In Saskatchewan and North Dakota, I saw the development efforts that are going on in the Bakken Formation. The Bakken is a rock formation within the Williston Basin, a sedimentary basin covering parts of three states and two provinces. The Williston Basin contains a vast wedge of sediments as much as 15,000 feet thick in some places.The Bakken itself is one of several hydrocarbon-bearing formations within the Williston Basin. But the Bakken reaches a maximum thickness of only about 150 feet. In fact, it’s even thinner in most areas.

The best understanding of the Bakken Formation is that it is both a “source rock” for hydrocarbons, as well as an oil and gas reservoir. That is, over millions of years, organic matter accumulated in the sediments and became chemically altered by heat and pressure. All of this produced oil and gas. Now the oil and gas have collected within the sedimentary beds of the Bakken. But it’s tricky to get them out. It requires directional drilling and subsurface “fracturing” to break up the shale and release the hydrocarbons.

Wells in the Bakken Formation are not easy to drill, and they are not cheap. Yet on my travels, I saw at least a dozen working drilling rigs. I saw many dozens of brand-new oil wells with the pump jacks still breaking in. The roads of Saskatchewan and North Dakota were clogged with literally hundreds of trucks hauling rig components and drilling supplies.

Investment is moving into the Bakken play, what with the high prices for oil in the last few years. I spoke with farmers who described years of toughing it out on the hard prairies, followed by recent lease payments in the millions of dollars.

And there’s a human migration going on as workers from all over North America travel to this exciting new energy patch to take jobs that can pay over $100,000 per year. But if you are thinking of going, take your fur-lined underwear – they drill year-round, and in winter, the temperatures have been known to get down to 60 below.

There’s much more to discuss about where I went and what I saw. But I want to say that I’m home now and there’s another hydrocarbon boom going on right around me. It’s the Marcellus Shale play, and in a sense, it’s like reliving the history of the old boom days of the Pennsylvania oil patch in the mid- and late 1800s.

The Marcellus Shale is a vast rock formation that extends over New York, Pennsylvania, Ohio, West Virginia and parts of Maryland, Kentucky and Virginia. And like the Bakken, it’s loaded with (mostly) natural gas, but in some areas, there are a lot of natural gas fractions like ethane, propane, butane, etc.

And just the initial leasing and land plays of the past year or two have brought immense new money into the region. Indeed, in parts of Pennsylvania, it seems like entire counties have hit the lottery. Prices for oil and gas leases have just plain soared.

From one end of Pennsylvania to the other, courthouses are packed with land agents. The agents are searching titles as far back as the 1850s. Really, there are lines out the doors of some courthouses due to the Marcellus land rush. In Bradford – home of the original Pennsylvania oil boom of the 1860s – the local register of deeds has placed a 15-minute time limit on any one person’s use of the title search computer terminals.

One woman told me that she and her husband have been “land rich and dirt-poor” for their entire lives. “My husband had to work at a factory job just to make enough money for us to pay the taxes on the farm,” she said. “And we almost never made any money off farming.” And now they are millionaires. They have engaged a “big name” law firm in Pittsburgh to write up a business plan for the newfound family wealth.

Stories like this are occurring all over the lands west of the Alleghenies, and even in hardscrabble places like northeast Pennsylvania. As a matter of fact, some of the thickest sections of the Marcellus Shale are in northeast Pennsylvania. (Marcellus Shale is shown as the gray region below)

So the Marcellus play is going to have some serious legs. And I have already identified a few great investment opportunities, which I will share with you in the coming weeks.

Source: How I Spend My Summer Vacation

Byron, on his Energy and Oil blog, has a great piece on the future of aviation. He reckons big changes are coming thanks to high crude oil prices…

Mother Nature is taking her revenge in the form of high-priced oil. The cost of jet fuel is soaring. The airplanes of the world are starting to get grounded. The skies of the future will not be so crowded. Flying will cease to be an option for many tens of millions of Americans — maybe for hundreds of millions.

In the future, only the most efficient jets (like Boeing’s new 787 Dreamliner) will ever go wheels up at the end of a runway. Ticket prices will be high. How soon will these things happen? I think that we will experience our first silent spring as early as next year.

Now, Byron says, Northwest (NYSE:NWA) and Air Canada (TSE:AC.A, AC.B) are now cutting flights within the US, and grounding more aircraft…

The Airline Waiting Game

By Byron King

Thing is, most of the airline cuts announced to date have not yet taken effect. The plane groundings and service cutbacks will occur towards the end of the year and into 2009. As of now, almost all of the flights are still rolling down the runways.

For the flying public, all that passengers are seeing just now is higher ticket prices and the nickel-and-dime stuff like charging for bagage check and paying for the sodas in coach class. A lot of people who bought tickets for summer travel back in the winter are feeling no pain, really.

Wait until people go to the likes of Orbitz (NYSE:OWW) and Priceline (NASDAQ:PCLN), and want to book flights in the first quarter of 2009. Good luck.

Choices of flights, connections, timetables and fares will be causing serious heartburn.

As I’ve been saying, in six months you will not recognize the US airline industry.

More info here.

Until next time,

Byron King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Source: The Airline Waiting Game