Why This New Pipeline Has Unexpected Profits

Keith Kohl

Written By Keith Kohl

Posted September 10, 2011

“What comes next?”

I’m asked this question on a daily basis. And I can understand people’s uncertainty.

After all, while Congress is tossing Obama’s latest $447 billion plan to boost hiring back and forth, stocks have dropped across the globe.

But let’s be honest here. Are we expecting a sudden, quick solution this time around?

With the next election just fourteen months away, don’t hold your breath for the two sides to play nice.

Lucky for us, there are better opportunities opening up.

A Pipeline Not Just for Bitumen

I told my readers earlier this week that there’s more to TransCanada’s Keystone XL project.

What most people don’t know is that bitumen won’t be the only thing traveling down the pipeline. TransCanada is planning to tack on a ramp that will also ship light oil from the Bakken.

For all the good drilling news that’s been coming out of North Dakota and Montana during the last five years, one major problem has developed: They simply don’t have the pipeline capacity to ship their crude to market without having to rely on other methods. This obstacle means North Dakota producers have had to sell their oil at a discount.

The new addition to the Keystone XL pipeline would add another 65,000 barrels per day to the mix, which could start flowing as early as 2013.

They’ll need all the help they can get. In 2010, North Dakota added more than 100,000 barrels per day of pipeline capacity — and it’s still not enough.

Within five years, the state’s production growth could catapult it ahead of Alaska and California (oil production in both states peaked decades ago), making North Dakota the second-largest oil producing state.

There are more than 4,500 Bakken oil wells currently active in North Dakota, with about 200 rigs drilling the formation for oil.

Until pipeline capacity catches up (a difficult task by itself), we can also expect those producers to count on other transporting means, namely rail. Right now, approximately 25% of Bakken production — or about 130,000 barrels per day — is sent via rail.

Investors are already dipping their toes back in the water. If you haven’t done so already, you too should be looking for a dive-in point.

And if you’re still not sure where to start, we’re here to help.

Here are some of the hottest investment stories to cross my desk this week:

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What happens when a casual breakfast meeting turns into an investment breakthrough? Editor Nick Hodge’s latest research report reveals how average investors in this still-tiny Boston-based company are becoming millionaires overnight.

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Editor Jeff Siegel discusses the latest opportunities in electric car investing.

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2011 Gold Bull Market: The Only Kind of Gold I’m Personally Buying Right Now
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Investing in the Philippines: Why the Philippines is On the Verge of a Major Economic Boom
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Thorium Powered Cars: Thorium Power Cars, Seawater Greenhouses, Printed Bikinis
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Why Invest in India: Buy India, Do the Needful
It’s been ten years since my travels last took me to the Subcontinent. I have a visceral memory of arguing with a cab driver in the brown smog on a hot street in Bangalore… I had just paid him to take me to the Palace of Mysore. His reply: a strange ear-to-shoulder head bobble.

The Future of Natural Gas: Witnessing a Natural Gas Revolution
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Enjoy your weekend,

Keith Kohl
Editor, Energy and Capital

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