Marcellus Stocks with a Kick


"As we expected, the report highlighted the importance of these shale oil and gas basins to our future energy production. Make no mistake—they will play a critical role. . ."

I'll confess I get a twinge of jealousy whenever one of my colleagues returns from some research junket. They never fail to come back with stories I couldn't even dream up. . .

But as much as I love hearing the wild antics of their journeys, I don't have to travel halfway across the globe to find the next round of energy profits. It's staring us right in the face.

That's right. There's a bona fide energy boom happening right in our own backyard.

And believe it or not, we can break it down to a single picture:

Gas, Shale, Keith Kohl

Of course, it would be entirely impossible for our natural gas investments to pay off without a little help from certain technologies, namely hydraulic fracturing.

We're also painstakingly aware of how scrutinized the entire process has become in the mainstream media, which opens a tremendous window of opportunity for investors; the more information that's distorted for public scrutiny, the more lucrative the returns become.

The Interim Fracturing Report

We've been waiting for the Shale Gas Subcommittee's report for a while, and they recently released the 90-day interim report on the environmental impact of shale gas production.

As we expected, the report highlighted the importance of these shale oil and gas basins to our future energy production. Make no mistake— they will play a critical role. . .

The United States already depends on natural gas for more than one-quarter of its energy demand, and that share of our energy mix is increasing without fail. By 2035, approximately half of our domestic gas production will come from shale wells.

The four-fold increase in our natural gas production, thanks to shale gas, has completely changed the situation. Not only are we now self-sufficient when it comes to natural gas, but we've talked in the past how it's dramatically increased exports.

During the last decade, our exports of natural gas have increased 367%!

And when I said that it was happening in our own backyard, I wasn't joking. . .

You can see below how Pennsylvania (the Marcellus has been center stage for the hydraulic fracturing debate) has benefited from the emergence of shale gas:

Gas, Shale, Keith Kohl

The first Marcellus wells in the state were drilled in 2004. A lot has changed since that time. . .

During the first half of 2011, roughly 1,600 Marcellus wells in Pennsylvania pumped out more than 430 billion cubic feet of natural gas—a 60% increase from the same period a year earlier.

The play is attracting billions of dollars in developing exploration and production. And this is only the tip of the iceberg.

Getting back to the report, its first set of recommendations was exactly what we were predicting. Ban hydraulic fracturing? Not a chance.

The oil and gas resources from those shale basins pictured above are simply too vital to our growing energy demand. Mark my words: Going forward, we'll start to see more disclosure, more public information, and more regulations put in place (not that more regulations and disclosure are bad things, mind you)—and by that time, we'll already be ahead of the investment herd.

Until next time,

Keith Kohl
Editor, Energy and Capital

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