  |
|
Invest in the New Way to Get Oil Editor’s Note: We always try to bring you the latest in the renewable energy world, but we are realistic as well. We know that there is no way the Big Oil industry will let their businesses fall by the wayside. Oil will be around for a while. Unfortunately, new reserves are not keeping up with production. So today, Byron King has a solution. Enjoy… Extraction Fashion
The world’s known oil reserves are depleting inexorably. Most major oil-producing regions of the world are at or near the stage called “irreversible decline.” Conventional, onshore production is leading the decline, which means that non-conventional production will become increasingly…well…conventional. New methods and technologies for recovering oil — which are generally called enhanced oil recovery (EOR) methods — are also being applied with great potential. And other hydrocarbon resources, such as the tar sands of Alberta or the heavy oil of Venezuela, are also coming online, but in volumes that are marginal at best in terms of daily worldwide demand. Finally, there are the prospects for new discoveries in frontier areas such as the Arctic. And then there’s offshore…deep offshore. *********************************** The Full-on Oil War of 2008 There’s bloody new “backlash” set to rocket oil past $150... And send gas soaring to over $6 per gallon. By the time this is fully under way — as early as March 2008 — the dollar will be destroyed and oil-dependent industries will suffer. Many stocks will go down… That’s the bad news. The good news is that when energy is under the gun, the soaring oil price itself opens you up to all kinds of soaring investments. This is your source to grab those soaring investments… *********************************** Let’s take a look at the future of offshore production, and particularly at production in areas known as “deepwater.” Offshore oil exploration and development as we know and understand it today dates back to the 1940s. Back then, people used land-based technology and began a systematic process of applying it to the offshore environment. But “deepwater” wells, meaning depths greater than about 1,500 feet, are a very recent phenomenon. As recently as the early 1990s, there were almost no wells in more than 1,000 feet of water, not even among the large-scale projects in the Gulf of Mexico (GOM) or the North Sea. Anything deeper than 1,000 feet was considered a technological frontier. Within the past 15 years or so, deepwater has evolved from being a technological frontier to a strategically important component of the world's oil industry. But the deepwater and ultra-deepwater regions of the world are still underexplored and hold considerable potential. Significant deepwater locations include the GOM, the Arctic regions, offshore West Africa, offshore North Africa, offshore South America, the South China Sea and the margins of the Indian Ocean. In fact, deepwater is driving significant growth in offshore activities, with at least $20 billion already budgeted to develop identified projects between 2006-2010. While the deepwater effort is moving to remote sites, often far offshore, the existing fields that are closer to shore still require significant capital investment to boost production via new drilling, re-drilling old wells, drilling offset wells and installing and applying other forms of production enhancements. From the exploration standpoint, deepwater fields tend to be few, but in terms of discovery and exploitation, they are extremely productive. In the deepwater trends of the GOM, for example, there are deeply buried turbidite sands that have yielded in excess of 20,000 barrels of oil per day. Hence, these are key targets for the drillers’ bits, and the potential payoff both invites and requires significant capital investment. But offshore and deepwater development does not end with the massive drillships that grind the initial holes in the bottom of the sea. In fact, drilling is just the beginning of a long, costly process called subsea processing. This activity includes making the oil and gas flow from the deeply buried rock formations, dealing with issues of pressure maintenance and handling the byproducts such as sand and deep brine water that come up with the oil and gas. Take the high-pressure, high-temperature regime of deep wells in general and now put these problems many thousands of feet below the surface of the sea. The problems are compounded, literally, by orders of magnitude. After dealing with the “production” issues, another requirement is either to bring the oil and gas to the surface of the sea for transport ashore or to pump it via pipeline to some landfall. The traditional offshore methods for doing this was to use massive platforms anchored to the seabed. But in deepwater environments, this is all but impossible. So we have to consider that it will be necessary to expand the subsea franchise. That is, much of what occurs in the future will have to occur at depth, far offshore and deep beneath the waves. The subsea market is very much on an upward growth path, particularly when looking at the value of delivered systems between 2001 and mid-2007, and forecasting deliveries of orders on the books out to 2011. Subsea production is currently occurring in 50 countries worldwide, with a further 10 nations to join this club within the next few years.Who are the players in all of this? Here is a chart of the principal leaders among the companies that design, build and deliver significant subsea production systems:
The leading U.S.-traded companies in the subsea field that are stand-alone investment plays are FMC Technologies Inc. (FTI: NYSE), Cameron Intl. (CAM: NYSE) and Dril-Quip (DRQ: NYSE). Another highly regarded company in the field, Vetco Gray, was acquired last year by General Electric (GE: NYSE). One more company that is a player in the subsea equipment business is Aker Kvaerner, which trades on the Oslo, Norway, exchange. (The stock also trades here in the U.S. Pink Sheets under the symbol AKKVF). Aker cut its teeth developing technology for work in the North Sea, and thus is a world leader in the field. Looking forward, half of all semisubmersible drilling rigs in the world currently under construction will be equipped with equipment supplied by Aker. *********************************** The Most Elite Opportunity for OTCBB and Pink Sheets Investors… People who invest in over-the-counter stocks are crazy, ridiculous and downright stupid… Well, that’s what the suits in Wall Street say. But, I’m here to tell you, THEY ARE WRONG! OTC investors last year had the chance to see 25,498% profits in just six months, if they had invested in the top 25 “Jumper” stocks. Read about it here, and find out how you can get on the next wave of Jumpers… *********************************** In the subsea realm, the current market fundamentals are extremely healthy for contractors. Profit margins are large and growing. The supply chain for the offshore sector is close to or at full capacity, which leads to a seller’s market in equipment and services. There are severe constraints in fabrication facilities, manpower, equipment and material availability, leading to cost-inflation overall. Any operator that is planning an offshore project, and certainly a deepwater project, needs to order critical equipment early and keep the time between discovery and production as short as possible. In the subsea equipment field, the trend is for operators to develop long-term relationships with the suppliers named in this report. These relationships will almost certainly last for at least 15-20 years per project. Due to the unique conditions of each deepwater project, not every contractor possesses the abilities necessary to bid on every job, and the proverbial “low-cost bidder” is not necessarily the one being chosen. As conventional oil production continues to decline, investment dollars will continue to flow toward offshore production, particularly deepwater. Get with the fashion…while it’s still avant-garde. Until we meet again… P.S.: I put together a special report on another type of energy that is still completely “avant-garde.” In the report, I describe something called “Slow Volcano” energy, which could power 20% of California by the end of 2010. Also in the report, I give away five penny stocks that will benefit from this discovery. I’ll even throw in three free months of my exclusive newsletter. But you have to hurry. This offer is over on January 14, 2008. Check it out before it’s too late… |
|
|
| Byron King practiced law for many years in Pittsburgh, Pennsylvania, where his efforts were focused on litigation, bankruptcy and other oft-contentious matters involving people and money. Byron seldom writes a letter to the editor of any newspaper, because “some newsroom intern might screw up and print it.” But in a moment of weakness Byron once sent a note to Bill Bonner, publisher of the Daily Reckoning. Things happened. Fate intervened. Byron is now a co-editor of Outstanding Investments. |
|
