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Exposing the Bakken Boom

The Epicenter of America's Industrial Rebirth

Written by Brian Hicks
Posted December 12, 2011

I met Jack Heinz at a hotel bar in DC's Dupont Circle about 10 years ago.

At the time, he was a law-student at George Washington University and I was a managing editor at Agora Financial.

A couple things struck me about Jack during that first encounter...

He just seemed a bit out of place for a by-the-book kind of town that DC was and is.

He had a thick beard and wore a suit and shirt that appeared to have been tailored to accentuate his bulging belly, making him look 40 even though he was only 28 years old when we had our first drink together.

Mostly, though, it was the lengths to which Jack went to hide his gruffness and lack of refinement: absolutely none.

He drank hard, swore hard, and tended to let people know exactly what he thought the moment he thought it... definitely my kind of guy.

Our first meeting at the bar ended up a bit fuzzy — but also resulted in a lasting friendship between two guys who couldn't have come from more different backgrounds.

You see, Jack was the son of a truck mechanic from a corner of the Northwest most Americans wouldn't be able to find on a well-labeled map. He hunted, he listened to country music, and during his return visits, he rode around town with a Dirty Harry-sized revolver stashed in the glove compartment of his Ford F-150, just as he had since high school.

Of course, he was quite proud of all this, telling me in what became a sort of Jack-catchphrase, “Come to Williston, and you'll see for yourself.”

Back then, those words meant very little to me.

In fact, until a few years ago, they still meant nothing — just some friendly smack talk between drinking buddies from very different parts of the country.

That was then. Things have changed over the last decade, to put it mildly...

Jack's a white-collar criminal defense attorney in Philadelphia now. He's got a mortgage in the suburbs; a mortgage on the shore; a couple cars in the garage; and two weeks paid vacation every year.

In short, my old friend is living the American dream.

If you were to ask me about my concept of the American dream, however, I wouldn't talk so much about Jack as I would about his father, Bill...

My portrait of the American dream comes from Jack's hometown, Williston, North Dakota: the cradle of the American oil shale revolution.

In the last few years, Bill — the truck mechanic who did some crop dusting on the side (perhaps the most interesting juxtaposition of talents I've ever encountered) — has expanded his business interests. And I should mention the word expansion does little justice to what this man has accomplished in such a short time...

He started off in the early 80s repairing 18-wheelers as they passed through town, which back then was little more than a regional depot for interstate commerce.

By 2008 — thanks to the rapidly growing local oil shale operations — there were so many big rigs heading in and out of Williston that Bill moved up from a simple mechanic's shop to a shop and truck stop.

When he noticed that the local lodging industry was hopelessly overloaded, he added a motel. A couple months later, oil companies made the concept of a vacancy a distant memory when they started leasing the rooms in batches for their workers. Bill responded by doubling the occupancy.

When downtown Williston became too congested with interstate truck traffic, he decided to cut out the middleman and bought his own line of vehicles to bring in much-needed supplies from out of state. And because he was locally-based, he was able to save money on fuel costs and quickly drove most of the competition out of town.

When Jack first talked to me about his father's heavy drinking and smoking, he mentioned that he was constantly on the verge of bankruptcy (mostly due to the aforementioned vices)...

Today, Bill makes close to a quarter million dollars per month from his various business interests.

For his most recent project, he's buying up land for development in what is becoming one of the hottest real estate markets in the country.

But most of his time is spent on his hobbies.

Besides drinking and smoking, Bill Heinz enjoys golf, fishing, and flying. He's recently put in a landing strip on his 500-acre ranch just outside of town. He's got three airplanes and two helicopters in the hangar.

To make it all a bit more real, here are a couple of snapshots Jack sent me last Friday:

plane1 chopper1

Doesn't look much like a truck mechanic's garage, does it?

Ironically, the one business that's suffered as the boom took hold in North Dakota is Bill's crop dusting operation — not because the farmers left town; but because Bill prefers to fly "for fun" now.

“He got one of the choppers from some Wall Street guy at a discount, 200 grand or something like that,” Jack told me once over vodka tonics.

“The Wall Street guy was still making payments on it. Dad bought it for cash.” No college education, no formal business training, and this guy — who was on the verge of ruin just a few years back — is now collecting $200 thousand toys.

Not to diminish Jack's own accomplishments, but you can see why Bill Heinz truly is the embodiment of the American dream.

And in Williston, he's far from alone.

Everywhere you look, the boom is evident: Waiters making $25/hour... teenagers with no work experience getting out on the rigs and pulling in six-figure incomes after a week of training... single-wide trailer homes selling for a quarter million and up...

“If you are willing to work on a rig,” Jack said to me over the phone last week, “you’ll be making six figures by sunset. It's that easy. Every store and business has "Help Wanted" signs. Fifteen-year-olds are making more money than paralegals back East.”

house1Four bedrooms, ranch-style, just outside of town: $3.6 million

It's a situation not seen in this country since the first oil boom of the early 20th century — and it's only getting started...

You see, the key to Williston's incredible rise is what's underneath it.

willistonbasinmap

I'm talking, of course, about the massive Bakken Formation — a 200,000 square-mile sheet of shallow-lying oil shale that contains anywhere from 24 billion to half a trillion barrels of crude.

At current market prices, this resource would have a gross resource value of anywhere from 2.4 to 50 trillion dollars.

Even when taking the smallest possible estimate, a capital infusion of that size wouldn't just change the local or even state economy, but — as Bill Heinz has already proven with his own experience — would spread to every support industry... cross state lines... and eventually trickle down to every aspect of our national economy.

The implications are so profound that this single resource is on pace to put the United States back at the top of the list of global crude oil suppliers as early as 2017.

And to the American people, it would translate to millions of new jobs.

But as I said, things are only getting started for the folks in North Dakota...

Today, the desolate Northwestern state — with a population of just 640,000 (ranking 48th of 50) — produces almost one barrel of oil per person per day, about equal to the national production of Australia.

northdakotadailyoilproductionchart

Within four years, that figure will grow by at least 80% to almost 800,000 barrels... which means a state with a population the size of Baltimore City will be producing as much oil as India.

Men like Bill Heinz, who reside in what could be the most valuable zip code on the North American continent, have already become millionaires many times over...

And years after they're gone, their grandchildren and great-grandchildren will still be growing richer from America's second fossil fuel boom.

Is this enough to cause a broad-spectrum resurgence in all major American industries as the military buildup during WWII did?

Quite possibly, but that will take years to determine.

What matters most is what's going on today — right now — as daily production marches toward that million-barrel-per-day milestone.

Forward-thinking investors who can't open businesses or buy land in Williston are doing something just as good: They're finding ways to invest in this boom, years before it hits full steam.

In fact, they may have it much easier than Bill Heinz ever did, because instead of putting time and sweat in support industries like he did, today's investors have the option of going right to the source of the money...

Keith Kohl, senior editor of Angel’s Energy Investor, is one such person.

Several weeks ago, Keith uncovered a perfect way to grab a piece of this runaway bull market while it's still in its early stages.

Trading at between $5 and $8, the three Bakken small-to-mid-cap oil producers Keith has zeroed-in on are local powerhouses — but still virtual unknowns in the global energy-producing community.

But this will all change in short order as these companies drill and tap new wells around the clock in one of the most abundant oil shale formations anywhere on the planet.

With the cost of foreign oil starting to drive the international market back to the States, further acceleration in production will be the only answer.

In the next 12 months alone, I expect all three to at least double in value as production ramps up.

Perhaps most important of all is that with the sheer size of the Bakken, this kind of growth will continue for decades after OPEC and the rest of today's global oil giants have pumped their last drop.

As for my buddy Jack Heinz? Well, he sleeps easy at night...

Because no matter what happens to his law practice — or to him — he knows with dead certainty that his daughter Ashley, who turns three in March, will enjoy a life with all the comforts, privileges, and opportunities the world can offer.

As a parent, I can't think of a truer portrait of the American dream than that... Can you?

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Brian Hicks
President, Angel Publishing  

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