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Peak Oil: The second-largest, unexplored oil reserve in the world

Posted December 5, 2007

"For seven years a border dispute has stopped the drilling in what the United State Geological Survey calls 'the second-largest unexplored oil reserve in the world.' But over the summer, the United Nations was able to hand down a ruling that averted a war and will benefit all parties. As I write this, seismic explorer vessels are on their way. Exxon Mobil and other large oil companies have formed partnerships." — Christian DeHaemer

by Christian DeHaemer, RedZone Profits

Baltimore — (TFN): There are those who will tell you that oil is a cyclical business and a global commodity. It rises and falls with the business cycles. If you look at a hundred-year chart, that is as obvious as a sidewinder on a sand dune. A sine wave through time — up and down in seven-year cycles.

But there are others who believe in the “Peak Oil” argument — the ultimate end-game, like a Suburban crushing a Smart Car at the end of a long hill. Peak Oil enthusiasts will point to long lists of numbers, detailed maps of known reserves, past prognosticators of genius, and declare with tinfoil-hat fervor that “we are running out of oil.”

I’ve read theirbooks and listened to their speeches. The idea that there is a finite amount of oil on the planet, and we are at or near the point where we will extract less in the next hundred years than we did in the past. Makes sense to me, as does the business cycle.

I don’t know if hundred-year history of the oil cycle is over. There is always a “this time it’s different” ideology at the peak. But then again, sometimes, it really is different.

Peak Oil Is Expensive

What we do know, what isn’t in dispute, is that oil is expensive right now, and that, by all accounts, all the easy oil has been found and is being extracted at a furious pace. And this has led the industrial countries on a desperate search for this ever-scarcer commodity.

Russia, China, India, Brazil, Canada, Europe and the U.S. are fighting a desperate and diminishing struggle for the last of the world’s hydrocarbons. Russia is sending submarines to plant national flags at the bottom of the Arctic Ocean. China has moved aggressively to acquire oil holdings from Kazakhstan to Somalia. India has gotten in bed with the genocidal regime of the Sudan to the tune a $45 billion natural gas pipeline. The U.S. is spending trillions in treasury and thousands in lives to make sure the oil flows from the Middle East.

The Guardian declared last year, “money is no object as the big players grab what is left of a diminishing resource.” This was after China’s Sinopec paid $1 billion for the right to explore for oil in deep water off Angola. Just a few years ago such a deal would have sold for a mere $35 million. But competition is fierce over the last remaining frontiers where vast quantities of oil might be found. If you add Latin American governments and Russia’s success at renationalized oil and gas assets — and the fact that many reserves in the Middle East are off-limits — you have a situation where the oil majors are going to the politically difficult and geographically inhospitable locations to find oil.

The Next Round in the Big Oil Game 

The oil game isn’t over by a long shot. One successful investment strategy is to find out-of-the-way oil assets selling on the cheap and buy them before the big players show up. I’ve discovered one such place off the cost of South America. For seven years, a border dispute has stopped the drilling in what the United State Geological Survey calls “the second-largest unexplored oil reserve in the world.”

But over the summer, the United Nations was able to hand down a ruling that averted a war and will benefit all parties. As I write this, seismic explorer vessels are on their way. Exxon Mobil and other large oil companies have formed partnerships. The perfect way to play this involves one small $3 company that owns the off-shore rights. I am currently writing up a detailed investment report. Look for this analysis to be available in the next week or so.

This is not the time to be a spectator at this accident of history. This is the time to profit.

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