Oil companies grew production so rapidly in the Permian Basin in the past year that they've run out of room on pipelines. As a result, regions such as the Bakken Shale of North Dakota could re-emerge on the scene in 2019. In this Industry Focus: Energy clip, host Nick Sciple and Fool.com contributor Matt DiLallo discuss:

  • The current state of the U.S. shale industry.
  • The potential for companies that control land in multiple shale plays to shift investment spending away from the Permian to places such as the Bakken.

A full transcript follows the video.

This video was recorded on Oct. 25, 2018.

Nick Sciple: We've talked about how we got here with the Bakken, where the Bakken is today. Looking forward into the future, what's your view of the prospects for the Bakken going forward the next five years or so? And, how does the Bakken relate to the other shale plays in the United States? To the Permian and other places across the country? How do you think investment in the Bakken might be affected by what happens in these other shale plays?

Matt DiLallo: There's been so much talk about the Permian Basin. It's growing so fast. Too fast, actually, because they've run out of pipeline room. That's not going to be solved until next year. Because drillers can't grow in the Permian, those that have assets in other areas will need to either slow down or move that capital to places like Bakken and Eagle Ford. You look at a company like EOG Resources, ConocoPhillips, Marathon, those all own assets in multiple shale plays, including the Bakken. We could see them move some rigs up the Bakken in the next year, at least, especially with how good the returns are up there. I think we'll see some shifting around to other plays, just because you can't grow as fast in the Permian for the next year. And, it just makes sense to diversify. Not only are there issues with pipelines, but there's issues with not having enough service capacity, there aren't enough people on the ground, there aren't enough pumping units, and all those different things that go into tracking a well. There just isn't enough of that in the Permian. There is more capacity in places like the Bakken. I think that'll draw companies. They'll look at returns, and they'll see, "Hey, you can get a really good return in the Bakken. Let's pour some money out there."

Sciple: Awesome, great stuff for our listeners. I think, especially as the Permian continues to tighten, the Bakken is going to continue to look like a compelling oil play going forward.

Matthew DiLallo owns shares of ConocoPhillips. Nick Sciple has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.