also recommended companies that were just starting to drill in the Bakken. We made huge profits off those stocks.
And that’s why we exist... and why you read us...
We have the liberty and foresight to bring you ideas and predictions the mainstream financial media simply can — and will — not.
And as for the so-called experts and pseudo intellectuals who dismissed our research as hype: Better luck next time.
Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy & Capital. Known as the "original bull on America," Brian is also the author of the 2008 book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox and countless radio shows. For more on Brian, take a look at his editor's page.
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