I told you before that the President wasted his time in Saudi Arabia and I wasn't kidding.
In fact, he was on the completely wrong continent.
By now you've probably gotten used to the huge amount of attention that energy has gotten lately in the mainstream press. News stations have gone so far as to label it, "The American Energy Crisis."
Believe me, the problem is a little bigger than that. Granted, the U.S. is leading the charge in oil consumption, using roughly 20 million barrels of crude everyday.
But, even if Saudi Arabia is one of the few countries left in the world that can actually increase their production capacity over the next few years, the Saudis still aren't our largest source for oil.
According to the Energy Information Administration (EIA), we've been receiving more crude oil from Canada than anywhere else since 2004. You can take a look for yourself here. If you also notice, Canada is one of the few countries that has been able to increase their imports to us since 2002. Furthermore, if we take into account the total amount of crude oil and products, we're getting more from Canada than the entire Persian Gulf since 2006!
We've previously talked about how the U.S. is setting up for a flood of Canadian oil production. At the time, we focused on the important role that the Alberta oil sands will play over the next decade. Today, however, it's not the oil sands that is attracting most of our Canadian oil investment attention...
Saskatchewan's Oil Field Attraction
It's the oil boom going on next door to Alberta. Specifically, the southeastern section of the province. You see, here we're not talking about the heavy oil sands, which requires a large amount of energy to extract the oil.
Instead, I'm referring to the higher quality, light pools of Saskatchewan oil located in The Bakken discovery. A discovery large enough to catch the eye of Alberta oil companies.
One of my readers was quick to point out that the Bakken (both on the U.S. and Canadian side of the formation) will require a huge amount of investment. I couldn't agree more. Do I think the Bakken will be pumping out enough oil to completely relieve us of our addiction to Middle Eastern oil?
I wouldn't hold my breath on that one.
Although the U.S. Geological Survey reported that up to 4.3 billion barrels are technically recoverable in the U.S. side of the Bakken, there's only been speculation as to exactly how much oil is located on the Saskatchewan side.
Either way, there's a lot of oil up for grabs.
And the bottom line for many of my readers comes down to this: How can you invest your hard earned money in the oil sector?
Better yet, is it still worth it?
Canadian Oil Field Investments
I'll let you decide for yourself which side of the field your on concerning oil prices. If you honestly believe that putting your money into oil investments today isn't worth it, I'm probably not going to change your mind.
Then again, if you can see where our energy picture is headed, you're not too late. And as far as the risk involved?
Well, that's all up to you.
So far in 2008, one of my favorite Canadian oil stocks has been TriStar Oil and Gas (TSE: TOG), and a perfect example of how well a company can perform in southeastern Saskatchewan.
TriStar's exposure to the light oil pools in southeastern Saskatchewan is one of the main catalysts for their 2007 growth. In February, 2008, TriStar exposure increased after acquiring Bulldog Resources Inc. The move gave TriStar another 2,200 boepd of high quality to their production, as well as access to another 10 net sections of acreage in the Bakken.
If you're looking for an up-and-coming oil and gas producer, check out Petrostar Petroleum Corporation (CVE: PEP). Trading on the Toronto Venture exchange, Petrostar shares jumped more than 40% during trading today after the company signed a letter of intent to develop certain leaseholds in the Bakken oil play.
Of course, there are even more ways for investors to get a piece of the action...
Stay tuned.
Until next time,
Keith Kohl
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I too have been watching the Sask. oil scene and have put a decent sum into BQI at $3.00 (avg.cost). While still in somewhat initial stages I have been impressed by their mgmt team and their finds to date.
You don't seem to go that direction, why not?
Surely someone has got it wrong either we have an oil crisis or we don't, which is it? I tend not to believe any announcement that embellishes oil production figures given out by oil companies especially if it is backed by the UK government. So, if we take these announcements of new finds as true are we out of the woods and what is the view of your colleages and yourself given the prediction that a rising population to 9 billion by 2030 is probable? Will they be living the 'American Dream' or starving to death in increasing numbers? If we are over this crisis it will inevitably return again when the human race has squandered (and greed and politicians will ensure it is squandered) the next boom and our environment has been polluted beyond repair.
My other point is why is America capping every oil well it finds in the US? Is the plan to use up every other source from around the world before exloiting its own resources? I would be pleased to hear you views on this and anyone else who cares to comment.
Gerry Evans
You haven't mentioned the latest news - a 5900 sq. mile oil shale reserve right here in the southern USA that has an estimated recoverable reserve of 5-7 billion barrels and is the same type shale reserve as the Bakken. This is where drillers are headed now with the technology that has proven successful in the Bakken. We are just beginning to seeing landmen sneak in to the area with low ball leasing rates of $50-$75 per acre. The oil bearing shale layer ranges from 100 to 800 foot thick ,which is way more than the Bakken. 2 test wells are producing oil now and another 2 wells have been permitted for June. This could be lift-off for the recovery of an enormous new play on mostly private lands. This reserve has been known about by the State for about 40 years but has been largely unmapped because the recovery technology did not exist and the price of oil was too low. Exploration technology proven in the Bakken and $120 oil has changed all that. Tests indicate that this shale layer holds over 300 barrels of oil per acre foot and the average layer of oil bearing shale is 160 feet thick but ranges to 800 ft.thick in some areas.