An oil boom always starts out small — whether it’s someone digging a salt well in a creek bed in Western Pennsylvania, or a couple of guys tapping into a salt dome oil field in Texas for the first time.
Around the same time these projects were being developed, a few smaller companies were seeking similar rewards more than 8,000 miles away, in a very unlikely place to host an oil boom…
The first two wells were dug on New Zealand eastern coast as early as 1874.
The next two decades consisted of a cascading series of hits and misses, with one company producing nearly three hundred barrels in a single month before complications forced them to abandon ship.
During a three-year period from 1909 to 1912, these oil drillers dug five wells on the country’s eastern coast. Unfortunately, they didn’t strike the same vein of success that their U.S. counterparts experienced.
But today there’s a renewed interest in oil on the East Coast of New Zealand. And this time, the resource they’re after could prove invaluable.
It’s all going down in the East Coast Basin, an area stretching approximately 120,000 square kilometers from East Cape to Kaikoura…
This shale payday comes from two thick shales, the size of each being compared to some of the best shale plays in North America.
As you know, the ability to extract oil and natural gas from these tight unconventional shales didn’t exist in the past. Only recently have companies been able to unlock the resources trapped in these formations.
Of course, you can bet companies will be drilling and exploring the shale plays in New Zealand’s East Coast Basin for years to come — and it just so happens they’re doing it right next-door to one of the world’s biggest crude customers.
The Biggest Oil Customer Right Next Door
It’s imperative for us to recognize the real value behind New Zealand’s potential shale boom.
Look, we’re going to be flooded with rhetoric concerning U.S. energy independence over the next few weeks, months, and years. It’ll come from all sides — from the election-hungry politicians on Capitol Hill to the smallest players drilling into U.S. soil.
However, U.S. oil demand, despite accounting for a quarter of the world’s total consumption right now, is going to remain relatively flat from here on out.
The reality is most of the growth going forward will come from non-OECD countries (think: China, India, and others).
BP reported earlier this year the major drivers behind energy demand during the next two decades will be population and income. About 93% of energy consumption growth is expected to come from these non-OECD countries.
China’s addiction to black gold could match levels in the United States as early as 2040 (we’ve talked about China’s scramble to secure energy supplies the world over in the past, and this is just one more reason for it).
For China, New Zealand proves an extremely attractive source for oil. Not only is it geographically closer than Canada (where China is spending billions for a stake in the oil sands), but you can imagine how much more stable the area is compared to the Middle East.
Those of you who pay attention to Canadian politics will know Canadian oil exports to China aren’t a sure thing just yet. A critical election in British Columbia is being held in a few days which could decide the outcome of an upcoming oil pipeline that will export crude oil to the Far East…
If the results aren’t in China’s favor, it could put the country’s future oil supply in a tight spot.
Then again, the 12 billion barrels of oil in New Zealand’s shale will also make a veritable fortune for the right producers — though finding them might not be as easy.
12 Billion Barrels or Bust
Talking about New Zealand oil with my colleague Christian DeHaemer this morning, he just smiled. He laughed outright when I mentioned Shell may have a stake in New Zealand’s shale fortunes.
Chris is hardly convinced Big Oil will play a significant role. That’s because he already knows where the best opportunities are in New Zealand — and they’re not with Shell.
He’s absolutely right.
Over the last two years, Shell’s investors haven’t had held much confidence that a big return was on its way:
“Those major oil companies will only waste your time,” he told me.
To that end, Chris has advised his readers to position themselves in two stocks still trading under Wall Street’s radar.
He’s putting the finishing touches on a report that gives you the inside scoop on both of these blockbuster investments. Look for his report to hit your inbox on Thursday.
Until next time,
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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