How Alaska Could Become the World’s Eighth-Largest Oil Producer

by Mike Kapsch

Oil in Alaska: What it Means for Oil Companies (RDSA, XOM, COP, TRP)

It’s one for the record books...

But hardly anyone is talking about it... yet.

According to the U.S. Geological Survey, Alaska’s North Slope shale formation could hold as much as 80 trillion cubic feet of natural gas and two billion barrels of crude oil.

BusinessWeek says it could be “the second-largest U.S. deposit of unconventional crude after the Bakken in North Dakota and… the fourth-largest gas-shale deposit after Marcellus in the Northeast, Haynesville in Texas and Louisiana, and the Eagle Ford...”

By itself, this is already a major discovery. But here’s where things get really interesting...

The USGS is only talking about onshore oil and gas potential.

Royal Dutch Shell (NYSE: RDSA) released its own statement pointing out Alaska’s offshore oil and gas estimates.

Alaska’s Outer Continental Shelf

Shell executive David Lawrence revealed to last week, “When you look at offshore, you’re looking at 25 billion barrels of oil [and] 120 trillion cubic feet of gas, so it’s a major resource that can compete in any arena we look at globally.”

In fact, Alaska’s Outer Continental Shelf (OCS) alone may hold more oil than the Pacific and Atlantic OCS combined.

And CNS News reports, “A new study says drilling on Alaska’s Outer Continental Shelf (OCS) could make Alaska the eighth-largest oil resource province in the world - ahead of Nigeria, Libya, Russia and Norway.”

The state’s 200 trillion cubic feet of potential offshore natural gas, while less than the Marcellus and Haynesville shale formations, is still a major find.

Quietly, Exxon Mobil (NYSE: XOM), ConocoPhillips (NYSE: COP) and many other major players from around the world are gearing up to drill.

Shell has already spent over $4 billion researching Alaska’s OCS over the past several years. And it hasn’t even started drilling yet. It won’t likely begin until July.

And here’s the best part...

Easy Drilling Makes for Safer Drilling

The Wall Street Journal reports Lawrence also mentioned, “...drilling in the Alaskan Arctic is ‘relatively easy’ because it’s done in relatively shallow waters and under relative low pressure and Shell already knows a lot about the region’s geology.”

The easier it is to drill, the safer it is, and the more likely it is for oil and gas companies to turn a huge profit.

It’s also worth mentioning the Trans-Alaska oil pipeline already runs from the Alaska North Slope region and is fully operational.

On the other hand, TransCanada (NYSE: TRP) and Exxon still need to secure a natural gas pipeline that will run from Prudhoe Bay to the United States and then later split to Canada. This project likely won’t be complete until 2018 and is expected to cost as much as $26 billion.

President Obama, the state of Alaska, and the U.S. Department of the Interior are all fully supportive of this energy initiative. And despite potential risks and challenges, this opportunity is simply too important for the United States to pass up.

We’ll definitely be talking more about this development in Investment U as it unfolds. So just be sure to keep checking your inbox for potential opportunities.

Good Investing,

Mike Kapsch

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