Bill could void Bakken oil conditioning and flaring rules

A bill sponsored by nine Republican lawmakers could potentially void North Dakota’s efforts to curb natural gas flaring and the conditioning of Bakken’s sweet crude, according to a report by The Dickinson Press.

Lead sponsor of the bill Rep. Keith Kempenich said that one of the bills is in response to the flaring goals and oil conditioning standards being approved by the Industrial Commission without going through the Legislature’s Administrative Rules Committee. The Dickinson Press reports that Kempenich said, “We need to be involved when they get into that broad of public policy. The Legislature was pretty much left out of the loop as far as what those policies were.” He added that the rules committee would have likely rejected the order to reduce flaring because the goals are “arbitrary.”

That order, adopted July 1, requires oil and gas producers in the Bakken and Three Forks shale formations to capture 77 percent of the gas being released by January 1, 85 percent by January 2016 and 90 percent by October 2020. If operators are unable to meet these goals they would be forced to cut back on production.

Related: North Dakota rig count at lowest level since 2010

These goals, recommended by an industry task force, have already caused some producers to delay well completions. Spokeswoman for the Department of Mineral Resources Alison Ritter said operators will be hard pressed to meet the 2016 reduction goals, but officials have discussed pushing the goals back. The commission allows this flexibility because it isn’t a steadfast rule.

The order for the new oil conditioning standards, aimed to make Bakken crude safer for transport, are scheduled to go into effect April 1. The proposed bill, however, specifies that general orders that weren’t subject to the administrative rules process and were put into place after June 30, 2014 would be void, but not until the law takes effect January 1, 2016.

The orders for both flaring reduction and oil conditioning would be affected by the new law. Since the new law wouldn’t go into effect for another year, the commission would have time to submit the orders to the rules process. The approval process generally takes up to 10 months and requires public notices, comments, hearings and various reviews. Jeff Zent, spokesman for Gov. Jack Dalrymple, said, “What problem is it that needs to be solved? We think the current Industrial Commission is doing a good job, including its work to reduce flaring and to ensure that Bakken oil has limited volatility.”

Another bill that was filed this week aims to expand the state Industrial Commission from three to five members. The new additions would include the Public Service Commission chairperson and the state tax commissioner to the panel. The commission is currently made up of the governor, attorney general and agricultural commissioner. Additionally, Sen. Bill Bowman introduced a resolution calling for an interim study of the Industrial Commission and its membership’s relationships with the oil and gas industry. A recently submitted resolution notes that other states have regulatory boards comprised of industry experts.

To read the original report by The Dickinson Press, click here.

Dalrymple optimistic about upcoming year

Zach Koppang | Shale Plays Media

Despite falling oil prices, North Dakota lawmakers remain optimistic about the state’s infrastructure, its continued growth and the positive impacts of a strong economy.

During yesterday’s State of the State address, Gov. Jack Dalrymple acknowledged the growth the state has experienced over the past 10 years due to the increase in oil drilling activity. “Our economic growth is creating many benefits all across North Dakota. We also know that growth comes with its own challenges, and we remain committed to meeting them head on,” Dalrymple said.

The Bismarck Tribune reports that Republicans have seen the benefits being passed on to the citizens in their districts from Dalrymple’s continued tax cuts, investments in infrastructure and the building of reserves. The Democratic leadership, however, said that although the state’s economy is strong, the needs of the oil patch need to be handled quickly and with confidence. Democrats also said the proposals made by their Republican counterparts to lower income tax rates to zero percent would be harmful to the state.

Although the state’s economy is currently strong, the decline in oil prices will play a major part in how the state legislature plans its budget for the upcoming year. Rep. Todd Porter (R-Mandan), whose district has seen low unemployment and a healthy business climate, said that the revenue projection needs to match actual government spending.

Related: North Dakota Legislative session to get under way

Last month, Dalrymple proposed a budget of $15.72 billion. Of that total, $3 billion is slated to go to building infrastructure across the state. A few hundred million of the proposed budget will be devoted to oil patch projects. Additionally, part of this budget will be used to increase the share of oil tax revenue for cities within the oil patch from 25 percent to 60 percent for two years. He also called for over $400 million in tax cuts, though, proposals made by the legislature are expected to request greater cuts.

In line with the statements made by Porter, Rep. Mark Dosch (R-Bismarck) thinks “one-time spending” will be a major area of disagreement for lawmakers to consider. Due to the decline in oil prices, the level of initial and expedited spending sent to oil patch communities will dictate who receives how much. The rig count of North Dakota has been in steep decline lately and as of Tuesday, the count was down to 169. Though, according to Dosch, the slowdown might offer some communities a sort of reprieve.

The state general fund is limited to receive $300 million in oil revenues while the rest is dedicated to a variety of state funds. The Tribune reports that Senate Minority Leader Mac Schneider (D-Grand Forks) said, “The story of the session has to be the state of the state in decades to come … We have the opportunity to make one-time investments that will benefit long term after the last drop of oil is drawn from the ground.” He also stated that proposals made by Republicans to eliminate income taxes would only perpetuate the revenue decline being caused by declining oil prices.

To read the original report by The Bismarck Tribune, click here.

Fresh financial start list names ND cities and a boomtown

Lydia Gilbertson | Shale Plays Media

Badcredit.org compiled a list of the ten best cities for a fresh financial start this week. Three North Dakota cities and Bakken oil town Billings, Montana all made the list. Badcredit.org gathered data from sources such as the Census Bureau, the Bureau of Labor Statistics, BestPlaces.net and Forbes to create these rankings. Billings, Montana ranked 10th; Grand Forks, North Dakota ranked 7th; Bismarck, North Dakota ranked 4th; and Fargo, North Dakota ranked 3rd.  Billings is cited as an oil boomtown slated to grow exponentially in the near future because of advancements in the shale industry.

The article does not mention oil’s impact on the listed North Dakota cities. However, it is safe to say that much of the economic success in the state is a result of the shale industry in the west and the emerging technology industry in Fargo. The number one spot on the list went to Midland, Texas. Midland is the hometown of former President George W. Bush and has a significant amount of oil development supporting its economy.

Study: Pennsylvania struggles to conserve energy

As good as Pennsylvania has become at producing energy, the state is pretty good at using it, too, according to a new study.

The Keystone State ranks 39th in the country in energy efficiency, according to an analysis released Tuesday by WalletHub.com, a personal finance social website.

Most neighboring states fared better: Ohio ranked 23rd, Maryland finished 25th, New York ranked 2nd, New Jersey ranked 35th and Delaware tied for 15th.

West Virginia finished 42nd in the study.

Vermont turned out to be the most energy-efficient state in the country, while South Carolina is the least energy efficient.

WalletHub used public data to compare home energy efficiency per capita, adjusting for temperature, and car efficiency per driven miles for each of the 48 contiguous states.

Pennsylvania ranked 25th in residential energy efficiency and 42nd in car energy efficiency.

The study found many of the country’s larger states struggle with vehicular efficiency — Texas ranked 44th, consuming about 17 billion gallons of gas each year; Montana ranked 39th; and North Dakota ranked 48th.

“That’s the area that surprised us the most,” WalletHub spokeswoman Jill Gonzalez said.

Some large states performed well with fuel efficiency, particularly California (fifth) and Florida (first) — a testament to investments those states made in carpool lanes and fuel-efficient vehicle programs. Ms. Gonzalez said some of the poorer-performing states could learn from what California and Florida have done to reduce fuel consumption.

Related: Court to hear shale gas challenge

Utah ranked first in terms of residential energy efficiency. Louisiana finished last.

Pennsylvania has many older homes, and they often can be challenging to make energy efficient. Large-scale retrofits are costly, and residents typically avoid those and deal with energy loss.

But Nina Baird, an adjunct professor in the school of architecture at Carnegie Mellon University, said there are steps hoenergy inmeowners can take to reduce energy loss.

“Insulation is probably one of the most cost-effective things someone can do,” Ms. Baird said. She recommended homeowners check the insulation under their roofs, in their attics, in their walls and around their foundation.

Pennsylvania has taken strides to reduce residential energy use, most recently by expanding its Keystone HELP energy-efficient loan program. Launched in 2006, the program has distributed more than 13,000 loans and funded more than $100 million worth of energy-efficient projects. The state recently sold a bulk of those loans to a third party to fund an expansion of the program.

The WalletHub study noted that funding energy-efficient projects is often the biggest barrier to realizing energy savings.

If there is another silver lining for Pennsylvania, it’s this: The state ranks seventh in the nation in the cost of energy, buoyed, no doubt, by Marcellus Shale gas. So while Pennsylvanians use more energy than their peers, they are paying less for it.

Colorado has the least expensive energy, and Mississippi has the most expensive energy, according to the study.

There is good news for all energy consumers — the Energy Information Administration released its winter fuel forecast Tuesday, and the agency expects winter fuel costs will be lower this year than last year. The EIA predicts lower demand will help consumers realize savings of 2 percent to 5 percent for natural gas, 15 percent for heating oil and 11 percent for propane.

While the Energy Information Administration predicts people will save money by using less natural gas, the cost of that fuel is expected to increase.

 

Click here to view the full report from WalletHub.

 

Natural Resource Partners LP makes $340 million Bakken, Three Forks acquisition

Lydia Gilbertson | Shale Plays Media

Natural Resource Partners LP (NRP) announced yesterday in a press release that it will acquire non-operated interests in oil and gas properties in the Bakken and Three Forks shale plays in North Dakota from an affiliate of Kaiser-Francis Oil Company. The $340 million deal affects holdings in the Sanish Field in Mountrail County, currently operated by Whiting Petroleum Company.

Wyatt Hogan, president of NRP, stated in the press release, “This acquisition represents another significant step in our efforts to diversify NRP, and we anticipate that we will derive approximately 25 percent of our 2015 EBITDA from oil and gas.” He sees the addition of the oil and gas interests in the Williston Basin as a way to position NRP to be a “truly diversified natural resource company.”

According to their website, Natural Resource Partners owns and manages mineral reserves across the United States but does not actively engage in mining activities. Instead, NRP leases property to operating companies in exchange for royalty payments. NRP’s headquarters are located in Houston, Texas with its operational headquarters in Huntington, W. Va.

In related news, Vitesse Energy buys up Bakken assets for $186.5 million.

Midland ranked 12th fastest growing city in US

Rye Druzin | Midland Reporter-Telegram (Midland, Texas)

A new report from NerdWallet.com has ranked Midland as the 12th fastest-growing city in the country.

The NerdWallet study of the 506 biggest cities in the country showed that between 2009 and 2013 Midland’s working-age population grew by 10.4 percent while average earnings increased by more than 22 percent. The Tall City outperformed statewide averages of 8.39 percent for working-age population growth and 2.9 percent earnings growth. Midland ranked above Redwood City, California, which has seen increased growth from the burgeoning technology industry in the San Francisco Bay Area.

Midland’s workforce population surpassed 100,000 in July for the first time in its history. While the oil boom spurred on by hydraulic fracturing has brought in thousands of new residents, the city’s infrastructure and community has struggled to keep up with the speed of change. The Lone Star state has seen more than 1.3 million people move into its borders since April 2010, according to the U.S. Census.

Related: CEO calls for oil exports to strengthen U.S. economy

In the NerdWallet.com study, out of the top 20 cities four were in Texas. College Station — home of Texas A&M University — ranks second behind Boulder, Colorado, which experienced a nearly 50 percent increase in average earnings over the 2009-2013 period. The study attributed the growth in income to the city’s growing tech scene.

Within the list of the top 20 fastest-growing cities, only six have more than 100,000 people, and Midland ranked fourth within this group, ahead of Cary, North Carolina and McKinney. Boulder, Ann Arbor, Michigan, and Gainesville, Florida, ranked ahead of the Tall City.

The new figures continue what has been a drastic upward trend for Midland. The city’s median household income is estimated to be around $69,000, according to figures published by Forbes Magazine. This is compared to U.S. Census data that shows the states’ average personal income at $51,500. Forbes also ranked Midland first in the nation for job growth with Odessa following in second place. College Station was ranked eighth on that list.

 

The Three Forks Shale Formation

Next Boom in the Bakken, the Three Forks Formation

threeforksshale1

The Three Forks formation, which exists underneath the notorious Bakken region of North Dakota, is the new frontier of oil exploration in the area.  Although the Bakken formation was initially discovered and tapped for oil in the 1950’s, the underlying Three Forks formation has only been a recent phenomenon in economic consideration. For years, the Three Forks formation was left out of assessments and business plans because of its non-commercial characteristics. This deep layer of rock has low-porosity and low-permeability qualities which made the efforts to extract oil costly. Now within the past decade, the Three Forks shale play is finally displaying promise for entrepreneurs. With new budding technologies and ambitious companies are paving the way to deeper drilling within the Williston Basin, the Three Forks shale formation is sure to be the next favorable play in the world of energy extraction.

Geological Properties

It is important to note the Three Forks shale group is a strati-graphic layer of rock within the Williston Basin. This Basin is not a topographic basin but rather a structural one. At its deepest point, the Williston Basin resides 16000 feet into the ground.

threeforksshale2

Over a period of hundreds of millions of years, this basin was slowly filled in with layers of sediment. The time period of “filling in” in which the Three Forks began its development was around 370 million years ago during the late Devonian system, or more precisely, the Famennian age. Subsidence and basin filling were most intense during Ordovician, Silurian, and Devonian periods. As seen in figure 2, Oceans filled with aquatic life existed where Williston is today and the prairie lands we call home were completely nonexistent. This time period is often referred to as the “Age of Fishes” for good reason. The great Continent known as Gondwana was increasingly headed northbound and a second supercontinent began to form huddled around the Equator. This early unusual continent Known as Laurussia (or Euramerica), was created by the coming together of parts of North America, northern Europe, Russia, and Greenland.

A Mass extinction marked the end of the Devonian period, effecting predominantly shallow warm water marine life and the great coral reefs of that time. This was prime material to help fill the early basin. The oil and gas from the Three Forks formation originated from the remnants of tiny marine florae and organisms called “plankton.” As plankton died, it began to settle on the sea floor where it created a layer of deteriorated organic compounds. This was happening in the Williston Basin 350 to 370 million years ago during the Late Devonian and Early Mississippian Periods. Typically, there are plenty of living organisms on the sea floor that would devour this layer. However, with a great extinction at play and few animals to do so, the organic layer built up on the sea floor. When ocean sediment contains more than 5 percent organic material it eventually forms a rock known as black shale. The color comes from the dark organic matter that it holds.

The Devonian system which exists inside the Williston basin reaches a thickness of 2000 feet near the center of the basin. Aside from the Three Forks formation, this system includes seven other formations, the lower Bakken being one of them. Devonian rock consists predominantly of marine carbonate, evaporate, and shale beds. But more precisely, the Three Forks groups is primarily made up of dolomite, mudstone, and bituminous shale. The Bakken is separated from the underlying Forks with a thin layer of dolomitic sandstone named the Sanish Formation.  Altogether, there are a total of four layers that make up the distinct Three Forks shale group which are commonly referenced as TF1 through TF4.

Discovery & New Tactics

The phrase “Three Forks Shales” was offered in 1893 by geological surveyor and mineralist, Albert C. Peale. He used it to describe rock beds resting on the Jefferson Limestone and underlying the limestone formations in the Madison groupings. The named was derived from the close by town of Three Forks, Montana. The town resides geographically near the point, in neighboring Missouri Headwaters State Park, where the Jefferson, Madison, and Gallatin Rivers converge to form the Missouri River.

Although the rock formation was discovered over 100 years ago, the intent to extract resources from these rocky layers is only a very recent undertaking. Oil drilling in North Dakota’s Bakken started technically back in the 1950’s (with little economic success) but drilling deep enough into the basin to reach the Three Forks layers was yet to be idealized for nearly 60 years. New technologies and tactics within the last five years have made it possible to tap into the potential of the Three Forks formation. This includes multi-stage hydraulic fracturing, and skilled horizontal drilling. Continental Resources claims they were the first to complete a 1,280 long-lateral multi-stage frac in 2007, a horizontal well in the Three Forks zone in 2008, and a paired Middle Bakken and Three Forks well in 2010.

The gigantic obstacle which left the Three Forks highly non-commercial for decades is the formation’s structural properties.  The play has poor porosity which diminishes the capability of gas and oil to flow out of this horizon.  Only now, in the modern era of energy discovery, has technology caught up to the issue. Horizontal drilling of lateral holes joined with hydraulic fracturing has resulted in considerable production from thick formations that suffer from low porosity. Horizontal or directional drilling has revolutionized the way the oil and gas wells are being drilled in the Williston Basin.  Progressions in drilling have shaped the opportunity for longer laterals. The average length of laterals, or horizontal portions of wells, has risen around 5000 feet since 2008.

threeforksshale3

Figure 3. Source:  DTC Energy Group

The reason horizontal drilling is changing the oil and gas business is that a well drilled sideways through a formation containing oil and gas will produce exponentially more than that of a vertical well.

threeforksshale4

A vertical well will only pierce a restricted area of the productive zone, while a well drilled horizontally may penetrate up to 10,000 feet of the same region. This also means that previously tight oil formations such as the Bakken Formation can result in abundant production.

The Bakken/Three Forks plays are over-pressurized systems, which is why wells have such high opening production rates. The elevated pressure in the Bakken implies the oil is contained within the source rock itself. This means the oil remains in place and is secure homogenously throughout the geologic composition.

It is true new rigs and advanced drilling tools have driven up drilling cost in the Bakken. Cost have risen from roughly $40,000/day back in 2008 to about $70,000 in 2013. However, the drastic increase in recovery and shorter drilling times have reduced overall drilling costs substantially.

Furthermore, methods such as pad drilling, which involves drilling several wells from a singular drill site, has also been a major contributor to improving the extraction process. Pad drilling improves well economics, slightly reduces environmental impacts, and cuts down on drilling times. Instead of drill rigs taking days to move from site to site, this technique takes mere hours to move onto another well on the pad. In addition, by cutting the number drill sites, smaller portions of land area at ground level is being disturbed overall.

threeforksshale5

These new advancements in drilling tactics could not have come at a better time. According to the 2013 United States Geological Survey (USGS) assessment on the Bakken/Three Forks plays, there is much more oil under the surface than previously estimated. In 2008, the USGS evaluated the total recoverable oil reserves to 3.6 billion barrels of oil and 1.7 trillion cubic feet of natural gas. Very little data existed on the Three Forks Formation when the USGS ran the numbers back in 2008. At that time, it was generally thought to be unproductive. However, since the 2008 USGS assessment of the Bakken, more than 4,000 wells have been drilled in the Williston Basin, providing updated subsurface geologic data. Therefore, new drilling has resulted in a new perceptive of the reservoir and its resource probability. The newest survey moves the numbers up to 7.38 billion barrels of known recoverable oil and 6.7 trillion cubic feet of undiscovered and technically obtainable natural gas. Of the 7.38 billion barrels of oil, 3.7 billion barrels are to exist within the Three Forks formation alone.  USGS is typically conservative in their estimates so future reports could expand beyond even this.

Today & Tomorrow

According to North Dakota Senator John Hoeven, the updated USGS assessment is a direct outcome of a request he made of the former Interior Secretary to do a second assessment of the Bakken Formation and an original calculation of the Three Forks Formation.

“More than two years ago, I persuaded former Interior Secretary Ken Salazar to initiate a new USGS study of the Williston Basin. This information will help stimulate more private-sector investment in infrastructure like housing, hotels, retail stores and other services to meet the needs of a rapidly growing western North Dakota,” Senator Hoeven stated in 2013.

Hoeven states that his request to Salazar was prompted by reports from companies operating in the Williston Basin. These reports inferred that businesses believed there was considerably more recoverable reserves in the area than the 2008 report reflected.
If the USGS assessment wasn’t groundbreaking enough, another survey of the basin done by Continental Resources displays even more promising numbers of potential production. The current USGS assessment came shortly after the news of Continental’s significant results from a once untapped third layer of the lower Three Forks formation. Continental Resources, one of the leaders in this deeper basin exploration, believes the heaviest reserves are located in lower portions of the Three Forks formation. Continental estimates the Bakken/Three Forks could hold around 903 billion barrels of oil. With their self proclaimed 4 percent expected recovery rate, Continental predicts roughly 36 billion barrels of oil could be recovered in all.

threeforksshale6

 

Only time will tell if Continental’s generous hypothesis will hold true. Nonetheless, the excitement over the newfound numbers and potential of the Three Forks play is something many companies are highly anticipating. A 2013 statement by Goldman Sachs’ researchers claimed 25 percent of the Bakken will generate some sort of productivity from Three Forks levels 2, 3, and 4. As technologies evolve along with these latest deep oil observations, Three Forks has the potential to attract new investors and companies.

As it stands today, The Uppermost layer (Three Forks 1 or TF1) is the only derisked and most productive layer of the Three Forks formation. Nevertheless, some exploration and production has already reached into the lower layers. TF2 for example, is seeing quick development in McKenzie County. Here in the core of the Bakken, thriving wells drilled by Continental Resources, ConocoPhillips, EOG and Oasis Petroleum exist already. Some T3 wells do occur, and although they are much fewer in numbers, they are more geographically spread out, spanning over four different counties. This is a great sign for the Three Forks accessibility as we head further into 2014.

What was once thought to be an unobtainable commodity, the Three Forks play is now becoming a part of an extended production strategy to an area which showed no signs of slowing in the first place. These new oil soaked layers of the Williston Basin are already often referenced right alongside of the Bakken.
“If you look at the Bakken like a layered cake, we’re starting to see how big and wide this cake is,” said Alison Ritter, spokesperson for the Department of Mineral Resources. “What we’re seeing is companies are beginning to experiment with how many layers this cake is going to have.”

threeforksshale7

 

Few could argue the Three Forks formation is not a game changer. In nearly six decades in the making, the Bakken/Three Forks plays are finally probable sources of activity for drillers. Plenty of diligent science,exploration, and most likely, luck have led to this moment in the Williston Basin.

 

The oil boom in North Dakota is an important variable behind population increase in recent years. 10 to 15 years ago, North Dakota was facing the unfortunate reality of losing thousands of residents yearly. Now, the estimated population has grown nearly 50,000 since 2010. It’s presumed that nearly 18,000 people moved into the state last year alone. Since last year’s predictions, the western oil region is also calling for 14,000 more jobs, 14,000 more permanent housing units, and estimates the population will increase by 30,000 in the Bakken/Three Forks counties by 2039. Along with these escalations, systematic sociological consequences have taken root in the Bakken/Three Forks region. Housing, crime, and limited infrastructure are the dreariest social realities facing west North Dakota. On the other hand, North Dakota is experiencing one of the best economic situations in the country and workers’ wages have arguably seen the biggest increase in the State’s history. State government is working with many agencies such as housing developers and banks to implement strategies with hopes of alleviating what is now being called, North Dakota’s “Growing Pains.”

threeforksshale10.

Early Boom

Overall, the state saw population increase of 4.7 percent between 2000 and 2010. However, the positive increases in population were only seen in eleven counties, eight of which rest around or in the Bakken formation. For instance Williston, the hub of the oil boom, exist in Williams County which saw an increase of 13.3 percent. The surrounding counties of Mountrail and McKenzie saw increases of 15.7 percent and 10.9 percent respectively. The same data also showed surprising decreases in 12 of North Dakota’s 17 oil-producing counties. The negative population indexes from other western counties could be an indicator of migration to counties with bigger oil production projects or perhaps more housing options.

threeforksshale11.

Figure 2: Numbers based on U.S. Census Bureau statistics

Modern Numbers

Even after a few years of oil boom craze, exact universally agreed upon numbers of population are still non-existent. Census numbers are skewed based on their collection. With such a fast surge of workers moving into Western North Dakota, and with many of those workers not having a permanent residence at which to reach them, it’s difficult for official Census numbers to keep tally. Up-to-date estimates of population essentially show growth all around for western North Dakota. In particular, the counties which were believed to have significant decreases of population from 2000 to 2010 census data are now growing for the most part. Figure 2 shows the six counties that were estimated to have the largest population decreases from 2000 to 2010 are actually increasing or remaining steady in population. Williston is still growing with a 2012 estimated population of 18,532. This is over a 25 percent increase from the 2010 census. Some 2013 estimates put the population anywhere from 26,000 to 40,000. Williams County overall is estimated to have increased 32 percent since 2010. Other oil hub counties such as Mountrail and McKenzie are also on the rise. Mountrail County’s population is up 22 percent and McKenzie saw the greatest increase with 46.4 percent from 2010 according to the 2013 U.S. Census Bureau estimates.

Jobs

Between 2007 and 2011, employment in oil well producing counties in Montana and North Dakota grew from 77,937 jobs to 105,891 jobs, an increase of 35.9 percent. Of these jobs, 38.1 percent were in mining, quarrying, and oil and gas extraction. Transportation and warehousing claimed 17.5 percent of the growth, and construction accounted for another 12.9 percent. Altogether, these three industry sectors accounted for 68.5 percent of the employment rise in counties with oil-producing wells in the Bakken Formation. The county that homes Williston, Williams County, saw the largest growth in employment with an increase of 12,561 workers from 2007 to 2011. Although this more than doubled the amount of employment in the county, almost 50 percent of the jobs were in mining, quarrying, and oil and gas extraction. Furthermore, from 2007-2011 McKenzie, Mountrail, and Stark counties had the highest portions of their job growth in mining, quarrying, and oil and gas extraction.

Even though the region as a whole experienced substantial growth, a handful of industry sectors experienced employment declines. In particular, health care and social assistance occupations dropped by 1,353 employees from 2007 to 2011. Administrative and waste services had the next major decline, with 727 less workers in 2011 than in 2007. In 2007, mining, oil and gas extraction made up roughly 5 percent of employment in the Bakken region, being beat out by retail trade, health care and social assistance, and government sectors. By 2011, the same sector towered over retail, health care and social assistance, and nearly matched the government sector in employment.

threeforksshale12.

Figure 3. Source: U.S. Bureau of Labor Statistics

 Wages

With such a surge of activity and money moving out west, many businesses increased wages in hopes to retain employees. Places such as McDonalds implemented sign on bonuses and Walmart nearly doubled their average hourly pate rate according to online job searches in the Bakken/Three Forks area. Wages more than doubled in oil-producing counties. The average annual pay for employment in the Bakken/Three Forks region increased from $33,040 to $50,553 for a rise of 53.1 percent. Within these counties, the largest increase of annual pay was seen in the real estate, rental, and leasing industry where average annual pay doubled, increasing from $35,940 in 2007 to $72,355 in 2011. Next in line was the professional and technical service sector which saw an 85 percent increase of $34,950 in 2007 to $64,529 in 2011.

threeforksshale13.

Economic Growth

North Dakota is expected to lead the nation again in fastest job growth for 2014. Many times, the jobs can’t be filled fast enough and come from an array of occupational backgrounds. A primary example is seen in the new national advertising campaign that hopes to draw in blue collar and skilled workers across the nation. The campaign was announced by Lt. Gov. Drew Wrigley and the North Dakota Economic Development Foundation in early 2014. The “Find the Good Life in North Dakota” promotion will use directed promoting and event strategies to attract potential new residents to North Dakota. Set to Launch in May 2014, the campaigns goal is to bring in more than 20,000 people to fill positions ranging from truck drivers to receptionists and pretty much everything in between.

A study Conducted by North Dakota State University found that oil and gas industries supported 60,000 jobs, or 9 percent of the North Dakota workforce, in 2011. In the same year, the industry contributed over $30.4 billion to North Dakota’s economy.

Within the past years of prime Bakken boom, the number of business establishments have seen a substantial rise within North Dakota. According to The United States Census Bureau, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. As shown in figure 4, North Dakota as a whole has seen growth in establishment over the last decade, only dipping during the Recession in 2009 and growing exponentially in 2010-2011. The oil boom has certainly helped build an economic foundation for new jobs in the oil and gas producing sector but has also helped lay the economic foundation for new establishments. New hotels, restaurants, and gas stations have layered once barren land in order to make profit from the incoming oil workers. The North Dakota Petroleum Council stated that in 2011, the oil and gas industry created $7.4 billion in statewide retail sales.

State Revenue

North Dakota oil and gas allocations are collected in two year increments (biennium). The 2013-2015 Biennium period is expected to bring nearly $5.3 billion which is collected by the North Dakota Tax Department. This is a $1.87 billion increase from the previous biennium of 2011-2013. Two tax rates are used for this monetary accumulation. The first is the oil and gas production tax rate which is 5 percent and is expected to bring in nearly $2.29 billion. The oil and gas gross production tax is imposed in place of property taxes on oil and gas producing properties. The second tax rate, which is the oil extraction tax is 6.5 percent. The oil extraction tax is levied on the extraction of oil from the earth and is expected to accumulate almost $3 billion in tax revenue.

Figure 5 depicts the distribution of revenue from the oil and gas taxes. Figure 6 is a more detailed breakdown of the Political subdivisions category of allocation. According to the Office of Management and Budget Director Pam Sharp, North Dakota’s will have a $457 million surplus at the end of the current biennium (2015).

threeforksshale14.

 threeforksshale15.

 Figure 6. Prepared by the Legislative Council staff, Political Subdivision spending

Housing

A National study conducted by Rent Path Inc. in 2013 found that Williston had the highest average rent in the United States. The prices floated around $2,400 per month for a single bedroom apartment. In the same study, Dickinson placed fourth on the list with an average of $1,733 for the same kind of apartment. In context, both of these western North Dakota towns average higher rent than similar apartments in Los Angeles or New York. Williams County, where a two-bedroom apartment averaged only 300 a month prior to the oil boom, now sees prices quadruple that.

North Dakota Governor, Jack Dalrymple, discussed North Dakota’s housing crisis in the 2013 State of the State address. He stated that, “the demand for all types of housing in some communities is rising faster than builders can complete their projects.” But he assured North Dakota that it is just a matter of time until building projects catch up to the demand. To help alleviate issues from the housing calamity, numerous strategies from State Legislatures and the Governor Dalrymple have been implemented. For instance, in exchange for state income tax credits, taxpayers invested in the Housing Incentive Fund which resulted in financing the construction of 739 housing units valued at $104 million.  The latest North Dakota State budget called for more the $15 million in affordable housing projects and delivered $20 million to supply low interest loans developers. Overall, the state will invest $41 million to develop affordable housing in western North Dakota during the current biennium.

Homelessness

The fact is western North Dakota cannot keep up with new housing development. Numerous people make the trip to North Dakota without vital skills for the oil related work, even though there are plenty of jobs to go around, often resulting in homelessness. A local Salvation Army in Western North Dakota started helping some of these people to buy tickets back home instead of adding to the growing homeless population. Still, even if a candidate does land a job, there is absolutely no guarantee for housing. Most motels are booked for weeks at a time, and shelters are more than overrun. Even the lowest of quality motel rooms go for no less than 200 dollars per night. Many personal reports from transplanted oil workers include stories of sleeping in their cars in parking lots or staying in man camps. Several years ago, North Dakota’s homeless population was under 1,000. Now it’s over 2,500. The nearly tripled amount of homeless people in North Dakota could in fact be even larger since the estimates do not account for those living in motels, other people’s homes, or temporary RV’s. In places such as Watford City, one fourth of students enrolled at the K-12 public school were identified as homeless. This exceptionally high number could potentially be the result of children of migrant workers and those who have fallen on hard times with exponentially rising rent prices.

Crime

When the oil boom initially hit Western North Dakota, stories of old-west-styled lawlessness spread throughout the country. Articles about drug trafficking, murder, and large-scale robberies covered every North Dakota newspaper and still do. Its true many crime rates increased, as is typical for any region going through a population growth. Nonetheless, even though portions of eastern North Dakota are growing, many concentrated rates of criminal activity are taking place within the western counties of North Dakota rather than equally statewide. Empirical data suggests that there is a positive correlation between the increase in population and the increase in crimes in the Williston Basin.

The following stats are from an in-depth study by conducted by the North Dakota State and Local Intelligence Center and the Montana all Threat Intelligence Center. The Impact of Population Growth on Law Enforcement in the Williston Basin Region study the facts and perceptions used to determine impact came from census population estimates, survey/needs assessments, Uniform Crime Report data, infrastructure data, and various outside agency data. The statistics’ summations are based on comparing years from 2005 to 2012 within the Bakken region as compared to a control group which is comprised of North Dakota counties that are also experiencing growth or are heavily populated but do not reside in the Williston Basin area.

  • 32 percent increase in reported crime in 2012 from 2005 vs only five percent from the control comparison populous group.
  • Violent crimes (aggravated assault, forcible rape, murder, and robbery) increased 121 percent in the Bakken region since 2005. The comparison populous group increased 98 percent in the same time period.
  • The Williston basin has seen sexual offenders’ registration increase 20 percent since 2010. The populous group saw an increase of 11 percent.
  • According to the Uniform Crime Report data, 10 of the 20 murder/non-negligent manslaughter Incidents in 2012 happened in western North Dakota.
  • Since 2006, vehicle crashes on state/interstate highways has increased 58 percent compared to 7 percent for the populous control group according to Montana Highway Patrol and North Dakota Department of Transportation reports.
  • Fatal crashes increased 72 percent in the Williston Basin since 2006. The control populous group saw a decrease of 21 percent over the same time.

The huge influx of male migration disastrously brought up the amount of rape reports. A woman in Williston is four times more likely to report being raped than a woman in Los Angeles and seven times more likely than a woman in New York City.  Although these comparisons are based on per 100,000 units which are less reliable with smaller population, they do help portray a horrific spike in such cases since 2008.

Police departments have unquestionably felt the criminal consequence of the oil boom. The formerly small town of Watford City saw an exponential increase in police calls, from just 41 calls in 2006 to nearly 4,000 in 2011. Moreover, in 2005, the Williston Police Department received 3,796 calls for service. In 2011, that number grew to 15,954 calls. In 2012, a report from North Dakota State and Local Intelligence Center claimed that 46 percent of officers from agencies in the Williston Basin had no more than 5 years of experience. Furthermore, 37 percent of agencies indicated they were experiencing high turnover rates and 75 percent claimed to be experiencing recruitment issues.  In addition, some law enforcement agencies are finding it difficult to compete with other jobs in the area. A deputy position could start at less than $20 an hour versus an oil field job which averages two to three times that.

Infrastructure

Aside from the ongoing housing crisis, roads, bridges, airports, and even school capacities are all unintended targets of the oil boom. Train rails are congested with unprecedented traffic and streets never intended for constant huge machinery are crumbling. North Dakota Governor, Jack Dalrymple has stated previously that the drastic increase in population is also taking its toll on sewer systems and public water supplies.

The Bakken/Three Forks region has seen a spike in vehicle crashes and fatalities. Many of these could be the consequence of increased rural road travel, reduced visibility due to the dust from the heavy traffic of drilling equipment and trucks, and from deteriorating roads. All of these issues are linked to the integrity of the roads in the Bakken/Three Forks Region.

North Dakota is in an ongoing battle with infrastructure concerns. Big moves in the budget have been the most popular method for alleviating infrastructure problems. According to the state Department of Transportation, the state legislature set aside $2.3 billion out of the current two year fiscal budget for road repairs. An action of distributing $5 million to 49 townships in the form energy impact grants was also put into motion in April 2014. The grants will help complete 55 road projects, expand the McKenzie County Sheriff’s Department, and expand the Mountrail County law enforcement center. As shown in figure 4, a total of $240 million will be allocated through the Oil and Gas impact grant fund. More creative tactics such using oil field-produced water to prevent dust on rural roads has also been thought about and used in counties.

 

 

 

 

 

 

 

 

 

 

North Dakota Energy Infrastructure and Impact Officeis a great source for staying up-to-date with oil and gas impact grant funding in North Dakota. The Office resides within the office of the commissioner of the board of university and school lands. The office provides assistance to political subdivisions through grant to oil and gas development impacted cities, counties, school districts, and other taxing districts.

Impact of Population Growth on Law Enforcement in the Williston Basin Region. Joint study from the Montana All Threat Intelligence Center and the North Dakota State and Local Intelligence Center. A very in-depth, objective report on how population increase has changed the rates of crime in the Bakken/Three Forks region.

North Dakota Petroleum Councilassociation that represents more than 500 companies involved in all aspects of the oil and gas industry including oil and gas production, refining, pipeline, transportation, mineral leasing, consulting, legal work, and oilfield service activities in ND, SD and the Rocky Mountain Region. They host any news and studies relevant to the oil fields in the Williston Basin.

North Dakota State Legislative BranchThe portal to anything and everything going on in the state legislature. This includes budget proposals, financing facts, and tract records of voting from state legislators including the many funding projects that deal with the oil and gas revenues. The site also has detailed oil and gas tax revenue publications that depict how funds are being used.

U.S. Geological SurveyOriginated in 1879, the USGS is a comprehensive resource for United States geological history and formations, maps, knowledge on the health status of our environment,and thenatural resources we rely on. They tract impacts of climate and the changing practices of land use. In addition, the USGS is a great resource for research that is timely, relevant, and understandable by anyone. The USGS serves the Nation by providing reliable scientific information to describe and understand the Earth; minimize loss of life and property from natural disasters; manage water, biological, energy, and mineral resources; and enhance and protect our quality of life.

North Dakota Geological Survey was created by the North Dakota Legislature in 1895. They are the greatest source for North Dakota geological information. Much like the Bigger USGS, the NDGS provides surface and sub-surface maps. They are a great fairly local source of any geographical information on the Williston Basin.

Devonian Period. This is a great informative article from National Geographic. Describes the period in which the Bakken/Three Forks formation started developing in simple and direct terms. Includes general overview of plants animals, and continental shape of the early earth.

United States Census Bureau is the best source for current estimates on population in North Dakota. Information can be accumulated based on state, counties, or towns. The US Census Bureau also contains changing trends in housing prices, businesses, demographics, and monetary income.

North Dakota Crime and Homicide reports. This section of the North Dakota Attorney General’s webpage host crime reports from 1999 to current. The reports are summaries of the Uniform Crime Report data that are relevant to North Dakota. The UCR is official data on crime in the United States published by the Federal Bureau of Investigation. The UCR accumulates statistical information from law enforcement agencies at the county, state, tribal, and federal levels. It also gathers data accumulated by colleges and universities.

2013 U.S. Geological Survey Petroleum Resource Assessment of the Bakken and Three Forks Formations The latest assessment of the Bakken/Three Forks formation. This report was a cooperative effort of multiple industrial, state, and academic agencies. The assessment contains information of how much oil and natural gas is locked in the Bakken/Three Forks formation and gives detailed info graphs of such data.

2013-15 Oil and Gas Tax Revenue Allocation Flowchart  provides information on the estimated distribution of oil and gas tax collections for the 2013-15 biennium as approved by the 2013 North Dakota State Legislative Assembly. A summary of the funds is included in Appendix A, and a more detailed schedule of the distribution of oil and gas gross production tax collections is included in Appendix B.

NDGS Emphasis on the Three Forks Formation Report. The thorough report put together by Stephan Nordeng. He gives geographical location, scientific geological properties of the formation, and a general description of the Three Forks formation during the Devonian period. His informative report also has infographics, charts, and depictions to help better understand the scientific knowledge.

U.S. Energy Information Administration. The EIA is a government agency that collects and analyzes objective, scientific energy information. The agency uses this to promote worthy policy making and to create a greater understanding of energy for the public. Their website is filled with news articles, independent studies, info graphs, and general geographic information broken down by elements of the energy world. This organization deals with anything and everything pertaining to energy.

EIA’s Drilling Productivity Report for tight oil and shale gas. The Latest oil and gas productivity statistics from all the major shale plays in the United States. Years span from 2007 to present. Data includes new-well oil production per rig, rig count, oil and gas production trends, and other statistics which are comparable between shale plays.

EIA’s Bakken drilling productivity report. The latest oil and gas productivity numbers from the Bakken/Three Forks shale play from the U.S. Energy Information Administration. This includes the number of new rigs and the rates of oil and gas production since the beginning of the boom.

Bakken Resources, Inc. is based out of the Williston Basin. The company focuses on acquisition, exploration, exploitation, and development of oil and natural gas properties. They own mineral rights to an estimated 7,200 gross acres and 2,400 net mineral acres of land located about 8 miles southeast of Williston, North Dakota. Their website resources includes well activity from big names such as Continental and Oasis, general geologic education, and more information on who they are and what they wish to accomplish.

Petroleum Marketers Association of America is a federation of 48 state and regional trade associations representing approximately 8,000 independent petroleum marketers nationwide. PMAA holds a collection of articles and information relating to the world of oil.

Consultant confident Broomfield primary will go smoothly

Megan Quinn | The Broomfield Enterprise, Colo.

An outside consultant hired to examine elections-related problems said Broomfield will carry out a smooth primary election, despite having a controversial general election in November.

Broomfield hired the independent elections consultant, SLI Global Solutions, to examine past election problems.

At the City Council meeting Tuesday, SLI gave an initial overview of its ideas and concerns leading up to Broomfield’s June 24 primary election.

SLI’s report states Broomfield’s election processes typically meet state rules and best practices, but Broomfield will have to tighten up regulations on how it sorts and stores ballots, communicate better with the Secretary of State’s Office and update its residency requirements to meet new state laws.

By improving key areas of the elections process, “we have confidence that your staff can provide a good primary election for you,” SLI consultant Al Davidson said.

SLI’s report comes in the wake of the controversial Nov. 5 election, when Question 300, a five-year moratorium on fracking, passed by just 20 votes. That margin was determined after a recount, and the election results were further mired in a number of legal cases, which have all been resolved.

The report stated Broomfield could better handle elections by having stronger lines of communication with the Secretary of State’s Office, especially after questions arose in November about who was eligible to vote on Question 300.

Part of the problem came from confusing new voter registration laws, which changed in May 2013 after House Bill 1303 was passed.

Related: Negotiations continue on Colorado legislation regarding local control over oil and gas operations

The 1303 rule change allowed people who have lived in Colorado for just 22 days to vote in state elections. But Broomfield required 30-day residency to vote on municipal questions, such as Question 300. That led to Broomfield miscounting 10 ballots because of residency mix-ups.

SLI’s report stated Broomfield should now follow a new state rule that standardizes residency requirements, so all voters must live in Colorado for at least 22 days prior to the election.

SLI blamed both Broomfield and the Secretary of State’s Office for residency errors, saying Broomfield should have contacted the office for guidance rather than checking with neighboring communities to see how they were handling residency questions.

SLI said the Secretary of State’s Office should have provided information and guidance on the residency issue much earlier, instead of giving advice in early October, according to the report.

Davidson also pointed out how Broomfield should improve the way it sorts and stores ballots.

In January, Broomfield examined a controversial “anomaly box” that contained 80 items including spoiled, undeliverable or unvoted ballots. The items couldn’t be counted in the Nov. 5 election, because they were returned undeliverable or contained enough mistakes they warranted a voter request for a new ballot.

The anomaly box drew criticism from some who wanted Broomfield to be more transparent about the way it sorted and stored ballots, including those that couldn’t be counted.

Davidson said all future elections materials should be kept in the ballot counting room, and all boxes should be sealed, inventoried and logged in a way that clearly identifies the materials in the boxes and their status.

This isn’t the last time SLI will offer advice and perspective, Davidson said.

SLI plans to observe primary election activities and continue its assessment to make sure future elections are complete and accurate, he said.

Councilman Kevin Jacobs said he is happy with the level of detail in SLI’s initial report.

“If this hadn’t been such a close election, we wouldn’t have looked under the hood,” he said, adding that with outside perspective from SLI, “we do have an opportunity to to adopt best practices.”

Councilman Todd Schumacher said the report is a reminder that Broomfield’s elections process has to be as accurate as possible.

“The process has to be clean, and that does not change our responsibility to run a clear and fair election, whether the margin is three votes or 5,000 votes,” he said.