Wall Street Money Discovers the Bakken

Earlier today, I linked an article in a fairly well-known newspaper, but did not post this from the article:

Mr. Perkin said he was putting together a group to invest in a unique way in the oil boom in North Dakota: lodging.

“Every oil company in the world is going gaga over the Bakken oil fields,” he said. “The problem is there is zero infrastructure: terrible roads, no restaurants, nowhere to stay, the airport is awful, no hospitals or schools, nothing.”

Despite all that, he said, he has a group of clients investing $60 million into a hotel project with another $40 million of investments planned.

“It’s the kind of thing people are looking for — infrastructure and a hard asset,” he said. “It’s like the California gold rush. Who made the most money on the gold rush? Levi Strauss. We’re looking at the ancillary businesses that come out of the demand for oil.”

This is not without risks beyond the lack of liquidity in the deal. If the price of oil drops below $60 a barrel, the demand for Bakken crude could slow, he said. But now, he said, clients like investments that appear uncorrelated with the market volatility the fiscal cliff could cause. 

So, what newspaper? The New York Times.

MDW has noted that Wall Street money has not found its way to the Bakken yet. Occasionally I get notes from readers suggesting that once Wall Street "discovers" the Bakken, the bar will be raised; it will be a whole new ball game.

I believe this is the second post -- only the second post -- that links a story about Wall Street money discovering the Bakken. Here was the first. 

Huge Story: First Reserve, Triangle Form Pipeline Venture

Google  First Reserve, Triangle form pipeline venture

So many story lines from this one story.

Here's the lede:

Private-equity firm First Review Corp has formed a new venture to build pipelines throughout the booming oil fields of North Dakota, an investment aimed at resolving transportation bottlenecks plaguing energy producers in the region.

Data points:

• new company: Caliber Midstream Parners LP
• first pipeline: 10,000 bbls of oil and 15 million cubic feet of natural gas per day by mid-2013
• first pipeline: will connect more than 100 far-flung oil and natural-gas sites to rail terminals
• later pipelines: connectors to major interstate pipelines
• hundreds of thousands of pipelines that need to be built
• "stable market share and still have 100% growth per year"
• First Reserve: $1.2 billion Energy Infrastructure Fund
• break-even price for Triangle Bakken oil with pipelines: $45/bbl

At the beginning, I mentioned there are many story lines from this one announcement. This may be the biggest story line: about two years ago, a reader (personal communication) noted that most of the money flowing into the Bakken was by the operators and the builders themselves. Not a lot of outside money was coming in. The reader noted that the Bakken would move to a new level once "Wall Street money" started flowing to the Bakken. I know nothing about First Reserve but it sounds like a Wall Street firm.

How do I know this is a "huge" story. It is one of only three stories on page B3 of the WSJ; with large-font headline (across four columns of the five-column). I've mentioned before that the biggest news posted in the WSJ is generally on page B3.