Striking it rich in North Dakota | Don Brunell's Business View
October 12, 2012 · 4:16 PM
In 1951, if farmer Henry Bakken had told you there was oil under his prairie land in Williston, N.D., you’d have thought he was a few bricks short of a load.
As it turns out, he was right.
North Dakota’s economy is going gangbusters, thanks to millions of barrels of oil being recovered from what today is known as the Bakken formation.
The Bakken formation stretches about 200,000 square miles beneath Montana, North Dakota and Saskatchewan. The U.S. portion of the Bakken is estimated to hold up to 10 billion barrels of oil.
The oil is being recovered with a technique that drills down 10,000 to 15,000 feet — thousands of feet past the aquifer layer — then goes horizontally and uses hydraulic fracturing, or “fracking,” to break up the hydrocarbon formations. Through this method, they are able to protect aquifers and safely recover millions of barrels of oil that earlier drilling methods couldn’t reach.
Today, North Dakota is the second biggest oil producer in the U.S. after Texas. Its production is fast approaching that of OPEC-member Qatar, which produced 770,000 barrels per day in August. By 2020, Bakken production is expected to almost double.
Because of the oil boom, North Dakota’s unemployment rate has dropped to 3 percent and the state’s budget surplus has mushroomed to $1.6 billion — equal to almost 40 percent of the general fund. And that doesn’t count another $1.9 billion tucked away in three restricted state funds and an additional $1 billion set aside for public works projects and property tax cuts.
In fact, Bruce Gjovig, founder of the Center for Innovation at the University of North Dakota, estimates that oil from the Bakken Basin is creating 2,000 millionaires a year.
Average income in Mountrail County, the hub of the North Dakota oil boom, roughly doubled in five years to $52,027 per person in 2010, ranking it among the richest 100 U.S. counties, up there with New York and Marin, Calif.
So, while our nation’s politicians argue about how to help 23 million unemployed and underemployed Americans and stop a national debt clock that’s spinning like a runaway Ferris wheel, North Dakota is creating family wage jobs, paying its bills and socking away savings in the bank.
The success in North Dakota could be repeated in many other states. We have the technology and know-how to develop new energy resources in an environmentally responsible way.
Stalled energy projects have already cost the economy $1.1 trillion and nearly two million jobs, according to the U.S. Chamber of Commerce’s Project No Project study.
Tom Donohue, president of the U.S. Chamber of Commerce, estimates that one million jobs could be created in the oil and gas industry alone if projects could be permitted. Because of fracking, the U.S. now has more than a 200-year supply of crude oil and 120 years of natural gas.
The American Petroleum Institute says that with the right government policies, we could increase U.S. oil and natural gas production 76 percent by 2030, generate more than 1.4 million new jobs and produce $800 billion in additional tax revenue.
People in North Dakota are safely developing their energy resources. As a result, they have low unemployment and money for schools and universities, roads and bridges and fire and police protection. They have the resources to fund assistance for the truly needy, and for other government services.
Sixty years ago at Henry Bakken’s farm, people failed to realize the astounding bounty that lay far beneath the surface. With so much of our economy tied to energy production, will we make that same mistake again?