How Petroleum and Natural Gas Production Affect the People of North Dakota

Bakken Pumpjack Aerial
Bakken Pumpjack Aerial: An aerial view of a pumpjack in Western North Dakota. Photo courtesy of Marathon Oil.
  • The biggest source of energy in the United States is petroleum, which accounts for approximately 35 percent of U.S. energy usage.
    • North Dakota is the second leading oil-producing state in the nation, producing 12 percent of all U.S. oil.
    • North Dakota reached the milestone of 1 million barrels per day in June 2014.
    • Texas and North Dakota are the only states to produce more than 1 million barrels of oil per day.
photo of multiple well pads
Multiple Well Pads: North Dakota Department of Mineral Resources has developers plan well sites along a corridor to disturb as little land as possible. See a stretch of well pads off a single road in this aerial shot. Photo courtesy of Vern Whitten Photography.
  • A typical Bakken well drilled today may produce for 45 years.
    • During that time, it could generate about $20 million net profit; pay approximately $5,000,000 in taxes, and pay $7,800,000 to the mineral owners.
  • North Dakotans benefit in many ways from oil and gas production in the state.
    • Homes, schools, and businesses are heated with natural gas.
    • North Dakotans use petroleum-based products in all phases of everyday life.
    • Each barrel (42 gallons) of petroleum can make about 19 ½ gallons of gasoline.
    • Over half of the remaining petroleum is used to make other products.
Mandan Refinery: Mandan’s refinery began operations in 1954. This two-minute video clip describes how the Bakken oil boom affected refinery operations. Video courtesy of Tesoro Corporation.
  • Because of the oil and gas industry, the economy of North Dakota is boomed between 2008 and 2015.
    • North Dakota was the fastest growing economy of any state in the United States.
      • The economy of North Dakota increased at five times the national average in 2012.
      • Many states were deeply in debt at the time; however, the state of North Dakota had a one billion dollar ($1,000,000,000) budget surplus.
        • Tax revenue from oil and gas production and oil extraction totaled $1.66 billion ($1,660,000,000).
        • Money earned through oil taxes went into the state Legacy Fund, which totaled $4 billion ($4,000,000,000) in 2017. Certain restrictions limit the spending of these funds.
Mandan Refinery
Mandan Refinery: More than 350 people are employed by Tesoro in the Bismarck-Mandan area and western North Dakota. Photo courtesy of Tesoro Corporation.
  • Because oil is a commodity – an important, basic good that is bought and sold on the market – the industry can be greatly affected by prices.
    • Oil prices fell in early 2016 because over-production of oil around the world caused too much supply, and oil wasn’t as in demand as before.
    • Oil prices in July 2008, at the peak of the boom, were $133.48 per barrel. Oil prices in February 2016 were $39.26 per barrel.
    • Because oil companies are using more efficient technology, they are able to keep producing oil, but not as much as they were before prices dropped.
       
  • Even though the oil and gas industry in North Dakota has slowed down, it still provides employment for thousands of people.
    • The unemployment rate in North Dakota is one of the lowest in the nation.
    • About 30,000 people work in the oil fields of western North Dakota.
      • Wages are higher in parts of North Dakota than in most other states.
<span class='figure-reader-id'>Rig WCS</span> Drilling a well requires truckloads of materials. Each new oil well needs about 2,000 truck trips back and forth to the well during the first year. Traffic to additional wells on that pad, after the first well, drops to 850 trips. If pipelines would be in place, this could possibly drop down to 250 truck trips. </div> <span class='figure-archive-id'>Photo courtesy of Wyoming Casing Service.</span><span class='figure-reader-id'>Crossroads</span> The increased truck traffic makes roads in western North Dakota dangerous. Traffic on a main highway in western North Dakota went from 1,400 to 14,000 vehicles per day.
  
 
  • North Dakota’s oil and gas boom also brought challenges.
    • Because of all the workers moving to western North Dakota, there were housing shortages.
      • Some of the workers lived in campers and other temporary housing.
    • Water supplies, sewage systems, and government services are were strained in oil patch regions.
    • There was a shortage of hospitals and doctors because the population has increased.
    • Prices went up on rent, products, and services.
      • Many businesses are having difficulty finding enough workers because of the low unemployment rate.
Rig Floor Operators
Rig Floor Operators: Rig floor operators (also known as roustabouts) handle operations on a drilling rig. Photo courtesy of Whiting Petroleum.
  • In spite of the challenges, the increase in the oil and gas industry has opened up career opportunities for young people in North Dakota.
    • By the year 2020, the state could see a peak of 100,000 well-paying jobs related to the oil and gas industry.
      • The oil and gas industry offers a higher average industry wage at every level, compared with all other industries.
      • Energy courses and training programs are offered at several North Dakota colleges and universities including those at Bismarck, Minot, Fort Yates, Devils Lake, Wahpeton, Fargo, Grand Forks, and Williston.
      • Drilling new oil wells, building pipelines, constructing housing, and creating more businesses will continue to bring opportunities to the people of North Dakota far into the future.