Over the last few weeks, I've been trying to wrap my head around the recent excitement over our domestic production. Whether the topic of drilling in ANWR or the outer continental shelf came up, people were getting excited.

There are a few problems, however.

For starters, Congress needs to lift their drilling ban. But for argument's sake, let's pretend (no matter how unlikely you find it) the drilling restrictions were lifted by the end of 2008. We still wouldn't see a drop of oil for the next five to ten years. I'm always asked whether or not the government will open up drilling in those two areas.

I believe it's only a matter of time. The reason is simple enough. The biggest challenge for alleviating our oil addiction is to decrease the amount of oil we import. According to the Energy Information Administration (EIA), the U.S. imported 13.4 million barrels of oil per day. I'm pretty sure you wouldn't be surprised to learn that nearly six million barrels per day of those imports came from OPEC producers.

One of the best ways to decrease our dependence on Middle Eastern oil is to develop more of our domestic resources. Ten years to see production just isn't enough.

Fortunately for us, there's an oil boom already happening in North Dakota.

Drilling the Bakken Oil Fields

I'll admit it has been a while since we last talked about the Bakken formation. With approximately 4.3 billion barrels of undiscovered, technically recoverable oil, producers have been scrambling to get acreage in the play.

Even though oil prices fell as low as $125.63 per barrel on Tuesday, it is still well above the $80/bbl necessary to make production worth the effort. Remember, a single well can cost up to $5 million. I don't know anybody that honestly believes oil will ever fall that low again.

In the past, oil prices would peak in July, at the height of the summer driving season. During fall, oil prices would then fall as demand decreased.

In 2007, things were quite different. Oil peaked around $80 per barrel in July. During the fall, we saw oil prices suddenly jump. Prices haven't looked back, either. The question is whether or not we'll have a similar experience in the next few months.

Although it will take a few years to significantly ramp up production, the Bakken isn't just another pipe dream.

An Old Fashioned Oil Boom

Glancing at the EIA's statistics on U.S. crude oil production, you'd be hard pressed to find a state where oil production actually increased. Even then, the growth isn't too impressive.

And then there's North Dakota.

Let's take a quick look at the numbers from the North Dakota Petroleum Council. Last year, oil production in North Dakota increased by 12.8% over the previous year. The 45 million barrels of oil brought in more than $251 million in revenues to the state.

The Bakken represented roughly 16.6% of the state's total production. In 2006, the Bakken only made up about 5.6% of that production. Production from the Bakken formation grew 329% last year.

I wouldn't be so quick to say the boom is over, either. In fact, it's just starting to heat up.

In April, 2008, North Dakota's monthly oil production reached a new height. The state produced 150,578 barrels of oil per day, breaking a 24 year record set in 1984. North Dakota is now the 7^th largest producing state in the U.S.

If production continues to increase (not to mention the decline other top oil-producing states are experiencing), North Dakota could be threatening the move up that list.

Just remember, every barrel we produce lowers the amount we need to import from the Middle East.

Playing the Bakken Field

Three months ago, I gave you some of my favorite Bakken Oil Stocks. Even if we take into account the recent market woes, Continental Resources (NYSE: CLR) is still up 25% since suggested my Energy and Capital readers take a look at the company.

The good part, however, is that this oil boom at the Bakken is far from over. Next week, I'll fill you in on several companies that could double in value by the end of the year.

Until next time,

Keith Kohl

P.S. Due to the record prices you pay at the pump, the U.S. is desperate for a plan of action to solve our energy problems. Experts like Boone Pickens have recently released their ideas on how to ease the situation. Before Boone, however, we've already had an energy plan on the books. It was developed by Chris Nelder and Brian Hicks.

This proposal was released last May, and not only could it avert an economic crisis...but investors stand to make a fortune. You can learn more about their plan here.