Bigger Than the Bakken

Brian Hicks

Written By Brian Hicks

Posted November 28, 2012

Ever heard of the Cline Shale? If not, now is the time to start becoming familiar with it.

Some analysts are claiming this shale deposit could be the largest oil play in the history of the nation, crucial to strengthening America’s position in the global oil and gas market.

140 miles long and 70 miles wide, the Cline Shale is located in the Texan Permian Basin. Based on cursory explorations, Devon Energy (NYSE: DVN) and Chesapeake Energy (NYSE: CHK) estimate that the shale might have as much as 3.6 million barrels of recoverable oil per square mile, MarketWatch reports.

Now consider that the Cline Shale is some 9,800 square miles overall; that suggests in excess of 30 billion barrels of recoverable oil.

Let’s put this in context: If true, then the Cline will exceed both the Bakken Shale and the Eagle Ford by almost 50 percent.

Moreover, the Shale is 85 percent oil and liquid-rich gas, and operating costs are roughly 50 percent below costs in the Bakken. Putting all these facts together, it becomes clear why oil companies and investors are showing keen interest in the Cline Shale.

Currently, the region suffers from lack of housing, a problem that will grow worse once serious work begins there as it did in Williston, North Dakota.

The other major issue is lack of infrastructure for distributing the expected enormous quantities of liquid gas.

If these two issues can be addressed, the Cline Shale could well become one of the most significant events in the history of American oil and gas development.

LubbockInvest is focusing on the housing issues with its 50-acre, 265-lot manufactured home development called Stone Bridge Estates. The development offers comfortable yet affordable housing quarters for employees drawn by the developing shale boom, MarketWatch reports.

And Teekay LNG Partners (NYSE: TGP) is working on the distribution infrastructure problem. Teekay is looking to export LNG, which commands high prices outside of the U.S., and it has been working to level up its export facilities—it added 6 vessels to its inventory in October last year.

Since most of the produce from the Cline is already liquid-rich gas, the international market will prove crucial to fully developing this highly promising play.

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