by Hilary Kramer | August 2, 2013 4:48 pm
If we sat down and came up with a list of the biggest game changers in history, I think we would all agree that energy and the advancements in its uses through the years would be at or near the top of the list.
We could go all the way back to the use of fire as man’s first attempt to harness natural resources to make a better life. The use of boiling water to produce mechanical motion goes back more than 2,000 years, and the initial steam engine became critical to industry and transportation about 300 years ago. Heck, man even made it to the moon thanks to energy.
There is no doubt that energy enables much of modern life. It’s scary to imagine how different our lives would be without the energy to power our homes, appliances, cars, phones, computers, airplanes, industry and on and on. Most of us in developed nations take these things for granted, but in many parts of the world, modern energy applications are just now beginning to see the same widespread use. Global economic development is changing the game again, and quite simply, the world needs to find more energy to keep up.
According to the U.S. Energy Information Association (EIA), total world energy consumption will increase more than 52% from 2008 to 2035. The vast majority of this growth will come in developing nations, where demand is expected to double. But here’s what’s most surprising: Even in 2035, almost a quarter of a century from now, roughly three-quarters of the world’s energy needs are still expected to be met through the same old sources of oil, natural gas and coal – all of which have limited resources. Yes, renewable energy, nuclear power and other alternatives will grow, but not enough to become primary producers of energy.
So how the heck will this demand be met? We can’t just run out of energy. The answer: If we won’t have new sources of energy, we have to do a better with the old ones – and that’s where the game is already changing. Technological advancements allow us to get to oil and especially natural gas that we couldn’t get to before.
One advancement you’ve probably heard about is in shale gas, which is natural gas trapped within shale formations. Two new methods of retrieval have dramatically changed the amount of gas that is now recoverable. One is horizontal drilling, in which a traditional well is drilled from the surface down to the targeted rock formation. Then, at the desired depth, the drill bit is turned sideways to bore a well that stretches through the reservoir horizontally, providing greater access to the gas trapped deep in the producing formation.
The second method is hydraulic fracturing, which has become better known as “fracking.” This is a real difference-maker, but it is still highly controversial. Water, sand and — here’s the controversial part — chemicals are pumped into the well to open cracks (fractures) in the shale, and the natural gas then flows through those cracks and into the well. When used in conjunction with horizontal drilling, fracking enables gas producers to extract gas that was previously off limits, and do it at a reasonable cost. Fracking is estimated to be used in 50% of all natural gas wells today to improve production.
Going hand in hand with extracting more oil and gas are better ways of finding it. I just recommended an interesting company to my GameChangers readers that is at the forefront of a cutting-edge technology — the same science used to study earthquakes — to help scientists extract oil and gas from the most remote corners of the earth. Its software can help energy companies find and produce oil and gas more cheaply—including its move into “4D” map views. It also has a very unique business model that allows management to rake in the profits while third party companies do all the heavy lifting.
If you’re looking to invest in the game-changing field of energy, this is a much better way to go than some of the traditional gas and oil plays. Just look at Exxon Mobil (XOM) and Chevron (CVX) this week, both of which fell after reporting disappointing earnings.
In contrast, our newest stock has strengthened the last couple of days, but it’s still below my recommended buy limit, so I see plenty of upside ahead. If you’re interested in finding out more about this company and reading my full analysis, you can click here for a risk-free trial membership to join GameChangers now.
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