A little-known story that came out within the last couple of weeks is that China, a nation with a voracious appetite for energy of all sorts (from nuclear to coal to natural gas and oil, etc.) has postponed any plans for tapping its shale hydrocarbons for at least a decade. It turns out their shale deposits, which six months ago were believed to be among the most potentially productive deposits in the world, on closer examination are now considered to represent an extremely complex challenge. So far we don’t know the details of China’s decision on this, but if you told us that water was part of the calculation, we wouldn’t be surprised. For the process of hydraulic fracturing requires huge amounts of water. And if there’s anything that could defeat China long-term, it’s much more likely to involve H2O than hydrocarbons.The writer doesn't cite the source for that "little-known story" but it doesn't surprise me.
For newbies, water is not an issue for fracking in North Dakota.
Don didn't have to point out this paragraph. Most of us already knew this:
The real promise in this area, and we’ve made this point before and continue to believe it’s true, involves oil fracking. It’s not just gas that’s found in those shale formations; there’s also oil. The major difference between oil fracking and gas fracking is that oil remains an international, not domestic, commodity. As a result, oil prices are many times higher than those for natural gas. And of course, high capital expenditures are much more easily rationalized for higher-priced than lower-priced commodities or products. This is the biggest difference between oil and gas, and it’s a huge one. And it explains why one of our recommendations, Continental Resources, has been soaring and why Whiting Petroleum Company and EOG Resources have also been climbing.And the closing paragraphs:
But it’s undeniable that more oil and more gas are coming on stream. And in addition to those engaged in oil fracking, other clear beneficiaries here will be those companies which transport and deliver these valuable energy resources. Here we would mention an Income Portfolio recommendation, a master limited partnership ONEOK Partners LP; we also have other recommendations in The Complete Investor that might benefit even more.
And yes, there will be some oil service companies that do well, too. We won’t stray too far out on a limb here in recommending, as we have in the past, Schlumberger Ltd.
