Surprised? I was, but it’s true! In decline since 1970, the American Petroleum Institute reported US oil production has now turned up, with October production of 5.36 million barrels per day, the most since 2005.

See the article here. Even Exxon is “coming home” with its proposed
acquisition of XTO Energy — XTO has a large position in North Dakota
Bakken Shale acreage.

The Cheyenne River Indian Reservation in western South Dakota is wild,
desolate, and beautiful! Three million acres of rolling prairies and
buffalo, just as trappers and the first settlers saw it. Much of the
surface soil here is shale, Pierre Shale. In the 1970’s I found 80
million year old ammonites exposed, right on the ground. The high clay
content makes the soil poor for agriculture (probably why it was given
to the Sioux Indians as a reservation in 1889). Due to surface
exposure, the original oil and gas components here are long gone, but
not so for the deeper shale and sandstones deposits to the north, where
a bonanza in oil and gas has been found.

Further north (meaning North Dakota, Montana, Saskatchewan) oil
production is skyrocketing. North Dakota may be sitting on one of the
largest pools of oil in North America. Bakken Shale oil production
alone may reach 500,000 barrels per day in 2011, up 50% from two years
ago. And now, beneath the Bakken a new, apparently just as prolific,
oil formation, called the Three Forks, is being explored. The Three
Forks is rumored to contain just as much oil as the Bakken. Also, newly
exploited to the northwest, in Canada, the Cardium formation is showing
an abundance of oil. SA author Keith Schaefer has written extensively
on the Cardium.

Multi-stage fracturing, or fracing, of horizontal wells in tight shale
formations is providing an unexpected abundance of gas and oil. This
new and rapidly evolving technology involves insertion of various
liquids or gases (water, carbon dioxide, nitrogen, air etc.) along with
proppants into horizontal bore holes in “tight” rock formations such as
shale. The liquids or gases create fractures in the shale and proppants
(sand, ceramics, etc.) keep the fractures open. Oil and gas then flow
into the fractures and can be harvested. For more information on the
technology read here.

Mid-Continent shale may have as much as 500 billion barrels of oil
(admittedly a wildly optimistic estimate but if so think Saudi Arabia).
While it is true that much of this oil may not ever be recoverable,
increasing prices and the aforementioned technology is rapidly
improving the odds.

And, don’t forget the Gulf of Mexico. Although drilled heavily,
companies are also producing more oil from the Gulf. Major projects are
now coming on line while old fields, due to technological advances, are
producing more than expected. New discoveries keep coming, read about
BP’s recent “giant” find here. At the same time, smaller companies such
ATP Oil and an Gas are prospering by extracting more oil than ever
thought possible from old fields. Technology is truly evolving and
allowing us to find and produce ever more oil and gas.

So, is all the “gloom and doom” of Peak Oil talk just that — only
talk? Well, not so fast, the US increase is minuscule when compared to
worldwide daily demand of approximately 85 million barrels of oil. Oil
demand, while stagnating in developed countries, is jumping fast in
developing countries. Car sales are exploding upward in India and China
as road infrastructure is built out. The “American Dream” of car
ownership is now becoming the Chinese or Indian dream. With Asian
populations many times that of the US the potential is enormous.

A few years ago severe shortages of natural gas were predicted in the
US and several LNG port projects were started in anticipation of
imports. Now, construction has slowed or halted, and the facilities are
languishing — mostly due to US shale gas production. It seems unlikely
the same could happen with oil any time soon, but keep your eye on US
domestic production.

Below are some US companies with significant stakes in Mid-Continent (read North Dakota) shale oil plays:

Continental Resources, at $6.7 billion market cap and 605,000 net acres
is in both the Mid-Continent and Gulf Coast regions. 82% of the shares
are held by insiders, with Harold Hamm, CEO, holding most of it.
Continental under Hamm, excited by the potential, has recently made a
major move into the Bakken in North Dakota,

EOG Resources, at $23 billion market cap and 513,000 net acres is in
the Mid-Continent and Gulf Coast regions. EOG, an international
company, is probably the least speculative way to invest in the Bakken.

Whitting Petroleum, at $3.4 billion market cap and 89,000 net acres is
in the Mid-Continent Whiting is also in the Permian Basin, the Rocky
Mountains, Gulf coast and Michigan. Whiting is exploring the Three
Forks formation under the Bakken.

Below are some Canadian companies that have significant western shale oil stakes.

Crescent Point Energy is active in the Canadian Bakken and “believes it has a drilling inventory of 3000 wells to drill.”

PetroBakken recently combined with TriStar Oil and Gas and supposedly has an inventory of 1,300 Canadian Bakken wells.

Also, many of the Canadian Royalty Trusts have significant land
holdings in Canadian shale areas. An added bonus: they often offer
attractive dividends.

A cautionary note: I am not recommending any of the above equities.
Everyone’s situation is different so use your own due diligence and
investigation before investing. It is true that there is a lot oil in
North American “tight” shale, and technology is improving the cost of
getting it out. However, a sharp drop in world oil prices could make
the shale oil, which is still fairly expensive to pump, uneconomical
and many shale oil companies may be adversely affected.

Source: Seeking Alpha

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    The U.S.