One day we're going to profit. Anything worthwhile is worth waiting on. The naysayers think a buyout isn't likely since it hasn't happened yet, but the well is too promising and too near completion to be ignored, IMO.
Below is the bulk of today's Daily Resource Hunter from Agora, where T.Boone Pickens was interviewed by CNBC. He mostly talks about how stupid we are to delay and risk losing the pipeline but also how Natural Gas is our future, especially with this delay and the impending death of King Abdullah. Near the bottom is the meat of the Natural Gas forecast predicted by Pickens.
Dee
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Daily Resource Hunter Thursday November 17, 2011
When This Fat, 87 Year Old Diabetic
Dies, We Could See $300 Oil...
That and More Investment Lessons from T. Boone Pickens
Matt Insley
Dear Resource Hunter,
“Historically we’ll be the dumbest people in town” T. Boone Pickens told CNBC from his post in Texas.
Pickens, commenting on a topic familiar to us, was explaining that if the U.S. didn’t approve the Keystone XL pipeline it would be a less-than-smart move.
But that wasn’t where his insight ended for the day...
In a feat that only a legacy of energy abundance could pull off, the same Pickens was in front of me at lunchtime, singing the same song in Pittsburgh!
Pickens addressed the audience as the keynote speaker at the Developing Unconventional Gas (DUG) conference and made a few more points on crude oil and the pending pipeline decision.
He also noted that yesterday’s ConocoPhillips deal with Enbridge was probably part of the reason for a quick jump in crude prices — West Texas International (WTI) crude was up over $102 in day trade.
Enbridge, according to Bloomberg, agreed to pay $1.15 billion for ConocoPhillips’s 50 percent share in the Seaway pipeline and will reverse the flow on the line to carry crude from Cushing, Oklahoma, to the Texas coast.
This is a pretty big deal in the industry, but it also shows that these pipeline deals can create big money moves in the price of crude. After all , it’s a physical market.
In the short-term the price of crude jumped as traders realized this move brings a glut of crude down to Texas and closes the gap between Brent and WTI crude prices.
In the long-term though, this deal along with the approval of the Keystone XL pipeline will be the only sure way to create a cheaper, more secure energy source as more oil flows from our neighbors to the north, Canada.
During his talk in Pittsburgh Pickens explained that if we don’t approve this pipeline Enbridge or another pipe partner will build west through Canada to Ft McMurray in Alberta. In short, the crude oil that could be headed south to the U.S. will go west to China.
So like we discussed the other day, in the long-term it’s either us or China. Denying the pipeline is a huge mistake in energy policy.
So with the approval for the XL pipeline in limbo (and at least delayed till late 2012), you may wonder what Pickens’ forecast for crude oil is? In one word, depressing...
“$150 in 2012” Pickens predicts.
70% of the world’s oil supply is nationalized. “That’s a game we can’t play in, we have no team” he notes. Pickens doesn’t suggest that the U.S. nationalize its oil production but he did note that we’re on the short end of this global oil equation.
And this is where Pickens went in to depressing detail...
King Abdullah, the king of Saudi Arabia, is 300lbs, diabetic and [87] years old... “this guys gonna flop” Pickens said in his typical Texas accent.
If Saudi oil goes offline when the king passes it could lead to “$300-500/barrel oil.” A situation that could “come up pretty fast” Pickens says.
That’s a scary thought — but something we’ve talked about here before.
There’s a silver lining to the rest of Pickens’ talk and the overall scene at the DUG conference, though.
American’s cried about losing in the past decades — industry, jobs, manufacturing — now we can get them back, Pickens says.
“Shale gas showed up so timely... it could save our ass.” Pickens told the crowd.
We’re back at the same crossroads today that we were at the start of the industrial revolution 100 years ago, he continued. “We have the cheapest energy in the world.”
Washington doesn’t understand this situation yet.
But as Pickens says “the market will balance over time” — meaning that we can count on demand spurring in the natgas industry and creating several profit opportunities (think producers like Chesapeake or end users like U.S. Steel.)
Today in particular may be a turning point in the oil/natural gas mix. A main talking point Pickens stated on CNBC and at the DUG conference was the “1863” bill that entered the Senate yesterday.
The bill, planed to introduce natgas use for heavy duty trucks, isn’t a new idea — but the timing could be important.
At some point in the near future the energy market and our government is going to realize — and embrace — abundant and cheap natural gas. When this happens, which could be sooner than you think, we’ll be in the middle of a natgas investing bonanza.
Now’s the time to grab real estate in this market.
Keep your boots muddy,
Matt Insley
P.S. To hear an insider like T. Boone Pickens call for a 50% hike in the price for oil — and a potential triple in prices if something happens in Saudi Arabia — is an important signal to our energy future. To secure your future and find out a few strategies that deal with a spike in oil prices, I urge you to read Byron King’s full report here.
According to T. Boone Pickens our oil-based economy is in trouble. By denying the Keystone XL pipeline the U.S. would be doing the dumbest thing possible: denying secure energy and essentially waving it off to China. Pickens sees opportunity elsewhere, in natgas. As shale gas continues to ramp up the market will recognize this new source for cheap energy and opportunities will flourish.
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