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America's Oil and Gas Boom

Cowboys: The Next Filthy Rich Oil Sheiks

Written by Brian Hicks
Posted February 22, 2012

I want you to take a look at this table...

It could possibly be the most important chart you see all year:

Area

Last Count

Count

Change from Prior Count

Date of Prior Count

Change from Last Year

Date of Last Year's Count

U.S.

17 Feb 12

1994

+5

10 Feb 12

+281

20 Feb 11

Canada

17 Feb 12

705

-4

10 Feb 12

+69

20 Feb 11

International

January 2012

1171

-9

December 2011

+10

January 2011

 

It’s a chart of drilling rigs.

After declining to levels not seen since the 1940s, U.S. crude and natural gas production began rising again in 2009.

Drilling rigs have rushed into America’s oil and gas fields, suggesting a surge in domestic crude and gas production — and not just in the Bakken in North Dakota...

The Eagle Ford has Bakken-type potential.

In fact, the number of rigs just in U.S. oil fields has more than quad­rupled in the past three years to 1,272, according to the Baker Hughes rig count.

Including those in natural gas fields, the United States now has more rigs at work than the entire rest of the world combined — and by a wide margin: 1,994 versus 1,171.

Read that again...

The United States has more rigs drilling for oil and gas than the entire world combined (save for Canada).

Because of the drilling boom, the U.S. Energy Information Administration increased its oil production forecast for 2025 to 6.4 million barrels, up from its previous estimate of 6 million barrels.

But I think this is a conservative estimate.

By the EIA's own forecast, the United States will challenge Saudi Arabia as the world's #1 oil producer when crude and other forms of liquid petroleum are figured in the calculation.

As you’ll see in a moment, it’s a perfect storm for the American oil industry...

You see, every major energy think tank and government organization out there is predicting a substantial increase in global oil consumption.

Just two weeks ago, Global Industry Analysts — a high-end economic research firm that consults with companies and governments worldwide — released their annual report on the oil market.

Titled “Oil and Gas: A Global Outlook,” GIA's report forecasts total global oil consumption will reach 105 million barrels per day by 2015.

Now, that seems rather high to me. But even the conservative International Energy Agency (IEA) headquartered in Paris is forecasting a dramatic increase in oil consumption...

The IEA is forecasting global oil demand of 95 million barrels per day in 2016, up from 88.3 million bpd in 2010.

The IEA forecast global oil demand at 90.3 million bpd in 2012, up from 89 million bpd last year. 

Let’s take the lower estimate from the IEA...

That’s roughly a 1.25-million-barrel-per-day increase per year — for the next four years.

Let me put that into perspective: At current production rates coming out of North Dakota, we need to find two Bakkens (American side only) every year for the next four years.

Can it be done?

Perhaps.

The technology that fueled America’s shale gas rush into the Marcellus is also moving into oil fields like the Eagle Ford.

Even so, demand for oil will continue to outpace oil production. And you know what that means...

Much higher oil prices are on the horizon.

This baby is just getting started...

The original bull on America,

Brian Hicks Signature

Brian Hicks

Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy & Capital. Known as the "original bull on America," Brian is also the author of the 2008 book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox and countless radio shows. For more on Brian, take a look at his editor's page.

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