Thursday, April 03, 2008


Another big gas discovery has been announced. This one in Quebec. More than 4 trillion metric feet of natural gas that is located near already constructed pipelines.

In the past five years, US importation from Saudi Arabia has declined 12%. During the same time, US importation from Canada has increased 30% (figures from This is all before the coming development of the Bakken Formation.

The Bakken Formation was found in 1951. It covers much of two provinces in Canada, much of Montana and about all of North Dakota. In addition to holding about as much oil as is held by Saudi Arabia, it holds as much natural gas as the largest field in the world, which is 26 Trillion Meters of Gas in Qatar.

Oops, maybe I wrote that last sentence too quickly. The Barnett Field in Texas is now said to hold as much as the Qatar field. The reason these Bakken and Barnett have been left mostly idle for the past 50 years or so is that it took horizontal drilling technology and higher hydrocarbon prices to make these fields profitable. The combination of high prices and dramatically lower drilling costs have made these fields very attractive. Others are jumping into the act.

This week in Pennsylvania, the governor announced new leases on state forest lands. Pennsylvania sits on yet another undeveloped shale formation. A drip of oil here a drip of gas there and pretty soon the drips have turned into a pour.

I have to run but I just wanted to repeat a few words of basic truth to counter the constant stream of misleading words you are hear daily. During these confusing times, government officials and the news media are barking up the wrong tree while the raccoon is getting away. The amount of hydrocarbons being created daily, through natural processes that man could not stop if he wanted, can only be measured using scientific notation. The amount of methane gas that is bubbling up from the ocean floor daily is in the range of 10 to the 28th power.

There is no energy shortage. There is temporary hysteria. Soon and very soon, enough new supply is going to be on the market to knock the price of crude oil down $20 per barrel or more. The investment opportunity is enormous.