Monday, 14 November 2011 09:38

Essential Investments in Oil and True Benefits

essential-investments-in-oil-and-true-benefits1. $7 billion investment in the Keystone Pipeline and the Keystone XL extension pipeline.

"The Keystone Pipeline System is a pipeline system to transport synthetic crude oil and diluted bitumen from the Athabasca Oil Sands in northeastern Alberta, Canada, to refineries in Illinois and Oklahoma, and further to the U.S. Gulf Coast. It consists of the operational "Keystone Pipeline" and proposed Keystone XL (Keystone Expansion) pipeline." 


These two large scale oil investment projects, one operational the other waiting for government approval, will practically eliminate Middle East crude imports to the US. On the strategical plate of energy security, there's a big difference for America to deal with stable neighboring Canada instead of the volatile and distant Mid East countries. 20,000 jobs will be created in the construction and manufacturing fields once the Keystone XL will receive approval. Consequently, the vast economic ecosystem that naturally emerges around this kind of huge investments, will add 118,000 more jobs related to the pipeline extension.    

2. Over $18 trillion in royalties for the government. Hard to estimate the real long term revenue from the Bakken fields.

Harold Hamm is the Oklahoma-based founder and CEO of Continental Resources (America’s 14th-largest oil company), and the original discoverer of the gigantic and prolific Bakken oil fields of Montana and North Dakota. He estimates "that the entire field, fully developed, in Bakken is 24 billion barrels" as opposed to government estimates at between four and five billion barrels. The US is a top world crude oil producer and can become "completely energy independent by the end of the decade." 

Over the next five years "We expect our reserves and production to triple..." 

3. Oil & Gas Investments Bulletin

This is a web resource for retail investors in the crude oil and natural gas industry. Companies using novel drilling technologies (3D seismic, fracking or horizontal drilling) generate a great shareholder wealth. Finding companies that are increasing cash flows, and stock prices, by inventing new extraction procedures for oil and gas.

4. Through your pension funds, you're most likely a part of big oil! 

Crude oil and natural gas producers in the USA employ nine million people. Additional millions of shareholders are part of what is called "big oil," part of its profits for sure. Close to half the US population holds stock in oil and natural gas companies. This happens because of the 145 million retirement accounts that are invested in crude oil and gas corporations. Through your pension funds, you're most likely a part of big oil! 

"The average value of these pension accounts is less than $55,000. 48.6 million American families hold IRAs that are invested in oil and natural gas companies—80 percent of these IRA holders earn $70,000 or less. All in all, corporate management owns 2.8 percent of oil companies; middle class Americans largely own the rest."

5. The largest "pension" fund in the world, also known as The Oil Fund

The Government Pension Fund - Global (Norwegian: Statens pensjonsfond - Utland, SPU) is a fund into which the surplus wealth produced by Norwegian Brent crude oil income is deposited. The fund changed name in January 2006 from its previous name The Petroleum Fund of Norway. The fund is commonly referred to as The Oil Fund (Norwegian: Oljefondet). According to the valuation in June 2011, The Oil Fund is the largest pension fund in the world. However, this isn't exclusively a pension fund because it derives its financial backing from oil profits and not from pension contributions. As of 31 December 2010 its total value is NOK 3,077 billion ($525 bn), holding 1% of global equity markets. With 1.78% of European stocks, it'sconsidered to be the largest stock owner across Europe.

6. Top Oil Stocks

ExxonMobil (XOM) - a good long-term anchor to your portfolio.

Chevron (CVX) - posses a solid 4% dividend yield and currently trading at around eight times earnings.

ConocoPhillips (COP) – a strong array of natural gas positions; global stable and posses many valuable assets.

7. Crude Oil and the Biggest Trading Houses

Two of the biggest trading houses, "Vitol and Trafigura, sold a combined 8.1 million barrels a day of oil last year. That's equal to the combined oil exports of Saudi Arabia and Venezuela."

"Vitol's sales of $195 billion in 2010 were twice those at Apple Inc. As well as the 200 tankers it has at sea, Vitol owns storage tanks on five continents.

In recent months, for instance, Vitol's crude oil trading business served partners like the Libyan rebels (supplying them with $1 billion in fuel), the US government, the Syrian regime, at the same time. This tells us that trading and investing in oil is transparent to political colors.

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