North Dakota oil boom
The North Dakota oil boom is an ongoing period of rapidly expanding oil extraction from the Bakken formation in the state of North Dakota that followed the discovery of Parshall Oil Field in 2006, and is continuing as of 2013. Despite the 2008–2012 global financial crisis, the oil boom has resulted in enough jobs to give North Dakota the lowest unemployment rate in the United States. The boom has given the state of North Dakota, a state with a 2013 population of about 725,000, a billion-dollar budget surplus. North Dakota, which ranked 38th in per capita gross domestic product (GDP) in 2001, rose steadily with the Bakken boom, and now has per capita GDP 29% above the national average.
There are three reasons for the oil boom, not just in North Dakota but nationwide:
- the recent discoveries of shale gas reserves in the United States
- initiatives to seek independence from unstable energy sources, such as Venezuela and nations in the Middle East
- the successful use of horizontal drilling and hydraulic fracturing, which have made energy deposits recoverable
The leases expire after their primary term, commonly three to five years, unless the lessee oil company drills and starts producing, in which case the leases continue as long as oil and gas are continually produced. Expiring leases result in a push to commence drilling and production on as many as possible before they expire.
By 2012, income from oil royalties was reportedly paying many local mineral owners $50,000 to $60,000 per month, and some more than $100,000 per month. An economist estimated that the boom was creating 2,000 millionaires per year in North Dakota. The average income in Mountrail County has more than doubled since the boom started, to $52,027 in 2010, putting it into the top 100 richest counties in the United States.
The number of actively-drilling rigs in North Dakota peaked at 217 rigs in Spring 2012, with the rig count averaging 180-190 throughout 2013. Each of the rigs is estimated to create roughly 125 new full-time jobs. This means a total growth of around 25,000 jobs, including an extra 10,000 jobs for workers who lay pipes to producing wells and produce processing plants. Some estimates predict that North Dakota could have as many as 48,000 new wells, with drilling taking place over the next two to three decades.
The Bakken boom has propelled North Dakota into the top ranks of oil-producing states. As recently as 2007, North Dakota ranked 8th among the states in oil production. In 2008 the state overtook Wyoming and New Mexico; in 2009 it outproduced Louisiana and Oklahoma. North Dakota surpassed California in oil production in December 2011, then in March 2012 overtook Alaska, to become the number two oil-producing state in the country, exceeded only by Texas.
The North Dakota state government receives through severance taxes 11.5 percent of the gross value of all oil produced. The boom has given the state of North Dakota a billion-dollar budget surplus.
In addition to severance taxes, the state of North Dakota owns extensive mineral rights, which are leased by competitive bidding. In fiscal year 2010, the State Land Department reported that mineral income on its land earned $265 million for the North Dakota school trust fund, and that the trust fund had grown to $1.3 billion.
The federal government is also a major owner of mineral rights in the region, and leases the rights to companies in competitive bidding. In a January 2013 federal lease sale, the top bid was $19,500 per acre for a lease on one tract in North Dakota. Of the lease sale and royalties from the federal tracts, the federal government keeps 52 percent, and passes 48 percent on to the state of North Dakota.
Social and infrastructure effects
The industrialization and population boom has put a strain on road, water supplies, sewage systems, and government services of the small towns and ranches in the area. Some counties have increased in population by almost double from 20,000 to 40,000 people. The boom has brought with it increases in crime and social problems. The addition of thousands of oil workers has led to a housing shortage, requiring the construction of camps for housing them. As a result, law enforcement agencies report sharp increases in offences, particularly violent crime, drug trafficking, gun crimes and prostitution. These patterns are similar to those found in other regions where energy industry workers have taken up temporary jobs. A 2012 report indicated that conditions were improving. As of October 2013, the FBI's Project Safe Bakken had stationed additional full-time agents in the area.
- Bakken formation
- Peak oil
- The Overnighters, a documentary film about workers in the North Dakota oil boom
- Marcellus natural gas trend
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