The start of the modern oil age can be traced all the way back to Venango County, tucked away in northwestern Pennsylvania.
Now, I’m willing to bet you learned about this region back in elementary school. But if the county name doesn’t ring any bells, perhaps you’ll recognize the area from a more famous event: the drilling of the Drake oil well.
Despite the fact that this well was only drilled to a total depth of 69.5 feet, it is considered the first commercial oil well.
Make no mistake; Colonel Drake’s success in Venango County kick-started the U.S. oil industry, and soon sights like the following littered the landscape.
Unfortunately, Big Oil’s party only lasted until 1973, roughly three years after U.S. oil production peaked at slightly more than 10 million barrels per day in November of 1970.
As my colleague Jeff Siegel pointed out a week ago, that was the year OPEC took control. This marked the first major transition of power during the modern oil age, when the now 12-member oil cartel imposed an oil embargo on the United States.
Things have certainly changed in the years since…
Meet the Caliph in Chief
Ever wonder who really runs the global oil show today?
Allow me to introduce you to him…
His name is Abdullah bin Abdulaziz bin Abdulrahman bin Faisal bin Turki bin Abdullah bin Muhammad bin Saud (try saying that three times fast!), and as the official Custodian of the Two Holy Mosques, you’re more likely to know him as the King of Saudi Arabia.
I know some people will gripe that OPEC, whose members control approximately 40% of the world’s oil supply, is in charge — but it’s painfully obvious who’s holding the reins.
Have a look at their recent exports…
At last count, OPEC (with the exception of two members) exported 23.8 million barrels per day during the four weeks prior to November 9th.
Let’s be clear: Saudi Arabia accounted for over ten million barrels oil crude per day of these exports. Of course, nearly half of that oil comes directly from Ghawar, which is still pumping upwards of five million barrels per day.
It turns out that things have come full circle, with the Saudi oil empire on the brink as we stare at the next (and possibly final) stage of the modern oil industry.
Only this time around, it’s technology — not discovery — that’ll drive the global oil complex.
Tearing Down King Ab
The cat was let out of the bag last July after a Saudi prince expressed his fears over a specific technology that threatens to topple Saudi oil dominance.
What could possibly cause a Saudi billionaire to suggest his country diversify its revenue stream?
The answer is hydraulic fracturing.
Now, it’s important to note that it’s not simply fracking that’s driving the tight oil boom in the United States.
Hydraulic fracturing in the U.S. oil industry has been around since the late 1940s, and it’s only the first part of the shale equation.
Believe me, dear reader, the second part is just as threatening to the Saudi ruler…
And it just so happens that today’s shale billionaires are milking this technology for all it’s worth.
The Technology Shale Billionaires Milk for Easy Cash
Take a look at any successful shale company’s results in the last quarter, and I guarantee you’ll find one striking similarity in all their filings.
For these companies, it all comes down to cost.
And that makes perfect sense. After all, your company can’t churn out a tidy profit for shareholders unless you can economically produce the oil underground.
On Tuesday, I mentioned the one axiom in shale drilling is that cost is king. You’d be hard-pressed to find a drilling team in the entire country that isn’t interested in lowering the time and money it takes to drill one of their wells…
And they’re finding success in both with multi-well pad drilling.
Go ahead, take any shale play at random, and you’ll inevitably come across multi-well pad drilling as their method of choice.
It’s the fundamental shift taking place that we’re capitalizing on right now.
And you can bet the farm that Big Oil will be spending money hand over fist trying to buy these companies all out.
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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