It's official. According to the International Energy Agency
(IEA), the United States could be the world's largest
oil-producing country in the next seven years.
Based on the report, the United States could surpass all other
countries in oil production by 2020. And 10 years later, the
country could be energy-independent.
Talk about your 180-degree turnarounds.
For the past several decades, the United States has depended
heavily on imports to feed its 19-million-barrel-per-day oil
habit. In fact, about one out of every five barrels the United
States consumes each day comes from a foreign country.
But if this forecast is accurate, then the United States
production could eventually outpace domestic consumption. So
instead of bringing in oil, we could be shipping it out.
Is this plausible? You bet it is.
In fact, the whole scenario sounds eerily similar to what has
happened in the natural gasmarket . A decade ago, every credible
analyst was convinced that the United States was running out of
gas, and energy companies spent billions to construct import
Now, the United States has more than it can use, and those import
facilities are being converted to export hubs to send gas the
The start of this amazing reversal may have already begun. From
2008 to the end of 2012, crude output in the United States
climbed to 7 million barrels per day from 5.1 million, an
increase of 37%. That's an extra 1.9 million barrels of oil
coming to the surface daily.
The credit goes to unconventional reservoirs like North Dakota's
Bakken Shale, where oil production has surged to more than
673,000 barrels per day now from around 3,000 barrels per day in
2000. And that's just onespot -- there are billions of barrels
waiting to be recovered in shale formations across the United
And that's not even counting offshore drilling in the Atlantic
Ocean and Gulf of Mexico.
The powerful combination of horizontal drilling and hydraulic
fracturing (better known as "fracking") has given producers easy
access to oil that was once thought of as unreachable. And these
new supplies could quickly wean the United States off of foreign
So if this IEA outlook is accurate, then what is the takeaway for
Well, the collapse in natural gas prices resulted from a supply
glut. I don't think therewill be a repeat with crude oil, but the
influx of shale oil could certainlyput downward pressure on
prices or at least limit some of the upside.
But when you look past the upstream producers, there are entire
sectors that could see unprecedented demand for their products
and services thanks to North America's oil boom.
In fact, it may be one of the best ways to makemoney in the stock
market in the next decade.
More oil exploration means increased demand for offshore and
land-based drillers, and more work for pressure pumping and
hydraulic fracturing crews.
And all that drilling and fracking requires a lot of water. In
fact, for every one of the approximately 11,400 new shale wells
drilled per year in the United States, nearly 6.1 million gallons
of water is required. That comes out to
70 billion gallons of water needed per year.
That's one reason I'm keeping a close eye on
, an oilfield-service company that sources, stores and transports
fresh water to drilling sites. The company also treats and
disposes of used "flowback" water and waste fluids. They get paid
for bringing in fresh water and hauling out the waste water --
it's a solid revenue stream that could last up to 30 years.
As I mentioned in a recent article, Heckmann has an active
presence in eight shale formations around the country. The
company is now firmly entrenched in oil and liquids-rich plays
such as the Bakken Shale in North Dakota, the Eagle Ford in Texas
and the Utica in Ohio -- all spots where exploration and
development activity are buzzing.
To serve these regions, Heckmann has amassed a fleet of 1,200
trucks and 200 rail cars, along with over 100 miles of water
collection and delivery pipelines. The company also owns 4,200
frack tanks and 46 liquid waste disposal wells. More recently, it
has been constructing facilities designed to treat and recycle
used fracking fluids.
Action to Take -->
I think the stock could deliver close to a 20% gain by the end of
the year, with plenty of upside even after that.
But more important, this new energy boom will have majorinvesting
implications for years to come... and now is the time to act,
before the big money is made.
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