It may have taken 63 years and 10,658 wells, but North Dakota has finally joined a club that few states — or countries, for that matter — can boast.
Last week, North Dakota officials reported that the state’s oil production exceeded 1 million barrels per day during the month of April. With the sole exception of Texas, which is pumping out more than 3 million barrels per day, no other state is even close to this mark.
Don’t count us among the surprised, either. I’ve said that breaking this record wasn’t just a possibility — it was inevitable, and our own countdown started last year.
When news that North Dakota broke the 1 million barrel per day threshold crossed my desk, I couldn’t help but think about how April marked the 63rd anniversary of the Clarence Iverson No. 1 well.
If the name doesn’t ring a bell, don’t feel too bad — you’re not alone. I can probably count on one hand how many people out there would recognize the first commercial oil well in North Dakota.
Fewer still probably know that it was Amerada Corp. that struck pay dirt back in 1951 in a wheat field located on Clarence Iverson’s farm.
Although Amerada’s well kick-started a good, old-fashioned boom, not everyone that tried his hand at drilling for black gold in North Dakota was so lucky.
Back in 1940, more than a decade before companies were salivating over the Iverson well, it took the Carter Oil Company more than ninety days to drill a 5,000-foot well into North Dakota soil. That was with the best equipment of the time, and it ended up being nothing more than a dry hole.
Truth is, it’s going to take a different kind of game-changer to take U.S. production to the next level…
Fortunately, we’ve come a long way since those days. But today, too many investors become obsessed with where the next major discovery will take place. I have some bad news for them: we already know where the oil is!
The real driver for growth in the U.S. oil industry won’t come from a sudden gusher, nor will it be from a small wildcatter drilling where few dare to go.
It’ll be from technology.
One unequivocal downside that comes with developing the now-famous tight oil plays spread across the lower-48 states is the exorbitant price tag that comes with drilling and completing these wells. Throw in some severe decline rates, and you have a recipe for disaster if companies can’t keep up this drilling pace.
After all, the IEA recently sounded this alarm in its latest World Energy Outlook, saying production declines will absorb more than 80% of upstream oil and gas spending between now and 2035. In other words, companies need to get much more efficient at drilling plays like the Bakken.
And yet that’s exactly what’s happening in both Texas and North Dakota. For proof, we just need to look at what the big fish are up to.
The Real Growth Driver…
In Texas, Pioneer Natural Resources has lowered its drilling costs in the Eagle Ford Shale by nearly one-third since it first entered the play.
It’s virtually the same story in the Bakken, where players like Continental Resources pumped out more than 150,000 barrels of oil during the first quarter of 2014 and now plan to drill up to 400 wells over the next five years.
And as you can probably guess by now, both of these companies have been a windfall of profits for shareholders for years:
Trust me, it’s not blind luck that has made them so valuable. There’s one piece to this puzzle that you’re missing.
Since the first shale wells were drilled, companies have been slowly transitioning towards a new drilling technology. In 2006, it was used on less than 5% of the wells drilled in the major unconventional plays.
Now, that share has grown to more than half — and it will only keep rising.
And not only has this helped them considerably lower both the time and money it takes to drill, but it’s also single-handedly responsible for the continued growth in U.S. oil production. And any company not utilizing it is quickly finding itself at a severe disadvantage.
Stay tuned, because I’m going to tell you all about this opportunity within the next 72 hours.
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.
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