Natural resources fuel North Dakota’s economic boom

While the rest of the country suffers through unemployment, foreclosures, bank failures, and budget deficits, North Dakota is on a roll – thanks in large part to its abundant resources of oil and natural gas, almost all of which are on private land.

North Dakota produced a record 9.9 million barrels of oil in July, up from the previous record of 9.4 million set in June, according to figures published in the Billings Gazette (Oct. 5, 2010). A record 5,051 wells were in operation in July, up from the previous record of 4,977 set in June. North Dakota’s natural gas production also reached new heights in July; the 9.9 million cubic feet produced that month smashed the previous record of 9 million cubic feet set in June.

The plains state surpassed Louisiana last year as the nation’s fourth-largest oil-producing state. According to the Gazette, oil production has nearly doubled in the past two years in North Dakota, with production records having been set every month since January. Indeed, oil production was expected to reach a new high of 10.5 million barrels in August.

Almost all the oil and natural gas being extracted in North Dakota are located in the rich Bakken Shale and Three Forks-Sanish oil reservoirs located in the western part of the state. In 2008, the U.S. Geological Survey (USGS) estimated that up to 4.3 billion barrels of oil could be recovered from the Bakken Shale, using current technology. That technology uses advanced horizontal drilling techniques that are far more efficient than those used on rigs in the area in the early 1980s.  Future refinements to those techniques could lead to even more oil being extracted than the USGS current estimate. USGS calls the Bakken Shale, which stretches into eastern Montana, the largest continuous oil accumulation it has ever assessed.

The oil and gas lie underneath wheat farms. Wheat is still being produced on the farms, but the land is now dotted with oil rigs. Royalties from oil and gas have turned North Dakota’s wheat farmers into millionaires. There have been other economic benefits as well. The Wall Street Journal (Oct. 4, 2010) reported that 293 banks in the U.S. have failed since Jan. 2008. Not a single one of them was located in North Dakota.

Categories

About the Author: Bonner Cohen, Ph. D.

Bonner Cohen, Ph. D.

Bonner R. Cohen, Ph. D., is a senior policy analyst with CFACT.