One morning in 1847, James Young traveled to the Midland Valley of Scotland to investigate a deposit of rock that, according to a student of his, had been leaking a strange liquid.
What he found would change his life — and the world — forever.
Upon the discovery of recently excavated ground, Young confirmed that oil was flowing out of the broken rocks that had been unearthed.
Being a renowned chemistry professor, Young harvested what oil he could and started experimenting.
At this point, he had only just scratched the surface…
Eventually, through much tinkering, Young found a way to convert the oil seeping from the rocks into paraffin (kerosene), naphtha, and machinery lubricants.
Even still, the man’s sole focus was on the study of chemistry, and he had no clue what he’d found.
That was until the student who had tipped him off to the oil-laden rocks wrote him and said, “Perhaps you could make a capital thing out of this industry.”
From there, Young secured patents, and with some financial backing, he started EW Binney & Co.
He was crowned the “world’s first oilman” and was given the nickname James “Paraffin” Young.
He made billions in today’s dollars, and after a few short years, he sold his company to manage his various estates, go yachting, and travel the world.
This initial discovery — what we know today as the North Sea oil field — led to a bounty of oil and gas for the United Kingdom that made millionaires and billionaires left and right.
Companies like BP, Royal Dutch Shell, and many others rose out of his discovery… He truly shepherded the world from the era of whale oil into the fossil fuel age.
Since he found the oil seeping from the broken shale in Scotland, the region has produced over 40 billion barrels of crude oil and trillions of cubic feet of gas.
But things are different now…
North Sea Decline
After more than a century of production, the North Sea oil field and the many conventional onshore fields in the UK are drying up.
The North Sea peaked in the 1990s and will never see the same production levels ever again. In fact, the United Kingdom has been a net importer of petroleum since 2005…
As you can see, production in the United Kingdom has fallen at a consistent rate since the peak in 1999, and in 2014, the trend continued with another 1.1% drop in production.
Add to that the low oil prices we’ve seen for about a year now, and it looks as though future investment in the North Sea is a long shot.
The North Sea produces about 1.4 million barrels of oil each day, which is a 70% decline from 1999. Even before the bear market, major North Sea producers were questioning the formation’s prospects…
With only 10 billion barrels of recoverable oil left, all of it in precarious, hard-to-reach places, the incentive for companies to recover it just isn’t there.
Because of this, the UK government, in a desperate move, decreased the top tax rate on North Sea oil profits from 80% to 67.5% in March of this year.
The tax break will save some companies money, but with oil prices so low, the profit margins are still very narrow. At the same time, the government has found that what was once a source of seemingly endless revenue has become a dry well.
The New York Times reports that the UK expects to collect 700 million pounds from North Sea taxes this year, down from 2.6 billion pounds in 2014.
Many in the UK oil industry are worried, and rightly so. But perhaps they are looking in the wrong place…
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The Weald Basin
While Vladimir Putin attempts to create another Russian empire through his country’s tremendous fossil fuel resources, the UK may have found a savior for its dwindling North Sea fields.
Even though the UK only has 10 billion barrels left in its share of the North Sea, there’s another recently discovered field in the country with what could be 10 times more oil.
That’s right: 100 billion barrels of oil all in one tiny, 3,500-square-mile tract.
As oil prices return to recovery in the next few months, it’s only a matter of time before companies begin producing big out of this field: the Weald Basin.
If you haven’t heard of it, don’t fret too much. Hardly anyone knows about it. But now that the U.S. has perfected fracking technology and is willing to share it with allies in the UK, it’s about to get huge.
Perhaps even bigger than the Bakken.
Better yet, I have found what could be the Weald Basin’s version of Continental Resources. In just a couple of weeks, I plan to divulge this historic play to you right here in Energy and Capital.
For now, though, while I finish my due diligence on the report, keep your eyes open for more data and analysis of the Weald Basin, the tiny company I plan to recommend, and oil prices.
Stay vigilant, and remember: Oil always goes up.
Until next time,
Keith Kohl
Check us out on YouTube!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.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
