Capital is limited in the current mining exploration environment, so investors are increasingly looking for companies that have lower costs of doing business. Over the last four years, we’ve seen large-scale, low-grade projects go out of favour and investor preferences resting with low-CAPEX, high-return projects.

However, it is not only the construction costs and scale of a mine with which companies can save money. It can also be in initial prospecting, exploration, and the development of a project. The key here is for a company to be doing this work in a location setting that is easy to work in from logistical and cost perspectives. If a project is in a remote area in mountainous wilderness that requires setup of a camp and bush planes in and out, the payoff has to be that much higher.

This is where lithium brine deposits come in. Typically, they are located in salars (salt flats) which are flat, arid, and barren areas. This makes the logistics of setting up shop for exploration relatively straightforward, and also removes most topographical challenges of exploration. 

Further, there are some other major benefits of lithium brine exploration from a cost perspective that makes it favourable to many hard rock projects. Lithium brine deposits are considered placer deposits and are easier to permit. Brine is also a liquid which means that drilling to find it is more akin to drilling for water, and once it is found the continuity is more straightforward. It’s also typically not located relatively close to surface, which limits the amount of meters drilled.

Once a deposit is discovered, advanced exploration and development can also be at a discount. Drilling wells and testing recovery are more like shallow oil wells or drilling for water. Finally, permitting for construction and production is faster because of the placer classification.

Lithium brine exploration has benefits from the angle of cost that make it less expensive than most comparable hard rock projects. However, their potential also depends on the price of lithium – we cover all of the elements of supply and demand for the light metal in this large comprehensive infographic. Click here or the partial screenshot below:

….for full infographi Click HERE

Canada’s New Shale Oil Field Could Rival the Bakken

Canada’s energy industry may be most famous for its world-class oil sands resources. But a new shale oil field could surpass the oil sands as Canada’s largest untapped oil reserve.

In fact, it could even rival the massive Bakken shale of North Dakota in terms of recoverable oil.

This area lies north of British Columbia and east of the Yukon. It’s the Northwest Territories.

Recent data from the National Energy Board (NEB) and the Northwest Territories Geological Survey shows that this area holds as much as 200 billion barrels of shale oil reserves. That compares to U.S. Geological Survey estimates that the Bakken shale formation will yield up to 7.4 billion barrels.

Not all of this Canadian oil is necessarily recoverable. But the Canol and Bluefish shales contain a total approaching 7 billion barrels of economically viable resources.

Here’s a look at the vast potential of Canada’s Northwest Territories…

A New Shale Oil Field with “Significant Potential”

Major oil companies have been exploring this area just 145 kilometers south of the Arctic Circle, known as the Mackenzie Plain, for some time.

Oil producers such as Husky Energy Inc. (TSE: HSE), Imperial Oil Ltd. (TSE: IMO), Royal Dutch Shell Plc. (NYSE ADR: RDS.A), and ConocoPhillips (NYSE: COP) have performed exploratory drilling in the Canol field.

A total of 14 exploration licenses have been granted with $628 million in work commitments dating back to 2010.

The Canol Field could hold as much as 145 billion barrels of oil. That’s comparable to Texas’ Permian basin, where about 3% of oil in place is currently being recovered by operators.

The Bluefish shale has yet to even be explored. It could hold up to 46 billion barrels.

David Ramsay, Minister of Industry, Tourism and Investment for the Government of the Northwest Territories, commented on the NEB data, saying, “This study confirms what we have known all along – that there is significant petroleum potential in the Sahtu.”

Developing these fields could be a ways off, however. Some living in the territory as well as Greenpeace oppose fracking, claiming it could contaminate groundwater.

Perhaps an even larger obstacle to development is infrastructure. The area’s remote location currently lacks such basic services as an all-weather road. A pipeline system to carry the recovered oil and gas to market will also need to be built eventually.

So now the big question: Can investors profit from this new Canadian shale oil field? 

A Winning Play on Shale Oil

Because pipelines are crucial to the whole shale oil industry, they offer one of the most attractive ways to play this opportunity.

Although I’d love to suggest a pipeline play that will leverage the vast new potential of Canada’s north, right now it’s not the way to go. It’s too early to play this discovery.

But, this does draw attention to a strong profit play in the shale oil industry, so you can make money while we evaluate the future winners of Canada’s shale oil boom…

The better strategy today is to focus on an existing, attractive, and very profitable pipeline right in the United States.

Williams Companies Inc. (NYSE: WMB) is one of the largest energy infrastructure companies in the United States. Its history dates back to 1908, and its head office is located in Tulsa, Okla.

WMB moves as much as 30% of America’s natural gas through its vast network of pipelines every day.

Williams is a $39 billion company currently trading at a reasonable P/E of just 19. Shares yield a hefty 4.7%. The WMB share price did take a hit along with the crash in oil prices, but not by nearly as much. The stock price fell 32%, but bottomed in mid-January and has already recovered more than half that drop.

With $7.6 billion in revenue, Williams Companies earns a rich 27% profit margin and 16.5% operating margin and produces a 15.2% return on equity.

The company management also expects earnings to grow substantially in the future. And with 88% of the oil and gas moved under long-term fixed-fee contracts, oil and gas prices don’t matter all that much to company profits.

WMB stock is currently trading at $51.47 (Monday) and is up about 14% year to date.

Stay up-to-date on all the shale oil investing news you need @moneymorning on Twitter.

Invest in the Lithium Revolution

This week, as hard commodities came under early pressure, participants may have asked themselves: 1. Is the rally over in oil, copper and precious metals; 2. Was it just a dead cat bounce – or, 3. Has the tide truly turned and a new uptrend just begun?

The same could be said with trends in yields and the euro – and conversely, in the US dollar index which bounced sharply through Wednesday’s close.

Generally speaking, these assets have trended from….

….read more HERE

Is US shale about to make a comeback?

Oil prices have rebounded strongly since March. The benchmark WTI prices soared by more than 36 percent in two months, and Brent has jumped by more than 25 percent. There is a newfound bullishness in the oil markets – net long positions on Brent crude have hit multi-year highs in recent weeks on a belief that US supply is on its way down.

That was backed up by recent EIA data that predicts an 86,000 barrel-per-day contraction for June. The Eagle Ford (a loss of 47,000 barrels per day) and the Bakken (a loss of 31,000 barrels per day) are expected to lead the way in a downward adjustment.

But that cut in production has itself contributed to the rise in prices. And just as producers cut back, now that prices are on the way back up, they could swing idled production back into action.

A series of companies came out in recent days with plans to resume drilling. EOG Resources says it will head back to the oil patch if prices stabilize around $65 per barrel.

The Permian is one of the very few major shale areas that the EIA thinks will continue to increase output. That is because companies like Occidental Petroleum will add rigs to the Permian basin for more drilling later this year. In fact, Oxy’s Permian production has become a “sustainable, profitable growth engine,” the company’s CEO Stephen Chazen said in an earnings call. Oxy expects to increase production across its US operations by 8 percent this year. Diamondback Energy, another Permian operator, may add two rigs this year.

Other companies – including Devon Energy, Chesapeake Energy, and Carrizo Oil & Gas – have also lifted predicted increases in output for 2015.

In the Bakken, oil production actually increased by 1 percent in the month of March, a surprise development reported by the North Dakota Industrial Commission.

Taken together, momentum appears to be building in the US shale industry.

But let’s not get ahead of ourselves.

The US oil rig count has plummeted since October 2014, falling from 1,609 down to 668 as of May 8 (including rigs drilling for gas, the count dropped from 1,931 to 894). That is a loss of 941 rigs in seven months. Just because a few companies are adding a handful of rigs does not mean that the drilling boom is back. It takes several months before a dramatic drop in the rig count shows up in the production data. The EIA says production will start declining this month – but further declines in production are likely.

Moreover, even if US producers do come swarming back to the oil fields and manage to boost output from the current 9.3 million barrels per day, that would merely bring about another decline in oil prices. Lower prices would then force further cut backs in rigs and spending. The effect would be a seesaw in both prices and the fortunes of upstream producers.

As John Kemp over at Reuters notes, that is not an enviable position to be in. Much has been made about the geopolitical and economic influence that shale drillers have snatched away from OPEC. The oil cartel has lost its ability to control prices, the thinking goes. Now, the US is the new “swing producer,” and with it comes influence and prosperity.

But if oil companies oscillate between cutting back and adding more rigs as the price of oil bobs above and below the $60 mark, they won’t exactly be raking in the profits. Worse yet, EOG and Oxy may be profitable at $60, but there are a lot more drillers in the red.

In other words, there is still a supply overhang. In order for oil markets to balance, a stronger shake out is still needed. That means that the least profitable sources of production – drillers that have loaded up on debt to drill in high-cost areas – have yet to be forced out of the market. The drilling boom is not back yet.

More Top Reads From Oilprice.com:

• Here Is Why Predictions For Lower Oil Prices Are Wrong
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• Did Low Oil Prices Actually Hurt U.S. Economy?