Alternative Fracking Investments

The genius behind John D. Rockefeller’s fortune was that it wasn’t built on a specific well or field within the oil industry.

Despite having a stake in over 20,000 oil wells at one point, his most valuable business was refining our crude oil into products such as kerosene.

And less than a decade after co-founding Standard Oil in 1870, his company was reportedly refining nine out of every 10 barrels in the United States.

Rockefeller is often ranked as the wealthiest man in history, and the footprints of his empire are still alive and well today. Some of his descendants include household names like ExxonMobil, one of the largest publicly traded companies in the world at the moment.

Considering that Rockefeller was the world’s first billionaire, you could say he made out okay.

Now imagine what his reaction would be today upon learning his heirs are steering his fortune away from the very thing it was built upon.

That’s apparently the plan, as the Rockefeller Brothers Fund begins divesting its coal, oil, and natural gas assets in order to move to cleaner alternatives. After all, the charity has already rid itself of any ties to coal and the oil sands.

Now, I’m not saying alternative energy investments are an immediate bust, but I can’t help but think they got it wrong… Just make sure you don’t make the same mistake.

Race to the 10 Million Barrel Prize

Even the pessimistic estimates suggest that U.S. crude production will top 10 million barrels per day over the next two years.

The Energy Information Administration, for example, expects the United States’ domestic output to reach 9.5 million barrels per day in 2015, with natural gas liquids production topping more than 3 million barrels per day.

Personally, I think we’ll hit the 10 million barrel per day mark as early as 2015, so long as prices remain attractive enough for drillers to actively develop our tight oil plays… and that may not even matter.

Even though crude oil has declined to around $90 per barrel (it was nearly $110 per barrel just a few months ago), companies are expected to maintain their drill programs.

There is, however, a slight catch to this oil boom.

Frack it All?

Over a century ago, Rockefeller recognized that the two greatest opportunities in the oil industry were in refining and transportation.

Today, huge oil companies have a virtual stranglehold on refineries, and the United States has a network of more than 2.5 million miles of oil and gas pipelines.

Yet there’s another little caveat to our oil and gas revolution.

I’ll bet that most of my readers are already fully aware of what it’ll take to achieve those production projections by the EIA.

Regardless of which side of the fence you fall on in the ongoing “fracking” debate, the cold, bitter pill to swallow is how dependent the U.S. truly is on it.

Put it this way: roughly half of the United States’ oil production stems from just two states. That isn’t media hype, mind you. It’s simply a fact that some people have yet to grasp.

More importantly, over 90% of today’s oil and gas wells require some form of fracture stimulation.

Last week, I offered you an alternative way to approach these fracturing investments.

Today, we’ll take an even simpler route — one of the purest ways to take a page out of Rockefeller’s playbook and capitalize on a modern-day oil boom.

First, consider the fact that up to 5 million pounds of sand can be used during hydraulic fracturing operations. In some prolific shale plays like the Marcellus, that amount is even higher.

Sand has officially become the new gold.

And compared to Rockefeller’s refining descendants, the returns aren’t even close.

But I’ll let you decide which investment you would have wanted over the last two years…

U.S. Silica may be a small-cap player, but it’s still one of the largest producers of silica — the sand used as a proppant in hydraulic fracturing — and there’s always room to grow. In fact, the company just raised its full-year guidance.

It’s one of the few win-win situations in today’s oil markets. 

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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