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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:

Drilling the Last Oil Frontier: The $267 Billion Oil Heist that Makes Saudi Princes Panic
After flying more than fifty hours across the globe, editor Christian DeHaemer reveals a $267 billion oil fortune that has sent the Saudis into full-blown panic mode.

Averting a Nuclear Disaster: MIT Scientists’ Cure for a Crisis
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.

Electric Vehicle Investment: Colin Powell’s Electric Car
Editor Jeff Siegel discusses the latest opportunities in electric car investing.

Global Economy 2011: Goldman’s Secret Confession
Analyst Ian Cooper takes a look at why Goldman Sachs is so worried these days, and offers two easy ways to profit.

2011 Gold Bull Market: The Only Kind of Gold I’m Personally Buying Right Now
The complete story of how a long-time gold and silver investor is looking to make exponential gains in the next leg of the gold bull market.

Investing in the Philippines: Why the Philippines is On the Verge of a Major Economic Boom
It’s rare when a country reaches a point when its economy takes of off. The Philippines is on the verge of that point.

Thorium Powered Cars: Thorium Power Cars, Seawater Greenhouses, Printed Bikinis
The key to true wealth is being more insightful and faster than your neighbor. The ideas within aim to help you be just that.

Gold’s Got “The Feeling”: Forget About Buying Blue Chips — It’s About Mood, Meme, and Motion Now
Even GE is feeling punk, so you’d better have a new plan — and fast — and it had better include gold calls.

Obama’s Jobs Speech: How I Learned to Love Failure
Our current president has set the Democratic Party back sixty years. We haven’t had as bad a president since Kennedy brought the world to the brink of nuclear war and then started the Vietnam War as an encore… I’m thinking we could use another Bay of Pigs right about now.

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
A worldwide natural gas revolution is taking off. Learn about several natural gas investments with long-term potential.

Keystone XL Pipeline: Obama Finally Got Something Right
Canada could supply us with oil for centuries. It’s almost inexhaustible… That’s why I call it “the forever bull market.” And just two weeks ago, the Obama administration approved the controversial Keystone XL pipeline project.

Enjoy your weekend,

Keith Kohl
Editor, Energy and Capital

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