It's Impossible to Find Oil Without this Technology

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Twenty five years after the Hamill brothers discovered the world's most productive oilfield ever at Spindletop, an emerging exploration technology uncovered oil in Fort Bend County Texas.

The problem in those days was that unless you were lucky enough to have oil bubbling out of the ground, it was nearly impossible to figure out exactly where to drill.

You could spend many fortunes drilling test holes, looking for oil. And if you were even a few feet off of a major vein, you'd be out of luck - and out of money.


Enter a solution that's still being used and perfected today...

The year was 1926. A German scientist named Ludger Mintrop employed an exploration crew for Gulf Oil using technology he had developed during World War I.

The technology analyzed how sound waves traveled through space. Mintrop had originally designed it to help locate Allied artillery firing positions. To do so he set up three of his specialized instruments, and when the Allied gun fired, he could use the data gathered by his instruments to triangulate and pinpoint the gun in question.

After the war, he developed the technique to work in the earth. Again, he set up a series of instruments, set off a charge, and measured the time it took the sound waves to travel through the earth from the point of the charge. The result was a host of data that could detect changes in geological structures beneath the earth's surface.

Since certain types of structures were more likely to hold hydrocarbons (like oil and natural gas) than others, and Mintrop's tools could tell the difference, this technique was worth a literal fortune to energy exploration companies. They knew they had to have it.

Today, energy companies all over the globe rely on this specialized technology to pinpoint potential oil and natural gas reserves. It is the only way they can economically explore for these energy sources.

The technology, broadly known as reflection seismology or simply as 'seismic' has evolved and is used on land, in marine environments, and in the transition zone between land and water.

The companies that make this technology today are manufacturing a 'must have' for energy explorers. Shooting seismic is standard procedure before drilling. The best companies are making this technology more accurate, more efficient to deploy - and as with technology for computers, phones and most other electronic devices...

...Seismic technology is now going mobile.

In the past, most sensors were linked by cables - shooting miles of seismic required miles of cables. Now, the market is in transition - getting rid of the cables and moving to cableless systems.

I can't emphasize enough - this type of mobile seismic technology is a huge growth catalyst for companies that make and lease this equipment to seismic contractors.

Mobile seismic technology makes surveying a given property much more efficient, and potentially much less expensive - because it's now completely un-tethered by cables.

For the past couple of years survey crews have been testing this equipment to see if it stands up to the rigors of intense field work. An April 2010 article in E&P Magazine discussed the advantages of cableless systems based on trials by major oil and gas production companies.

The results were overwhelmingly positive, and suggest that cableless systems can open the 'exploration door' to previously inaccessible regions, decrease environmental impacts, and reduce health and safety hazards for seismic contractors.

With energy demand back on the rise, exploration crews have begun to rely on these wireless systems for special applications. I believe their use will become main-stream within the next decade as older, more cumbersome equipment is phased out, and the advantages of cableless systems make them standard equipment.

Right now, the energy market has hit a soft spot. The International Energy Agency (IEA) recently forecast that oil demand will decline in the first half of 2011, and energy stocks have pulled back as a result. In my opinion, this is not going to last, the IEA's own forecasts show oil demand rising above record levels later in 2011, and into 2012.

And as long as there is demand in the world for oil and natural gas, there will be demand for seismic equipment.

I believe this soft spot has created a buying opportunity for energy stocks. I've recently added two companies to my portfolio that are leaders in seismic technology development. These additions increased my previous exposure, which included two companies that are searching for oil and natural gas in regions of the world with huge, yet untapped, energy production potential.

If you're interested in learning more about the companies that are perfecting this new, vital technology, I encourage you to take a closer look at my research by clicking here now.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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