You may not know who George Mitchell is, but we owe him a debt of gratitude for the pivotal role he played in reversing the decades-long decline in our domestic oil production.
By now, it’s nearly impossible to come across someone who hasn’t heard of shale oil. When the mainstream media finally caught on to what you and I have been following for a decade, they began plastering the word “shale” on headlines — with good cause, too!
I’ll let the numbers do the talking…
Oil production in the United States increased from around 5 million barrels per day in 2006 to more than 9.5 million barrels last March.
Natural gas production has increased approximately 35% since 2006, rising to nearly 32 trillion cubic feet in 2014.
This simply wouldn’t be possible without the success — and failure — of George Mitchell. His company, Mitchell Energy, ignited a shale gas boom after proving that new horizontal drilling techniques could be combined with hydraulic fracturing to extract natural gas from the Barnett Shale formation beneath Fort Worth, Texas.
Perhaps a better word I should use is perseverance. After all, George had been trying to tap into the tight rock for roughly 15 years!
Without his efforts, we never would have heard about the now-famous names like the Marcellus, Barnett, and even tight oil plays like the Bakken.
And today it’s more important than ever that people have a realistic understanding of our energy dynamic.
Light, Tight Oil, Oh My!
So why should we be so grateful to George Mitchell? Well, take a closer look at the flood of oil that has led us to the current supply glut we are in.
“A flood of oil, really?” you may ask.
Yes, it’s precisely that:
Now dig a little deeper into our oil supply. According to the Energy Information Administration, U.S. oil production grew by 3 million barrels per day between 2011 and 2014.
Let’s be clear about this: 90% of this production growth consisted of light, sweet grades of crude oil.
More importantly, this supply came directly from tight oil plays like the Permian Basin, Eagle Ford, and Bakken.
So almost 18 years after George Mitchell cracked the shale code and sold his company for $3.5 billion, horizontal drilling and hydraulic fracturing have become vital to domestic production.
And right now, 77% of the rigs drilling for oil and natural gas in North America are drilling horizontally.
Every single one of these wells will need to receive some sort of fracture stimulation!
And it’s a situation that individual investors like us can’t possibly ignore any longer…
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Investing in Shale 2.0
It’s too easy for us to see the similarities between the oil price crash of 2009 and 2015, and both ended up creating an unprecedented buying opportunity for investors. I’ve said before that you could’ve blindly thrown a dart at a wall and doubled your money back then.
But the cold, hard truth is that this isn’t 2009… it’s better!
The key is technology.
Today, drillers are making leaps and bounds when it comes to extracting our tight oil resource, and they’re getting better with each new well they drill.
Just take a look at the average oil production per shale well in four key fields between 2007 and 2015:
What you’re looking at is the next stage of the tight oil and gas boom. Ever since the shale industry took off, more than $600 billion in U.S. shale infrastructure has been made, and nearly 2 billion well-feet have been drilled.
You see, companies in this play are able to tap into several prominent oil-bearing formations that are stacked right on top of each other.
For some of these companies, it’s like shooting fish in a barrel.
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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