Shell Strikes Arctic Oil!

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Shell Strikes Arctic Oil! By Jeff Siegel | Monday, April 8th, 2013 They figured out the key to Arctic oil drilling. But it took a long time. The suits over at Shell (NYSE: RDS-A) have been in the hot seat over the past year or so after burning through more than $5 billion to tap Arctic oil reservoirs in the Chukchi Sea. As I've discussed in these pages before, the risk-versus-reward scenario for Shell's Chukchi Sea adventure never made much sense. The independent oil producer simply had too little experience in Arctic oil production and too many mishaps last year (including a damaged containment dome that was crushed by the weight of unforgiving Arctic waters) to make it a particularly profitable venture... Moreover, after two of President Obama's advisors called for a permanent halt to oil exploration in the Arctic, long-time investors got skittish. Truth is — and I've said this time and time again — Shell would've been better off working with the Russians to tap Arctic oil treasures, as producers have more experience in those climates and the regulatory environment is less stringent. Certainly this is what Exxon (NYSE: XOM) did a couple of months ago after signing a deal with Russian petroleum giant Rosneft (PINK SHEETS: RNFTF). Back in February, the two companies approved a deal that resulted in some easy money for Russia and an additional 234,000 square miles of oil exploration for Exxon in the Russian Arctic. It looks like Shell is now heading down the same path... Advertisement Collect Fat Monthly "Rent Checks," Courtesy of the Retail King! We recently discovered a way for you to collect substantial, growing "rent checks" courtesy of the retail king. The best part is you can collect these "rent checks" without owning a single piece of property. This is a perfectly legal way to get some extra income at Wal-Mart's expense! In fact, one man in Arizona just used this tactic to collect $5,969. Another man in Ontario used it to pocket $1,638. Find out how you too can take advantage of this extraordinary income opportunity. Click here now.  Russia Runs the Show Last week we learned Shell inked a deal with Russia's Gazprom Neft (PINK SHEETS: GZPFY) to jointly drill in the frigid waters of the Russian Arctic. Finally, Shell strikes Arctic oil! This was the best decision Shell could've made in regards to its quest for Arctic oil. After all, Russia is the gatekeeper to about 70% of all Arctic oil. And the truth is it's really up to Mother Russia as to who gets what and how much. Now, while Exxon and Shell are actively holding hands with Russian roughnecks, Mao's descendants are also siphoning off the Russian teat. Last month Vladimir Putin handed over a share of its Arctic exploration licenses to China — a near perfect deal for the world's largest oil and gas producer and the world's biggest energy consumer. Under a new agreement that was signed on March 22, China will now have the opportunity to double its oil imports from Rosneft as well as begin construction on a pipeline that'll run Russian gas to the Middle Kingdom. But for the big score, China's foaming at the mouth over its chance to explore three new offshore Arctic regions with Rosneft... This, by the way, is all part of deal that involves Exxon, EniSpA (NYSE: E), and Statoil ASA (NYSE: STO) ponying up to help finance the drilling. Advertisement "There's enough oil below American soil to put OPEC out of business for good!" They said it couldn't happen... One day, the U.S. would produce enough oil to kick OPEC to the curb. That day is here — and these 3 companies are making it happen. A Domestic Shale Revolution Some people in the States have been bellyaching about the restrictive nature of Arctic drilling in domestic waters. The truth is it doesn't matter. Compared to what we're pulling out of shale right now, that which remains locked below the surface of the icy Arctic is neither economically competitive, nor even particularly necessary... Sure, the folks in Alaska are sure to take issue with this, but the bottom line is that the fracking boom in the lower 48 is a behemoth. And offshore Arctic oil production in the United States remains too costly to pursue aggressively. Moreover, the technology we're now using to produce more efficiently, is making the case for Arctic oil a much less urgent one. That's not to say those dynamics won't change; but for now and for the foreseeable future, shale is a much better play on domestic oil production than the fragile hopes and dreams of an Arctic treasure. Some of the latest production technologies actively being deployed today — like the Octopus — are actually producing more while saving production companies as much as $2 million per drilling pad. You can see the details on that here. And believe it or not, the Octopus method is actually appeasing environmentalists, as this particular technology is less environmentally-damaging than previous methods. And that has resulted in less of a regulatory burden. So as you can see, with so many advantages to modern production technologies on American soil, the rush to develop Arctic oil in American waters seems to be something better suited for a couple of decades from now... which, of course, means your investment dollars will be put to better use on what's working now. And that, without a shadow of a doubt, is the domestic shale revolution. To a new way of life and a new generation of wealth... Jeff Siegel @JeffSiegel on Twitter Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets.  He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.   I liked this article | I did not like this article Follow Energy and Capital on The Bottom Line Related Articles Arctic Oil Investments Arctic Oil Boom Arctic Oil Stocks Recently... How We Scooped the Prestigious National Geographic Magazine The Next Solyndra Oil's Game-Changer U.S. to Export Oil to Saudi Arabia The Texas Triple Threat

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