Look at how far America has come in the past century. Way back when in 1920 US crude oil production was 1.1 million barrels, and since then we have come quite a long way. As of June 2013 the US is now pumping 7.2 million barrels a day out of the ground . This is just the beginning, as many more wells are expected to be completed in the next decade.
So many wells
In the Bakken alone there have been 5,000 wells drilled already, but this is just the tip of the iceberg. There is an estimated 50,000 more wells to be drilled in the Bakken area, and tighter spacing could push that up even higher. . As long as there are more wells to be drilled, production should go up enough to compensate for the rapid depletion rate in shall wells. Right now the Bakken play is producing 875,000 bpd (barrels per day), and some experts see that rising to 1 million bpd in a few years.
The Eagle Ford play down in Texas has been working wonders for its economy and its oil output. The Eagle Ford was pumping out 621,000 bpd in June, which is 60% higher than last year. The shale boom has helped Texas see a recovery in its oil production, which had been steadily falling for a while. Wood Mackenzie sees the Eagle Ford pumping out 844,000 bpd by the end of the year, which would represent tremendous growth.
Output from Texas has gone from 1.08 million bpd in September 2009 to 2.05 million bpd in September 2012 . That number will only keep rising as oil prices remain above $100 a barrel. All of that oil has to be transported somehow, and several companies are already expanding capacity to meet demand.
Bridging the way
Enbridge (NYSE:ENB) currently carries 2.2 million barrels of crude oil and liquids each day through its vast 15,372 thousand mile pipeline system.Enbridge has recently undergone a $6.2 billion program to grow shipping capacity in Western Canada and the Bakken by 400,000 bpd. Western Canada is home to the booming oil sands play, so Enbridge is trying to capitalize on two high-growth markets.
Oil sands production in Canada is expected to reach 5.2 million bpd in 2030, which is a huge jump from the 1.8 million bpd currently being produced. Enbridge has numerous pipeline and storage facilities to help profit from the ramp up in production, which will provide profit growth for decades.
On top of increasing transportation capacity by 400,000 bpd, Enbridge is going to expand the number of refineries that receive its oil in the Midwest and increase terminal capacity in Canada.
Roping in more customers into its pipeline system will boost Enbridge's client base, and the more oil that runs through its pipes and is stored at its terminals, the higher its revenue. A larger client base combined with rising energy production and more capacity will lead to a larger profit stream for Enbridge and its investors.
Enbridge has a roughly 23% stake in Enbridge Energy Partners (NYSE:EEP), a master limited partnership with a whopping 7.35% distribution. Being an MLP, Enbridge Energy Partners must pay out most of its profits or risk being taxed at a significantly higher rate , so it pays out most of what it makes to unitholders (which is the equivalent of a shareholder in many ways).
Enbridge Energy Partners announced it was going to build a 610 mile long pipeline for crude oil that starts in North Dakota. The pipeline will initially carry 225,000 bpd to Clearbrook, Minnesota and 375,000 bpd to Superior, Wisconsin, where Enbridge has an existing terminal.
This pipeline is a great way to capitalize on the explosive growth of the Bakken and will benefit both Enbridge and Enbridge Energy Partners in great ways. It will allow Enbridge to connect the Bakken to the rest of the United States and to other operations it has going, like storage.
Enbridge Energy Partners is also heavily invested in Texas and currently transports 15% of Texas' natural gas output , according to Enbridge's website.
Texas' natural gas production will probably keep rising, especially once we start exporting LNG (liquefied natural gas). The Department of Energy has received 24 applications to export 32.4 billion cubic feet of natural gas a day. So far it has approved four projects to export 6.37 billion cubic feet of natural gas a day, but with US natural gas prices so low and production rising even as rig counts fall I would expect more projects to be approved.
Enbridge and Enbridge Energy Partners are worth taking a look at because they both offer big (in the case of EEP, huge) payouts. Both of these companies are also making strategic investments in the Bakken, so once those pipelines and storage facilities come online revenue and profit will follow, and they can use this profit to fund larger payouts for a longer time.
All American crude
Plains All American Pipeline (NYSE:PAA) is also investing in Texas, and it recently snatched up some of Chesapeake's assets in the Eagle Ford for $125 million . Plains bought 40 miles of pipelines, 15,000 barrels of existing storage capacity, 300,000 barrels of storage under construction and a truck unloading terminal.
With Texas seeing skyrocketing oil and natural gas output someone needs to be there to be able to process and ship all of that potential energy to a refinery or power plant. Plains sees the huge potential in this market and plans to do something about it. It entered into an agreement with Enterprise Product Partners to build a pipeline for crude oil and condensates with a capacity of 210,000 bpd, which ideally would reach 350,000 bpd.
This project would help fund Plains' 4.6% distribution once it is completed. Given Plains' investments in the Eagle Ford, this company is worth a look.
All three of these companies have high dividends or distributions with promising long-term growth prospects that offer the potential to see those payouts maintained and raised over a long period of time. These stocks are perfect for investors who want to balance risk and reward and should be looked into as strong yield/growth plays. No one is going to stop the U.S. energy revolution, but the question is who is going to help see it through?