The American Industrial Renaissance

Vast new wealth creation is underway right now

Inside This Issue
The next Rockefeller- and Carnegie-sized fortunes
Ground zero of the new American Industrial Renaissance
The birthplace of ethylene production
Optimism: An essential investor tool
The stock market is still not cheap enough
Editor: Dan Ferris

During the Industrial Revolution, John D. Rockefeller created Standard Oil, the predecessor company of ExxonMobil, Chevron, Pennzoil, Texaco, Amoco (now part of BP), and Gulf Oil.

It's estimated that, at one time, Rockefeller's fortune was as much as $660 billion in today's dollars, more than 1.5% of U.S. GDP at the time. (That's 13 times richer than superinvestor Warren Buffett.)

Around that same time, Andrew Carnegie built the company that is now U.S. Steel. His fortune has been estimated as high as $300 billion in today's dollars, and roughly 0.6% of U.S. GDP at its peak.

It's assumed that great fortunes like these are a thing of the past. I've recently started to believe that might not be true... American fortunes to rival Rockefeller and Carnegie could be in the making right now, and in almost the same way they were made over 100 years ago...

Investors like you and me can play along and earn a piece of that vast new wealth for ourselves by understanding what's going on and making prudent investments today.

The new wealth I'm talking about won't be created in China, India, or any other foreign country. I'm talking about trillions of dollars in brand-new wealth based right here in the U.S.

You see, a new American Industrial Renaissance has begun...

But first, know this. This isn't your typical Extreme Value issue. I'm not telling you about a stock that's safe and cheap this month. (There aren't many around today, anyway.) As you'll learn by the end of this report, stocks still aren't that cheap, and I'm in no hurry to rush in and grab a falling knife. But I do believe the story below will form the basis for several new stock picks over the next several months... or even years. What I'm telling you about this month isn't a "stock pick" so much as it is an "industry pick."

I'm going to take you on a winding journey through diverse corners of the global energy and chemical markets. But in the end, it all boils down to our belief that the United States has gained an advantage in producing ethylene, a chemical that surrounds you just about everywhere you go in our modern world. That fundamental trend will create the enormous new fortunes I described above. 

The New American Renaissance

The starting gun of the new American renaissance was fired last Thursday, in the little town of Natrium, West Virginia.

Natrium is where Dominion Resources (an energy company with a $26 billion market cap) announced it will build a natural gas processing and fractionation (separation) plant.

Dominion has signed up 90% of the necessary contractors to complete the first phase of the Natrium plant. It will be in operation by December 2012. It'll process 200 million cubic feet of natural gas per day and produce 36,000 barrels of natural gas liquids (NGLs). NGLs are other chemicals found in the ground mixed with natural gas. As you'll learn in a minute, some of them can be quite valuable.

Eventually, Dominion will process 400 million cubic feet of gas and produce 59,000 barrels of liquids per day.

The company could hardly have chosen a better site for a natural gas processing plant. It's on the Ohio River, right in the heart of the Marcellus shale.

The Marcellus shale is the largest-known natural gas shale deposit in the world. It's thought to have as much as 500 trillion cubic feet of natural gas, though most of it is not recoverable. It covers southern New York, eastern Ohio, western Maryland, most of Pennsylvania, and virtually the entire state of West Virginia.

It's about 95,000 square miles – almost half the size of France. It's a monster gas deposit. The huge supply of natural gas in deposits like Marcellus is why natural gas prices fell from $9 per thousand cubic feet (mcf) a couple years ago to $4 per mcf today. There's just so much of the stuff.

Some people think Marcellus alone has enough gas for two decades of U.S. consumption at current levels. The Utica shale borders it on the west, and is thought to cover an even larger area than Marcellus... though its resource potential is less understood than Marcellus. This is the mother of all U.S. gas deposits, and one of the biggest in the world.

Marcellus and Utica have lots of natural gas... But if that's all they had, Dominion wouldn't be building a plant that processes and fractionates various liquids found in natural gas.

Some natural gas fields don't contain many of these liquids. They're called dry gas or lean gas reservoirs. But the southern Marcellus is as much as 15% liquids. That's too much for the pipeline operators. They don't like much more than about 5% liquids. But they want the gas, so they're waiving the limits for a while. Most of these waivers will expire in 2013 and 2014. Then something will have to be done with all those liquids...

That's where Dominion's new plant comes in. Its job is to separate natural gas from the liquids in it... ethane, propane, butane, and others. Most folks have heard of propane and butane, but you probably have no idea what ethane is or what it's used for.

At room temperature, ethane is a colorless gas with a garlicky odor. Roughly 99% of the ethane in the world has one market: the production of ethylene. Ethylene is the most widely produced organic substance in the world, with global capacity of about 138 million metric tons (about 152 million U.S. tons).

Ethylene is the most important petrochemical. (Petrochemicals are just chemicals derived from petroleum. Without them, our world would look the way it did in the 1920s.) Ethylene is frequently used as a barometer for the entire petrochemical industry. It's one of the most important building blocks of the modern world.

The Extreme Value Petrochemical Glossary

Ethylene – a colorless gas that smells like ripe fruit, derived from petroleum products like natural gas and naphtha. Mostly used to make polyethylene, the most widely used plastic in the world.

– a colorless, flammable gas with a slightly garlicky odor; the second largest component of natural gas; 99% of ethane is used to make ethylene.

Feedstocks -
a raw material used in a processing plant, found in naptha.

– a process of separating a mixture.

– the primary source from which petrochemicals are derived.

Natural gas liquids
– other chemicals found in the ground mixed with natural gas. 

– organic compounds derived from petroleum or natural gas. 

– a synthetic compound used to make the foam in furniture.

Source: and Merriam-Webster.

You use products made from ethylene every day of your life: food packaging, trash bags, diapers, toys, drums, bottles, window frames, pipes, automobile antifreeze, all kinds of clothing, carpet, tires, shoes, laundry detergents, flooring, adhesives...

I could go on, but you get the picture. You're surrounded by ethylene-based products. You can't get away from them, no matter how hard you try. Crude oil and electricity make our world go and keep it warm in the winter, cool in the summer, and well-lit at night, but much of the stuff that makes our world so advanced today is due to ethylene.

So if you think the global economy will continue to grow for the next few decades – as perhaps one billion-plus Chinese and Indians attain middle-class status – you must believe ethylene consumption will grow, too. And if you understand how important ethylene is in the manufacture of much of our modern world, a large, new, low-cost supply of the stuff is a boon to whoever owns it. Well, that supply is right here in the United States.

Ethylene is the reason Dominion is building that new plant on the Ohio River. Even though Dominion hasn't said as much in any recent press releases, if you know what's there besides natural gas, it's not hard to figure out...

You see, there's not only an abundance of natural gas in the Marcellus shale... There's an abundance of ethane, too. On average, ethane makes up about 45% of the natural gas liquids found in natural gas fields in the United States. But in the Marcellus, ethane averages roughly 62.5% of natural gas liquids.

The Marcellus is about natural gas. That's the main resource there. But to a large extent, it's about ethane, too. The southern portion of the Marcellus is just saturated with the stuff.

If Dominion only wanted gas, it would go somewhere else. You don't build a plant designed to separate liquids from natural gas in the southern Marcellus shale unless you want lots and lots of ethane. Dominion has decided to be a major ethane producer in the region.

Natural gas prices are too low today. That's why natural gas rigs are beginning to shut down all over the country. Since last year, 100 natural gas rigs have shut down, going from 983 to 883.

Lower natural gas production will crimp supply and eventually lead to higher prices. That's what has most energy investors excited about shale gas today. But today's ultra-low gas prices and tomorrow's higher natural gas prices will be a relatively minor development over the longer term.

If gas prices soar too high, gas producers will come out of the woodwork and overproduce. All the gas market really needs is a small price correction, perhaps into the $6-$8 range. At those levels, our thesis is still intact.

Overall, abundant supplies of natural gas ought to keep gas prices fairly stable over the longer term. Liquids-rich natural gas in the Marcellus and other shales will create a massive supply of ethane, the primary feedstock for making ethylene.

It's Cheaper to Make This Stuff in the U.S.
Than Just About Anywhere in the World

"So what?" you might say. "Where's the renaissance?" Well, it lies mainly in the fact that ethylene is produced all over the world, but in most places, like Europe and Asia, the primary feedstock isn't NGLs like ethane. It's made from oil-based products like naphtha.

But right now (and I believe for many years into the future), the abundant supply of ethane coming out of U.S.-based gas shales will give the U.S. a huge cost advantage in ethylene production over the rest of the world.

Ethylene producing margins can fluctuate quite a bit from week to week and month to month. But the primary telltale sign of a sustainable U.S.-based Industrial Renaissance can be found in the ratio of crude oil prices to natural gas prices.

According to the American Chemical Council, it's cheaper to make ethylene from ethane than from naphtha above a ratio of 7:1. Natural gas prices are low, at under $4 per mcf. Crude oil has fallen the last few days, but it's still pretty high, up around $86 a barrel. So right now, even with oil prices down recently, the ratio is about 20:1.

That's why U.S-produced ethane provides a huge advantage over naphtha for U.S-based ethylene producers. European and Asian ethylene plants run mostly on naphtha. In the United States, over 85% of ethylene is derived from natural gas liquids. In Western Europe, over 70% of ethylene is derived from naphtha and other oil-based products.

And why shouldn't U.S.-based natural gas prices stay relatively low for a good long time, given that we have a 100-year supply of the stuff that's recoverable with current technology? And why shouldn't oil prices stay relatively high, given that roughly 25% of the global export supply is in the hands of governments like Venezuela, Mexico, and Iran, that are basket cases (or close to it), and are using too much of their oil profits for social programs, and not enough in developing new oil deposits?

In fact, if natural gas prices rise, the new American manufacturing renaissance can still happen. Natural gas could double to around $8 per mcf, and oil could fall another 25% to around $60 a barrel, and natural gas liquids would still have a cost advantage over oil-based ethylene feedstocks.

If oil prices remain relatively high, and natural gas prices remain relatively low, it's easy to envision much European ethylene capacity shutting down over the next few years, as consumers opt to buy from the U.S. That'll shove huge earnings gains into the hands of U.S. producers... and huge investment gains into the hands of U.S. investors. It's like tipping the Thanksgiving table and having the guy at the end eat everything in one bite. He's gonna grow fast. 

Ground Zero of the New American Industrial Renaissance

Since all this talk about gas, ethane, and ethylene may be unfamiliar to you, you may have missed the bold statement I made earlier, when I said Dominion Resources is building a natural gas fractionation plant because it was thinking about ethylene.

(One day, Dominion could end up in the Extreme Value portfolio. But remember... this ain't your typical Extreme Value. We're holding off on new stock picks this month in favor of giving you a clear understanding of the bigger picture underlying those picks.)

That's a bold statement because there are no ethylene plants in the Marcellus shale. Dominion would have to be thinking that it'll transport ethane to the Gulf Coast, where almost all the nation's ethylene making capacity is located. Or it's counting on the premise that if it builds it, customers will come...

Bayer Material Science owns two parcels of land totaling 1,460 acres in New Martinsville, West Virginia and Institute, West Virginia. It wants to lease or sell the unused portions to investors to build an ethylene plant.

Bayer is the world's largest maker of polyurethane, a whole class of chemicals most widely used to make various types of foam cushions and other foams for appliances and automobiles. Ethylene is used to make polyurethane, and has a plant on a portion of the land it's offering for the plant. An ethylene supply near Bayer's own plant could help lower its raw materials costs. It could also attract other manufacturers to the area.

Two months ago, Royal Dutch Shell (better known as oil and gas company "Shell") said it was planning to build a "world-scale" ethylene plant in the Marcellus shale area, though the exact location hasn't been determined. This is the first ethylene plant in the region in half a century. Shell didn't give any details. But it did mention it plans to supply most of its ethylene to markets in the northeastern United States, where it expects ethylene demand to grow in the coming years.

Ethylene production capacity is coming to the Marcellus. When it gets up and running, it'll attract customers from around the world, many of whom will likely want to set up shop next door.

We've only discussed the Marcellus and its next-door neighbor, the Utica shale. But they aren't the only liquids-rich shale in the country. The Eagle Ford shale, located near the Gulf Coast in Texas, is also rich in liquids.

Dow Chemical is the largest producer of ethylene in North America. Polyethylene is the most widely used form of plastic in the world. Dow announced in April it's planning to build a new ethylene production plant in the Gulf Coast to take advantage of shale gas supplies in the Eagle Ford and Marcellus shale regions.

Dow Chemical and Range Resources signed an agreement in April of this year. Range will deliver ethane from the Marcellus shale to Dow's operations in Louisiana. Upon making the announcement, Jim Fitterling – Dow's president of corporate development and hydrocarbons – said, "The improved outlook for U.S. natural gas supply from shale brings the prospect of competitively priced ethane and propane feedstocks to Dow – and the promise of new manufacturing jobs to America."

Today, Dow can produce 40%-60% of its ethylene from ethane. By 2017, it expects to produce as much as 85% of its ethylene from ethane. It's only telling the world that because it knows the Marcellus and other shales are loaded with ethane. Dow is basically telegraphing that it expects to make better profit margins on ethylene because of all the stuff I've told you today. That'll translate to higher earnings – and bigger returns – for shareholders of Dow, and any other company that can exploit this big, new ethane supply.

We're Making a Bold Prediction About the Future,
But Here's Evidence We're Right

Obviously, this is complicated. I'm throwing a zillion chemical names at you, each one representing a different global market, all of them intertwining: oil, naphtha, natural gas, ethane, ethylene, etc.

We recognize it's impossible to consistently and accurately predict price trends for all of them. It's impossible to know the future. But it is possible to get the odds on your side. And we believe the simple insight that abundant resources mean enormous wealth-creation potential will prove more important than the myriad details that might sidetrack investors.

The U.S. Energy Information Administration (EIA) says we now have more than 2,500 trillion cubic feet of gas reserves in this country. That's enough for 100 years of current demand. Much of the new supply is saturated with ethane. And the EIA's estimates of shale gas have more than doubled in just the past year, to more than 862 trillion cubic feet. So there's likely even more gas (and natural gas liquids like ethane) than the 100-year supply the EIA is reporting today.

Abundant U.S. gas supplies will lead to abundant ethane, which will give U.S. ethylene producers an advantage on the world stage. And since ethylene is used in so many manufactured goods, it makes sense to believe the U.S. will at least become a much bigger ethylene producer.

It also makes sense to believe it'll become an equally large ethylene consumer, taking advantage of an abundance of the basic material... much the same way Henry Ford took advantage of cheap steel and Andrew Carnegie and others used abundant iron ore and coal to make that steel, and the way Ford's customers took advantage of Rockefeller's cheap petroleum to run their new cars.

For example, Wham-O recently moved 50% of its Frisbee production from China to the U.S. Wham-O cited higher transportation costs associated with Chinese-based manufacturing. That's another benefit of cheap natural gas versus expensive crude oil.

I don't know Wham-O's proprietary plastic blend. But I do know the primary use of ethylene is plastic resins, which account for more than 80% of ethylene consumption. Wham-O may also be taking advantage of better ethylene supplies. With the U.S. still being a big market, and with cheap ethylene feedstocks coming online, it makes sense to bring manufacturing back to the U.S.

The American Industrial Renaissance is already boosting other industries. For the first time in decades, a new steel plant is going up in Youngstown, Ohio, in the Utica/Marcellus area. The plants cost $650 million to build, and 400 construction workers are currently building it. The one million-square-foot plant will make 500,000 tons of steel tubing per year, the kind used to produce natural gas from shale.

A French company, Vallourec & Mannesmann Holdings, is building the plant. Vallourec is one of the world's largest manufacturers of steel tubing for the energy industry. It chose the Ohio location for two primary reasons, according to a recent Wall Street Journal article: Youngstown has an experienced steelmaking work force... and it's next door to the Marcellus shale.

U.S. Steel will spend $95 million to upgrade a steel tube plant in Lorain, Ohio. Canton, Ohio-based Timken will spend $50 million to upgrade its steel tubing works in Canton.

Maybe this doesn't spell a full-blown renaissance just yet. But when I think of the Rockefeller and Carnegie fortunes, I notice a pattern: The abundance of the resource was known about prior to the great wealth-creating that occurred. When there's an abundance of something useful, sooner or later, we get around to using it.

We love a good glut. When something useful is cheap and abundant, we salivate at the possibilities.

West Virginia – where Dominion is building its gas-separating plant – is the birthplace of U.S.-based ethylene production in the early part of the 20th century. Back then, there were 14 ethylene plants west of the Mississippi, six of them in West Virginia's Kanawha valley. Ethylene is coming home. They left the area to find larger, cheaper supplies of oil-based feedstocks. Now, they're coming home to larger, cheaper supplies of gas-based feedstocks.

West Virginia politicians know the value of ethylene production, too. They recently passed the 2011 Marcellus Development Act to incentivize construction of ethylene plants. A world-class facility can cost $2 billion and take four years to build. So they've created incentives to help the process along.

This February, acting West Virginia governor Earl Ray Tomblin created the Marcellus to Manufacturing Task Force. Composed of energy and chemical industry leaders, the group's main goal is to attract and encourage companies that make ethylene from ethane. The group will also help existing West Virginia businesses that make products with ethylene. It also plans to help develop ethylene infrastructure.

I hate when government gets involved at all, but I'm sure businesses and local governments throughout the rust belt are dying to agree with us about an American Industrial Renaissance. It's an ideal job creation platform for any politician.

The American Industrial Renaissance:
What Investors Should Do Now

Before we move on, let's summarize our manufacturing renaissance idea into some digestible bullet points:

  • Natural gas from shales is abundant in the U.S.
  • Natural gas shales contain an abundance of natural gas liquids... ethane is in especially abundant supply in the Marcellus shale (the largest known gas shale).
  • Ethane has one market: as a feedstock for making ethylene.
  • Ethylene is the most widely produced organic compound in the world, the cornerstone of the global petrochemical market.
  • Ethylene is used in so many manufactured goods... and it's used in polyethylene, the most widely used plastic.
  • An abundance of gas, ethane and ethylene plants will bring customers.
  • Abundant supplies of natural gas, ethane and ethylene mean the U.S. will gain a cost advantage over the rest of the world in ethylene production... likely leading to an American Industrial Renaissance.
  • Major petrochemical and energy companies have kicked off the American Industrial Renaissance, and are planning to build natural gas-processing and ethylene production facilities to exploit the now-abundant supplies of natural gas and natural gas liquids (primarily ethane).

That's the big picture. But the real question we need to answer is, how can investors turn their knowledge into big returns?

You Can't Invest in Energy Without
Knowing About This Company

With the stock market dropping by the day – and stocks not much cheaper than earlier this year when we advised holding lots of cash – we're in no great hurry to answer that question. But we'll answer it anyway...

We have a list of at least a dozen potential energy stock recommendations right now. And believe it or not, I expect us to add to that in the coming weeks and months.

And we've already got three natural gas picks in the Extreme Value portfolio. Two are trading below their buy-up-to prices (Encana and Comstock), and the other one (ExxonMobil) is trading close to its buy price.

Remember... Extreme Value rejects the proposition there's more than a handful of great new stocks to buy each year. As subscribers, you're too smart to believe a new stock pick worth considering will arrive on your doorstep every month like clockwork. I try to provide what I believe real investors like you really need: thoughtful, careful, deep research into real long-term investment opportunities. We're doing investment research here, not throwing darts at a dart board.

So for now, we'll run through our current energy picks and see how they measure up against our expectations for natural gas, ethane, and ethylene...

We have two natural gas-related stocks in buy range today. One is Encana, the Canadian independent natural gas company.

Encana has over 9.1 million acres in western Canada, of which 4.9 million are undeveloped. It has 3.5 million acres of land in the U.S., of which 2.9 million is undeveloped. It's currently drilling in nine major natural gas regions in North America, five in the U.S., and four in Canada, plus one more in the offshore waters near Nova Scotia.

I believe Encana understands the importance of shale gas. Encana holds roughly 435,000 acres in the Haynesville shale (in Louisiana and Texas), and about 260,000 acres in the Horn River shale (in British Columbia).

Encana recently established two more large land positions in liquids-rich gas areas. In western Alberta, Encana now has over 365,000 acres in the Duvernay region. Initial drill results are promising, and two more Duvernay exploration wells are planned this year. In Mississippi and Louisiana, Encana has captured more than 250,000 net acres of the Tuscaloosa shale lands. The company will evaluate the play's potential this year.

Encana has over 2 million acres with excellent liquids potential, including Niobrara in Colorado, Collingswood shale in Michigan, plus the Alberta Deep and Montney areas in Alberta and British Columbia.

Encana's balance sheet is good... But it could improve soon, as the company sells between $1 billion and $2 billion in assets this year. It wouldn't surprise me if Encana also used some of the proceeds to increase its holdings of liquids-rich shale plays, especially in the Marcellus and Utica shales.

BUY Encana (NYSE: ECA) up to $31 a share.

Next up is our small-cap natural gas play, Comstock Resources. Comstock operates across the southwest U.S. It's in Texas, Louisiana, and New Mexico, in the San Juan Basin, the Haynesville shale, and the Eagle Ford shale.

Comstock isn't a liquids-rich play overall. But it ought to provide excellent returns once gas prices rise, mostly because it's a low-cost producer. At $2.93 per mcf, Comstock has the fourth-lowest all-in production and finding costs among 52 publicly traded peer companies. Low-cost production is at the heart of successful natural resources investing. Producers with lower costs will always rule the day in commodity markets. They're the ones you want to own.

BUY Comstock Resources (NYSE: CRK) up to $30 a share.

Finally, there's ExxonMobil, the World Dominator of the oil and gas industry. When it comes to U.S. natural gas, ExxonMobil clearly knows what it's doing. It bought XTO Energy in 2009, acquiring over 14 trillion cubic feet of natural gas reserves in the process. XTO is a shale giant, with property in every major shale play in the U.S. The XTO transaction doubled ExxonMobil's U.S. gas reserves and added 10% to its global gas reserves.

That's just reserves, though. In terms of total resource potential, the XTO acquisition added 60 trillion cubic feet of gas to its resource base, 5 million acres to its land holdings, and 2.9 billion cubic feet per day of gas production. The XTO acquisition made ExxonMobil the largest producer of natural gas in the United States.

ExxonMobil is still acquiring shale gas assets in the U.S. In June, it spent $1.69 billion to nearly double its acreage in the Marcellus shale. ExxonMobil bought two private Pennsylvania-based companies, Philips Resources and TWP, Inc., roughly 700,000 acres in Marcellus.

The transaction makes ExxonMobil the fourth-biggest land owner/lease holder in the Marcellus, right behind Chesapeake (1.73 million acres), Range Resources (1.05 million acres), and Chevron (714,000 acres). It wouldn't surprise me at all if ExxonMobil soon became the No. 1 shale gas company in the Marcellus, the U.S., and the world.

Due to the recent market drop, ExxonMobil is getting cheap again. It traded below $70 recently. If it gets just a few bucks cheaper, it should be the first energy stock you buy. It's one of the safest, highest-quality stocks you can buy (and a world-class dividend-payer, too). When it comes to oil and gas stocks, ExxonMobil is always the first one to consider. Always.

BUY ExxonMobil (NYSE: XOM) up to $66 a share.

Optimism: An Essential Investor Tool

Our American Industrial Renaissance thesis is obviously a huge, complex idea. It involves the interaction of several global energy and chemical markets, each one a complex field of study in its own right, and each one involving dozens or even hundreds of potential investments. We recognize that, even if we're right about this trend, it'll be years before we truly know if we nailed it.

This idea is our top priority... And I think it's a huge winner. Also, frankly, I'm getting tired of all the gloom and doom. I just don't see the world that way. Great things lie ahead, and there isn't an economic or political crisis the U.S. hasn't been able to overcome. Rather than believe the situation is hopeless and that America is done for, I agree with those who say, "It's hopeless, but it's not serious."

Yes, government activity accounts for perhaps one-fourth of the U.S. economy, and that's way too much. Yes, our currency is poorly managed. Yes, the government is too intrusive. Yes, there are problems. But look at it this way... The rest of the economy is around three times the size of the government. America's productivity and ingenuity will continue to trump the poor management of its currency, as it's done throughout our history. And problems will always crop up... But we'll find ways to solve them.

If you can't look at the world this way, you should exit the stock market permanently. If you aren't essentially an optimist who recognizes the ascent of man as the underlying primary trend, how on earth can you buy stocks when they hit major bottoms like they did in early 2009?

Most people sell at those bottoms. That's how bottoms happen! But selling out at the bottom is an enormous mistake. You'll never get rich doing that. Buying low and selling high is emotionally difficult, and for most people, simply impossible. It must be even harder to learn to buy when everyone else is selling without being an optimist about the future of America and the future of mankind in general.

Speaking of intelligent optimists, my research partner, the intrepid Mike Barrett, is the original author of the notion of an American Industrial Renaissance based on abundant natural gas and its effect on the production of ethane and ethylene. He's already produced a small mountain of preliminary research findings on the idea.

We expect the American Industrial Renaissance to become a major theme in these pages for a long time to come, and we believe we'll be able to help you make money in natural gas stocks, ethane-related pipeline stocks, ethylene producers... and any company that can exploit newly abundant liquids-rich shale gas in the United States.

This is only the tip of the iceberg. Next month, we're going to start diving below the surface to find out how big this sucker really is. And remember, there should be at least one new pick – if not more – playing off this massive energy trend next month.

Good investing,

Dan Ferris
Medford, Oregon
August 10, 2011

Added Value

Here's a recent Bloomberg article talking about how cheap shale gas is causing massive expansion:
Page 5 of this report shows how ethylene gets into so much stuff, and the map on Page 8 shows you how enormous Marcellus and Utica are:


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