Great Plains Bakken Riches Describe New Wealth, New Risk

scott-rig-at-night

GLENDIVE, MT — Myrna Quale and Laura Glueckert own and manage  The Enchanted Room here in this Dawson County town of 4,700 residents close by the border with North Dakota. In the last nine months, they said in an interview, business in their W. Towne Street fabric and floral gifts store has picked up 15 to 20  percent, “and we had a good business to start with,” said Quale.

“I view it as a positive thing,” added Glueckert. “We’ve basically been living in a very conservative mindset where the economy has been stressed. You learn to live that way. Now people are coming in with some capital. They’re easing up and spending more because they have better paying jobs.”

Two blocks away Louise Rittal, for over a decade the county registrar of deeds, was being swarmed by oil and gas landmen scouring the files for mineral lease opportunities. On the day I visited earlier this month, Rittal had already recorded 14 new leases. From June to early December, she’d recorded 375 leases. All of last year she booked 115 during the same time period, she said.

“It’s coming this way,” said Rittal, referring to the oil and gas drilling rigs heading south and west from Williston, N.D., 100 miles away and the center of the big boom in northern Great Plains energy development. “We’ve had an average of eight landmen a day searching for mineral rights owners. You can see the increase in traffic. Oil workers can’t find a place to live in Sydney or Williston, so they are moving into the local RV spots and trailer courts. You can’t find a rental because they’re all taken.”

Last week, in a series of posts linked just below, I reported on the overwhelming scale and speed of the oil and gas energy surge occurring in the United States. The boom has produced roughly 200,000 new jobs since 2005, new employment in high-paying work that came while the nation was losing 2.5 million jobs during the same period, according to EMSI, a labor market research group in Moscow, Idaho.

Oil and gas drilling has transformed North Dakota into the fifth fastest growing state in the nation, according to Census Bureau figures released this month. The energy sector is spending roughly $100 billion to explore, develop, process, and transport what writer and activist Bill McKibben calls “extreme energy” — the tar sands, shale oil and shale gas, mountaintop coal mining, and deep ocean drilling that is producing big scars on the land and bigger threats to the water.

In North Dakota’s Bakken Oil Field, The Smell of Diesel, the Sound of Trucks

Boom in Bakken Oil Play, and Elsewhere Starting to Drive U.S. Economy

Bakken Oil Wells Surround North Dakota National Park

Is American Energy Exploration and Production Breaking the Great Recession?

Bakken and Other Big Oil and Gas Plays Produced 600,000 New Jobs Since 2005

Great Plains Bakken Riches Describe New Wealth, New Risks

North Dakota Oil Boom Like Air Ambulance Flying In Storm

How Long Will North Dakota Bakken Oil Surge Last? Decades Due To China

What’s both remarkable and deeply troubling about the mammoth scale of the fossil fuel surge in North Dakota is that it’s 1) rolling at roughly the same pace and scale in a dozen other states, 2) steadily increasing levels of domestic oil and gas production and reducing the levels of imported oil, 3) overwhelming the nation’s capacity to inspire the development of cleaner energy sources, and 4) putting the urgency of responding to the economic threat of peak oil on the back burner for at least another generation.

For these reasons I describe the surge as a reprieve and a capitulation to the future.

How so? For one, the oil and gas surge is producing jobs at a scale unmatched now by any other industry and that’s helping working people all over the country who are participating.  Second, it’s reducing security risks posed by importing oil from nations that hate us and curtailing the flow of capital out of the country. In an era of hard times, when it seems like America can do nothing right, this swelling new treasure chest of fuel indicates we certainly know how to find and develop energy reserves.

But the boom also is strengthening the political influence of the energy sector and its allies in state legislatures and Congress, Democrats and Republicans. It’s putting more pressure on regulators to loosen health and environmental safeguards in order to speed development of energy fields and the factories being put online all over the country that produce development-related products and materials.

It’s causing serious damage to the land and waters. And it’s diverted the nation’s attention from the more promising and sustainable energy future. New forms of cellulosic fuel have been slow to reach the market. There are big questions about the mass market appeal of electric and hybrid vehicles. The solar industry boasts that this year it put 1,000 megawatts or one gigawatt of new generating power online. But that is just one thousandth of the 1,000 gigawatts of electricity that the nation uses each year.

The wind industry will put about 5 gigawatts online this year, and has more than 80 new projects under construction nationally, according to the American Wind Energy Association. China, in contrast, will put 20 gigawatts of wind energy online this year.

The U.S. is losing the global race to the $2 trillion to $3 trillion clean energy future. So when this latest gout of fossil fuel ends in 20 or 30 years, what shape will the the U.S. be in then? And how much warmer will the planet be?

— Keith Schneider

North Dakota Bakken drill site construction

Bakken and Other Big Oil and Gas Plays Produced 200,000 New Jobs Since 2005

ron-ivory

WILLISTON, N.D. — A pad of ice four inches thick greeted Ron Ivory on a clear and cold December morning at the busy water depot south of town. Ivory is 47 years old, a stocky and bearded truck driver from Vernal, Utah, with 23 years in the business. He’s been in North Dakota two weeks, working 14 hour days and earning $25 an hour hauling fresh water, 130 barrels a load, to oil production sites.

One of the reasons that North Dakota and the other big U.S. shale energy fields have generated so many new jobs is because extracting  gas and oil from solid rock two miles deep is as close as man has gotten to really drawing blood from a stone.

It takes a lot of water, millions of gallons per well, to perform the operation known as hydraulic fracturing, or “fracking.” The typical well receives 300 to 400 tanker loads of heated fresh water that is mixed with sand, solvents, and other chemicals and then pumped down 10,000-foot well bores at pressures eclipsing 7,000 pounds per square inch. Coupled with explosives and other evolving production practices, the water cannon-shot pulverizes the shale, opening spaces in the rock through which oil and gas flows.North Dakota water depoit ron-ivory-with-pipe

Thirty-five fracking crews work day and night in North Dakota now, and there are likely to be 45 next year. Some 100 to 150 jobs are connected to a frack crew, according to the state Oil and Gas Commission. Some of those jobs involve operating the powerful fracking pumps. The rest are connected with transporting water from pumping stations, known as depots in North Dakota.  There are dozens of depots scattered across the territory and the roads of western North Dakota are jammed with thousands of water tanker trucks.

“Everybody is up here to make money,” said Ivory (see pix above), adding that he anticipated that his next paycheck would have a 4 followed by three zeros. “That’s the game here.”

In a series of ModeShift posts this week I’ve described the accelerating pace and mammoth dimensions of the nation’s oil and gas boom, and steadily closed in on a firm answer to this question: How much influence has it exerted on the American economy?

Today, with the help of a new analysis prepared for ModeShift by Economic Modeling Specialists, Inc., an 11-year-old labor market research firm based in Moscow, Idaho, we’ve reached a clear conclusion.

Since 2005, the oil and gas boom has been one of the most important sources of new jobs in the United States.updated-oilchart

EMSI’s findings are based on federal Department of Labor and Department of Commerce data.

In addition, “production of oil and gas requires all sorts of inputs, from pipe, pumps and transport equipment to engineering, business, and legal services.  At each step, wages, taxes, and property incomes are generated and the associated spending creates multiplier effects,” said Henry Robison, the firm’s chief economist.  “Using traditional economic modeling techniques, EMSI estimates that for every oil and gas sector job, another 2 jobs are generated in support and other affected industries through multiplier effects.”

Bottom line: The 187, 000 oil and gas production jobs are generating 400,000 more jobs in related industry, service, and product sectors like tanker, pipe, and gas turbine manufacturing, construction equipment, real estate construction and the like.

One other point. EMSI found that the roughly 600,000 new oil and gas sector jobs generate an annual payroll of nearly $38 billion.

“Combine this with significant property incomes, taxes and royalty payments and one gets a picture of an industry growing not only in employment terms but also in terms of its effects on the nation’s gross domestic product, and its local, state, and federal government revenues.”

“It’s certainly stunning and noteworthy,” Robison concluded. “I don’t think the public is aware of this. You hear about the windmills and solar power initiatives. But this is striking.”

— Keith Schneider

North Dakota oil patch water-trucks

Is American Energy Exploration and Production Breaking the Great Recession?

North Dakota Bakken drill-rig1WILLISTON, ND — The Saturday morning earlier this month that Scott Terrell and I had breakfast at Gramma Sharon’s Family Restaurant, every seat was taken by roughnecks and drivers fueling up before heading out to work this state’s giant oil patch. The line of customers waiting to pay their bills was so long I did something I rarely do on reporting trips. I left cash on the table and utterly violated the ethos expressed on the hand lettered sign next to the cash register.

It said in plaintive neat cursive: “Please be patient. We are short staffed every day.”

Since the collapse of Lehman Brothers in 2008 the national background music of America’s hard recession has been the persistent lament of earnest adults unable to find work where they live. Largely missed was another soundtrack of energy-related job growth and economic activity. It steadily built into such a rumbling crescendo that the bang-bang-bang of hammer on steel is finally being heard in every corner of the country.

There’s more work in the oil fields of the northern Great Plains, Texas, Pennsylvania, Ohio, California, Colorado, Kansas, Utah, and Wyoming than there are people to do it. And almost all of it pays really well.

Scott Terrell, who turns 58 the day after Christmas, heard it. Terrell is a carpenter and painter from Coeur d’Alene, Idaho. He solved a nagging problem of underemployment in his craft in Idaho by heading across Montana and washing up on the shores of North Dakota’s riotous oil and gas boom, which has generated 45,000 new jobs. He very quickly gained work with a friend’s company driving a heavy Volvo haul truck involved in earth moving activities. He makes $20 an hour working 70 to 84 hours a week. That’s $1,600 or $1,700 a week, good money in a down economy in Idaho.

Like almost everyone you talk to, it’s not the adventure, the calling, the national moment that has attracted men here. It’s the money. “Work those many hours. I tell you I’m worn out,” Terrell said. “It’s just chaotic, every day. It’s cold. It can be dangerous. I’m away from my wife. It’s a whole different outlook from what anybody is used to.”

The surge of jobs and oil also is completely altering the economic and demographic geography of North Dakota. There are 59,000 more jobs in the state than there were before the boom. The U.S. Census reported today that North Dakota’s population surged to almost 684,000, more than at any time since the 1930s. The agency also reported that North Dakota, once described by native born journalist Eric Sevareid as a “blank spot on the nation’s mind,” is now the fifth fastest growing state in the nation. From 2000 to 2010 it ranked 37th.

The other four fastest growing states – Texas, Utah, Alaska, and Colorado — also are experiencing big energy production booms and associated job growth.

The torrent of oil-related money, nearly $20 billion annually now in this state alone, is the leading edge of an estimated $100 billion-plus annual capital investment nationally by the energy, pipeline, refining, chemicals, transportation, and related services sectors that economists say appears to be leading the country out of the recession.

Today I interviewed Mark Perry, an economics professor at the University of Michigan in Flint, a resident scholar at the American Enterprise Institute, and one of the few economists who’s viewing the oil boom from a national perspective. I asked him whether the oil and gas surge in North Dakota and a dozen more states can account for at least a portion of the drop announced today in unemployment claims, and the rise in leading economic indicators. Perry said that seemed like the case.

He then pointed out a December 15 report by PricewaterhouseCoopers on the influence of the shale gas sector on American manufacturing.

That study reports that 17 major American manufacturers told the Securities and Exchange Commission this year that natural gas abundance is dramatically changing their strategic outlook. Low prices for natural gas are expected to “spark a U.S. manufacturing renaissance over the next few years,” said the PWC study, “boosting revenue and driving job creation.” The firm estimates the shale gas boom alone “could lead to approximately 1 million more manufacturing jobs by 2025.”

That renaissance looks to be in nearly full swing already. In Ohio, where the Utica Shale is starting to yield big finds of oil and gas, Vallourec, the big French pipe maker, is building a $707 million manufacturing facility in Youngstown, Ohio that has begun to employ a staff that is expected to grow to 450 workers. Mac Trailer in Kent Ohio is opening a facility to manufacture tanker trailers to haul liquids involved in hydrofracturing in the Ohio and Pennsylvania gas fields. It will eventually employ 250 workers.

Republic steel is opening a new furnace in Lorain, Ohio to manufacture steel pipe. US Steel is spending $95 million to expand one of its Ohio plants to meet demand from the gas and oil fields of the mid-Atlantic. Big chemical manufacturers are building new gas-to-liquids processing and chemical manufacturing plants in Louisiana and Texas. Truck and heavy equipment manufacturers, led by Illinois-based Caterpillar, are reporting big surges in demand for their rigs.

Here in North Dakota, Tesoro is expanding its refinery west of Bismarck and this year added 40 new workers to its staff. The regional utility is preparing to build a new gas-fired electrical generating station. Pipeline construction is occurring at a frantic pace. Burlington Northern is buying new tanker cars to haul oil to refineries in Washington State, Oklahoma, and Texas.

To gain perspective on just how powerful the energy rush is in North Dakota, just stand for a few minutes at any place alongside U.S. route 85 north or south of Williston. Semis hauling heavy equipment, pipe, water, fuel, oil, rigging, and any number of other loads roll past, an unyielding train of oil field gear and supplies and products. And in the spaces where there aren’t semis, there are pickups hauling men back and forth to the drill sites.

Five years ago, say townies, U.S. 85 in early December was as quiet as a dance floor on Tuesday morning. The resident population grew older, more bent, and steadily less numerous. Western North Dakota’s small towns were receding like shallow lakes in the desert.

Now people are predicting with perfectly straight faces that Williston, where less than 13,000 people lived at the turn of the 21st century, and now is estimated at somewhere around 20,000, could reach 50,000 in the next decade or so, maybe 100,000 — just like Midland, Texas.

— Keith Schneider

North Dakota oil field double-flares

Bakken Oil Wells Surround North Dakota National Park

Roosevelt National Park

MEDORA, ND — Buck Hill is one of the tallest points in Theodore Roosevelt National Park, which spreads across more than 70,000 acres of grass and tight canyons where North Dakota meets South Dakota and Montana. Several weeks ago Valerie Naylor, the park superintendent, hiked to the summit and counted six oil drilling platforms within eyesight.

In the next few months more rigs will surround the park’s boundaries. With them will come open waste pits full of toxic drilling muds and liquids lifted out of the two-mile-long drill bores. There are roads and drill pads scraped from the grasslands, diesel trucks by the hundreds, and plenty of men. When I interviewed her earlier this month Naylor delicately described the new steel towers, bright lights, gas flares, and guttural sounds of the oil boom gathering at the park’s perimeter as “an intrusion in the national park experience.”North Dakota bison

That, of course, is like describing the head-on collision between a semi and a Volkswagen as a course correction that went unheeded.

About five years ago, the Department of Energy issued a projection for energy demand that predicted the United States would need to produce 40 percent more energy by 2050 to sustain the life of choice and mobility that Americans have come to expect. More than a year ago, in remarks to a gathering of Congressional staffers, journalists, researchers, and non-profit leaders in Washington, I noted that achieving that increase — which amounts to nearly 3 billion more barrels of oil annually, 400 gigawatts of electricity, 400 million metric tons of coal, 9 trillion cubic feet of natural gas — may be possible. But getting there would produce lasting scars on the land, reckless damage to rivers and lakes, more air pollution and climate changing gases, and incalculable risks to forests, grasslands, and America’s wild places.

Such consequences, while discouraging to conservation-minded Americans, also aren’t much of an impediment to a nation that consumes almost a quarter of the Earth’s available oil, heats and cools its homes to an even 70 degrees Fahrenheit, and is learning here in North Dakota and a dozen other states just how many good paying jobs are connected to the most massive energy exploration and production surge in U.S. history.

So the oil wells are advancing across a rugged and magnificent landscape that spoke so powerfully to Teddy Roosevelt that he established a ranch north of Medora in the late 19th century, developed a conservation ethic matched in the 20th century only by Interior Secretary Stewart L. Udall, and later wrote that “I never would have been president if it had not been for my experiences in North Dakota.”

Fortunately, drilling will not occur inside the park, which is home to cougars and a wild bison herd. (See pix above). U.S. National Park Service policy forbids oil and gas exploration in any national park, so all production activities are occurring beyond the park’s boundaries.

The same can’t be said for the Dakota Prairie National Grasslands, a 1.259 million-acre stretch of wildlands in southwest North Dakota and northern South Dakota. The grasslands are administered by the U.S. Department of Agriculture, which is busy leasing federal minerals and preparing permits for at least 90 drill sites. Federal land managers hold operators to more rigorous production practices than state regulators.

But the phalanx of industrial equipment required to wrest oil and gas from the deep shale here is utterly rearranging the big sky  landscape. Until the oil surge, this part of North Dakota — and for miles and miles extending south, west, north, and east — was so undisturbed, and so thinly populated, that East Coast academics Deborah and Frank Popper, in a famous 1987 essay, proposed to populate the region with bison and other hooved creatures and re-establish the center of the country as a national “buffalo commons.”

That idea is off the table now, and will remain so for generations. The Bakken formation in North Dakota and Montana, and its related Three Forks and Tyler shales in North Dakota, Montana, South Dakota and Wyoming are said by geologists to contain nearly 30 billion barrels of recoverable oil. Landmen, the advance guard of the industry, are swarming county clerk offices to lock up private mineral leases. Drilling rigs are poised to advance into South Dakota in the spring.

Another deep shale layer, the Niobrara, extends from northeastern Colorado into Wyoming. Early production reports indicate that the Niobrara, which looks to be nearly as big and productive as the Bakken, is capable of yielding 500 to 1,200 barrels per well per day.

In Utah, oil and gas production is occurring with accelerating urgency in the shale of the Uinta basin in the state’s northeast region. In Oklahoma, exploration and production is picking up in the Granite Wash region, and the Anadarko. Kansas is seeing new drilling activity. The old Permian Basin of west Texas and southern New Mexico is being reworked with new technology. And  there are nearly 200 drilling rigs, almost as many as operate here in North Dakota, that are actively developing the Eagle Ford shale in southeast Texas.

And this is just a partial list. Texas also has big natural gas plays in the Barnett and Haynesville shale, which extends into Louisiana. The Utica shale in Ohio looks to be a big oil and gas producer. And the Marcellus shale in Pennsylvania is turning that state into a major natural gas producer that could also see a revival of big chemical and steel manufacturing plants because of the competitive cost of energy.

Economic Modeling Specialists, Inc., an 11-year-old analysis and research firm based in Moscow, Idaho, just completed a study of the fastest growing job sectors in the United States from 2007 to 2011. Using federal Bureau of Economic Analysis and Bureau of Labor Statistics data, the 50-member firm found that three of the top five fastest growing jobs, and nine of the top 15, were related to the oil and gas boom occurring nationally. The study also points out that the new jobs pay well, which accounts for the wave of population growth in North Dakota, a state that had been losing people for decades.

nd-national-park1

— Keith Schneider

Boom in Bakken Oil Play, and Elsewhere Starting to Drive U.S. Economy

Jon Moore-and-Rick Harding North Bakota Bakken 2011

WILLISTON, ND — After dark beyond Williston’s last lit living room, and heading east on state highway 1804, North Dakota’s landscape turns alien. Steel towers of active oil drilling rigs, flooded by lights as bright as a sports stadium, flank every steep rise. The orange flare gas fires, like 20-foot birthday flames, break the pitch dark of every plunge into deep valleys. The sound of ceaseless prairie winds, and big trucks hauling water and drilling wastes and metal pipes is the theme music of what seems almost certain to become the biggest onshore American oil field ever.

A lot is at stake here for the nation, for this region, and for the 45,000 people, most of them men who’ve come from every corner of America to find work. Last August Jon Moore and Rick Harding migrated over from their home town in Sandpoint, a small resort city in northern Idaho. They are both 26 years old, unmarried, and have partners back home with young children. They also are ambitious.

Within days of landing in Williston they secured good jobs paying $60,000 to manage nine freshwater pumping stations for tanker trucks hauling water to drilling sites. In January Moore and Harding plan to bring their families to the mobile homes they rent, perched side by side at the top of a big hill overlooking highway 1804 and the Red Mike Valley. In the distance, two drilling rigs are visible. (See pix at bottom). The valley is a target of energy companies. Mineral leases have been sold for $10,000 an acre. Moore and Harding, high school graduates with a few college credits, see opportunity to become executives and investors in the shale oil energy surge that began in 2006, really got rolling in 2008, and now is an economic cyclone that has engulfed western North Dakota and shows signs of turning south and west into South Dakota, Montana, Wyoming and Colorado.

“I think I’m here for awhile,” Moore told me earlier this month. (See him on left in pix above.) “Back home there was just nothing going on. We heard about North Dakota and came over to get jobs. It’s working out real well.”

There is good reason for the American left to be nervous about the oil and gas boom unfolding on the northern Great Plains, and in almost a dozen other states. The gas and oil industry has generated 600,000 new jobs in the United States since 2002, according to a new study by IHS Global Insight, a respected energy research group. North Dakota has produced 59,000 new jobs since 2005, according to the U.S. Census Bureau, at least 35,000 of them oilfield related. The state produces 500,000 barrels of oil a day worth $45 million at current market prices, and oil and gas production generates $4.5 million a day in state tax revenue, according to the state Oil and Gas Commission.

The all-too-brief contest from 2008 to 2010 between “drill baby drill” and clean energy is a rout. The oil and gas industry is spending $100 billion a year now in the U.S. and Canada to drill, process, and transport liquid fuels and natural gas from new energy fields. Nearly $20 billion annually is being spent in North Dakota alone to drill 2,000  wells a year, and undertake all of the related service and infrastructure development. There are two proposals for new refineries here. Enbridge, the Canadian transport company, is planning a $145 million expansion to its oil pipeline network here. Burlington Northern is building prairie depots to load oil aboard unit trains that transport 100,000 barrels a day to the Gulf Coast.

Last year, in contrast, the Pew Environmental Group reported that spending on clean energy technologies in the entire U.S. was $18.6 billion. Wind turbine and blade manufacturers are in trouble. Solar companies are closing. Federal interest in clean energy development subsidies is fading. America seems to be heading back to the future, clearly ready to embrace a profligate new era of petroleum and natural gas abundance while forsaking the innovation, jobs, and wealth that China already is developing in its clean energy sectors.

Moore and Harding understand the shifting economics of energy production. They worry about the damage to the landscape that comes with thousands of drill pads scraped from the prairie and miles of new roads and pipeline corridors. Migratory birds die in the toxic waste pits that accompany the drilling, an outcome that the US Fish and Wildlife Service is addressing with high profile prosecutions here. The state has counted over 1,000 oilfield related spills of fuel, oil, saltwater, and waste, five times higher than the number of spills in 2004. Traffic deaths this year are double what they were in 2010, and injuries are 40 percent higher than in 2010, according to the state police. A bad drilling pad explosion and fire in September killed two young workers and burned two others. Emergency medical and ambulance crews describe in published reports how picking up the pieces on the drill sites, highways, and man camps that have sprung up everywhere is like treating the wounded in a war zone.

Still, young men come because there are good jobs that pay very well in a growing sector that also has geopolitical consequence. “This is energy that we produce here,” said Harding. “We’re not sending dollars out of the country.”

red-mike-oil-well

— Keith Schneider