Australia: Largest Shale Oil Discovery in the World?

- by Adrian Tout, Feb 28 2013

- Australia's Shale Gas/Oil Boom
- Why This Stock Put on 500% in 6 Months
- Chevron Increases is Aussie Footprint
- A Man's Best Friend... 


Today I read an interesting post from Dr. Kent Moors. 

Moors is an internationally recognized expert in global risk management, oil/natural gas policy and finance, cross-border capital flows, emerging market economic and fiscal development, political, financial and market risk assessment.

He is also a prolific writer and lecturer, has six books, more than 750 professional and market publications, and over 250 private/public sector presentations and workshops have appeared in 44 countries.  You can read more about Dr. Moors at his home page here.

This week he published a story on why Australia may hold the largest shale oil find of all time in an area known as the Arckaringa Basin.

The Arckaringa Basin is located in central South Australia, about 850 kilometres north of Adelaide.


Moors believes the area contains as much as 233 billion barrels (or more) of recoverable shale oil.

How much is that?

That's more than all of the estimated oil in Iran, Iraq, Canada, or Venezuela. And it's just 30 billion barrels shy of the estimated reserves in all of Saudi Arabia.

If you are not familiar with shale oil: it is also known as kerogen shale, is an organic-rich fine-grained sedimentary rock containing kerogen (a solid mixture of organic chemical compounds) from which liquid hydrocarbons called shale oil (not to be confused with tight oilcrude oil occurring naturally in shales) can be produced.

Shale oil is a substitute for conventional crude oil; however, extracting shale oil from oil shale is more costly than the production of conventional crude oil both financially and in terms of its environmental impact (more on that in moment)

Estimates of global deposits range from 2.8 to 3.3 trillion barrels of recoverable oil.

If this is true - we could very well see an energy independent Australia (assuming our government gets it act together).

Opportunity - Linc Energy

Moors tells us there is one small company operating in the area -- it's a company called Linc Energy.



Linc's shares have probably been on the strongest performing on the ASX over the past 6 months - almost gaining a 500% from its lows of 50c.


There is an interesting trend happening in Australia with respect to oil and gas and it's one investors where investors should be paying close attention; ie these mega-billion projects being controlled by small to mid cap players. 

You see Linc are not the only ones taking advantage of the oil/shale boom in Australia.

Other stocks like Drillsearch (DLS) (see my chart of the day this week); Beach Energy (BPT); Buru Energy (BRU) in WA; and Senex (SXY) are all tapping into this wave of investment.

As Dr. Moors says:

Today, small cap companies are controlling access to some of the biggest shale projects on the planet, requiring the big boys to rethink their strategies. 
These developments provide individual investors some major opportunities to buy into projects with small companies at low cost or ride in on the backs of the majors and oil field service producers coming in. 
And if you learn the right way to invest, there is some serious money to be made down under.

I agree...

Moors describes how both shale/tight oil and shale gas have significantly changed the hydrocarbon production landscape

And whilst we have seen large developments across North America in this area -- studies from the US Geological Survey, the International Energy Agency, and even OPEC itself have all concluded shale oil and gas is prevalent elsewhere in the world.

Shale Oil: Australia's Next Iron Ore

Beach Energy in another exciting company worth a look.

Long time readers will know I discussed buying this stock around $1.00 around May/June last year. Today's it trades around $1.40.

Earlier this week Chevron made news by announcing it had agreed to pay as much as $349 million to Beach Energy in two separate projects. 

Feb 25: The Australian

Both are shale gas plays - one in South Australia and the other in Queensland.

These two new plays significantly boost Chevron's already large footprint in Australia.

These are Cooper basin developments, where several projects are into producing shale gas. 


Moor adds: "Chevron is likely to take over controlling interest (as much as 60% in the first), while settling for a bit more than a third in the second"

Australian Investment Heats Up

I think this is an exciting new trend for Australia and represents a wealth of opportunity... the most exciting in decades. 

It is not just Chevron increasing their footprint down under... other energy giants such as ConocoPhillips (NYSE: COP) and Hess (NYSE: HES), Norwegian major Statoil (NYSE: STO) and U.K.'s BG Group (OTC: BRGYY) are all joining the fray.

Small cap companies like Beach, Drillsearch, Senex, Buru and Linc Energy (and there are many more) all look set to gain. 

In five years (or less)... these may be household names like say BHP or RIO... you just don't know.

One of the biggest hurdles however is our government

In addition to raising taxes on our miners... hydraulic fracking remains a sensitive point for environmentalists.  Lobby groups like this one are constantly trying to prevent the development of this industry. 

If you want to read more on why shale gas may remain under the ground - here is a good article which appears in theconversation.edu


I quote:
"Debate is intensifying over the extraction of coal seam gas, particularly in NSW and Queensland. 
Farmers are protesting over safety concerns and threats to the country’s food security. 
The Greens and the Nationals have joined forces to restrict mining, and now Tony Abbott has spoken out against mining on farming land. 
But what is coal seam gas? How dangerous is it? Will it reduce emissions? And what’s its relationship to shale gas?"

The Australian Department of Geographic Science has said there may be as much as 400 trillion cubic feet (11.3 trillion cubic meters) of shale gas in our country... will this potential be unlocked?


It's important to remember that investing in shares can lose you some or all of your money. The potential gains on my blog are based on investing in Australian and US share markets and do not include taxes, brokerage commissions, or associated fees. It is important you seek independent financial advice regarding your particular situation.

For any investment, never invest more than you can afford to lose, and keep in mind the ultimate risk is that you can lose whatever you've invested. If in doubt of the suitability of an investment please seek independent financial advice.

                                                            _____ .. ____

Man's Best Friend....

On a sad note - yesterday (around 10am) - our much-loved family dog - Bella - passed away.

We found her curled up in the garden - she was only three.

Bella: 18/05/2009 to 27/02/2013
Some heartless cowards had poisoned her with laced meat under the front gate.

Why... I will never know.

She never hurt anyone. Was never let outside. Always walked on her lead.

You can't understand these things... it makes no sense. You try and find answers but they aren't there. It's just very very sad.

If you live on the Gold Coast... be careful... the Animal Care Centre told us there have been several of these cruel attacks of late. Try to ensure they only take food from you.

Rest in peace beautiful girl... it's only been a day and I miss you so much already.

2 comments:

jeremy churchill said...

truly tragic news adrian

i love dogs, and i hope these mongrels get whats coming to them

cheers, get another one, maltese terriers r nice!

adrian tout said...

Thanks Jeremy... Very very sad day