Report from :
Jerusalem Post
This Forgotten Oil State Could Out-Produce Alaska and California Soon
Posted by _Keith Kohl, Energy & Capital_
(http://www.topstockanalysts.com/index.php/author/keith-kohl/)
January 26, 2012 11:26 am
We can’t help but feel sympathetic for Montanans.
Much like the rest of the country, Montana’s oil production was in a
downward spiral for as long as anyone could remember.
Between 1981 and 1999, the state’s output was cut in half.
Things weren’t looking good…
But at the turn of the century, good news finally struck. (Remember, we’re
talking years before the shale revolution began — nearly a decade before
the USGS’s reassessment of the Bakken formation in 2008.
The newfound success was thanks to the discovery of the Elm Coulee oil
field, located in Richland County on the eastern edge of the state, in 2000.
By 2005, development was in full swing:
By June of 2006, Montana reached the 100,000 bbls/d mark for the first time
in history (with more than half of that amount coming from just Elm
Coulee).
A year later, the field was considered the highest-producing onshore field
in the lower 48 states discovered since 1950.
Unfortunately, the fairy tale didn’t last. We know how Montana’s oil
fortune played out.
Despite the good news, state production fell by more than 30% over the last
five years. And at the same time, Montanans had to sit back and watch
neighboring North Dakota’s fame and good fortune take off…
For the good folks of the Treasure State, the grass really was greener on
the other side. And the economic impact has been nothing short of a miracle.
The reasons for Montana’s envy are many:
First, there’s the 3.4% unemployment rate that North Dakota enjoys (more
than half of Montana’s own unemployment rate)…
Then there’s the nearly billions in revenue the state will make over the
next few years…
And North Dakota residents are getting wealthier by the day. According to
the U.S. Dept. of Commerce, personal income in the state grew by 6.9% in the
first quarter of 2011 compared to the fourth quarter of 2010…
Tack on the fact that all this growth isn’t slowing in the slightest…
With more than 10% of all the oil and gas rigs in the United States
drilling on the western side of North Dakota, it’s only a matter of months
before
it surpasses the production rates of Alaska and California.
Investors Won’t Be Left Out in the Cold
We’ve said so before, but Montana has become the forgotten step-child of
the U.S. oil boom.
Which is just one of the reasons why most investors won’t see these profits
coming.
All the telltale signs of an upcoming boom are there, and I believe some of
the best sleeper picks for 2012 and 2013 will come from the Treasure
State.
This may be the year that Montana regains some of the spotlight.
We’ve been following the increased activity in Montana’s oil and gas
industry throughout 2011, and certainly won’t be surprised if the state
doubles —
or even triples — current production in the next three years.
...the number of oil rigs drilling on Montana soil has surged 137% compared
to last year:
Although it’s nowhere near the number that North Dakota has, it’s a good
sign going forward.
And some of those drillers have been very successful. Several months before
it was bought by Statoil for $4.4 billion, Brigham reported a new record
initial production rate for its Johnson well in Richland County, Montana.
All the major Bakken players have a stake here, from Continental Resources
to Whiting Petroleum.
...Bakken investments have panned out well for early investors...
What they don’t realize, however, is that the next stage of the U.S. oil
renaissance is only beginning…
Until next time,
– Keith Kohl
--
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