Shale Gas Investing: The "Echo Boom" Gains Momentum

Brian Hicks

Written By Brian Hicks

Posted December 23, 2011

Editor’s Note: For more information on the topic, check out our updated resource page on shale gas stocks

How big is the shale gas boom going to get?

All you have to do is talk to Letha Webster, the latest winner in the shale gas boom, to get an idea…

Letha’s lived in Valley Junction, Wisconsin, since 1955.

Her hometown sits at the intersection of Highway N and Concord Avenue, about 100 miles west of Sheboygan.

But Valley Junction has no shale gas underneath it. There are about 300 miles and a Great Lake between Valley Junction and the nearest shale gas zone.

Instead, the town is at the heart of an “echo boom” spreading throughout the country.

And it’s proof of how big the shale boom is going to eventually get — and where investors can find safe, consistent gains as the next leg of shale gas growth unfolds.

Peak Sand

You see, Letha is one of a number of landowners in the area.

She is part of a group that collectively holds 436 acres, estimated to be worth $1.1 million.

That land, however, was just sold for a total of $5.3 million — more than four times higher than the appraised value.

The reason? Sand.

This area of Wisconsin has the right kind of high-quality sand used in the fracking process. And the high-quality sand is growing right alongside shale gas exploration.

There are currently 16 sand mining operations producing high-demand sand that’s helping to unlock trapped gas across the country. According to the Wisconsin Center for Investigative Journalism, there are proposals to build another 25 sand mines in the area.

That kind of sand demand shows how much bigger the shale gas and fracking boom is going to get.

But it’s just the start of a major follow-on — or “echo” — boom resulting from the shale gas boom…

Shale Gas “Echo Boom” Underway

Now that the shale gas boom is in full swing, big-money investors are moving in aggressively to capitalize on it in every conceivable way.

Considering the billions of dollars they’re investing, you can bet they’ve done their due diligence on how big the shale gas boom is going to be… and it’s going to be big.

A few of the deep-pocketed companies cutting eight- and nine-figure checks include:

  • Nucor (NYSE: NU) is completing a $750 million plant in Louisiana due to the advantageous costs of operating in an area awash in shale gas. The facility could be expanded to include a total capital investment of $3.4 billion.

  • U.S. Steel (NYSE: X) has announced it’s investing $95 million into Ohio steel production assets to meet the specific needs of shale gas developers in the region.

  • Vallourec (Paris: VK) is investing $650 million in a new Ohio plant, and expanding another to make the tubes and pipes necessary for natural gas production, processing, and transportation.

Those are just three of the hundreds of companies seeing how they can use shale gas to improve their bottom lines. There are plenty more, and the opportunities are just as big.

Consider this…

All of the gas produced from shale is going to have to get to the end user somehow. And that means miles and miles of more pipelines will have to be laid.

Thousands of compressors, miles of pipe, and brand-new processing facilities still have to be built and installed to build out all the necessary infrastructure.

The shale gas boom is great for natural gas producers, processors, and fully-integrated oil and gas companies.

As it grows, it’s reverberating through the nation’s manufacturing sector and elsewhere.

From an investment perspective, it’s important to consider the latter part of the echo boom. That’s where the financial community is still playing catch-up.

Safety and Profits, Sam Brannan Style

If Sam Brannan were alive today, he’d likely have shops across the country by now.

Brannan was the owner of the general store next to Sutter’s Mill. He was the biggest promoter of the California Gold Rush.

Brannan knew how booms worked and profited handsomely. He became the wealthiest man in San Francisco during the Gold Rush. But he never prospected; he amassed his fortune by selling picks and shovels to the waves of prospectors.

That’s why, in this next stage of the shale gas boom, there will be a lot more money made in a variety of different sectors on top of the direct shale gas plays…

The shale gas boom will drive years of earnings growth in manufacturing and gas processing, to pipeline builders and operators…

Just take Keith’s Kohl’s shale gas plays. His picks have paid off extraordinarily well over the years.

Keith has managed to find profits in the shale gas echo boom by showing his readers a company that doesn’t drill for, produce, or own any shale gas assets anywhere in the country — yet its shares have risen more than 500% by selling the essential and specialized processed sand to the shale gas companies, which are devouring all the company can produce.

Companies like these are the picks and shovels of shale gas.

You get all the profits without the risks of drilling dry holes.

If history is any example, this boom will be bigger than anyone expects. Its impact will ripple through many sectors.

And it will make investors a lot more money in the years ahead, in everything close enough to shale gas to derive benefits from it.

Letha Webster may have sold out and taken her profits…

But I’m still a buyer — and you should be, too.

Good investing,

Andrew Mickey Signature

Andrew Mickey

For close to a decade, Andrew’s prescient analysis and world travels have uncovered safe, ultra-lucrative investments across the world — from farmland in Russia to the gold boom in Colombia years before the rest of the financial world has caught on. $A_weekly  $3a39,000 contributing writer for Wealth Daily, Andrew has been labeled one of the world’s top investors. He has been quoted by CNBC, Fox News , and the National Center for Policy Analysis. He is an active venture capitalist and the founder and Investment Director of Freedom and Capital. For more on Andrew’s most successful picks, go to this editor’s page.

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