Oil Boom has “staying power,” experts say

Western North Dakota has had its share of oil booms and busts, but the most recent oil boom appears to have “staying power,” according to state and industry leaders.

Chart courtesy of Shale Projection Webinar Series
Chart courtesy of Shale Projection Webinar Series

By Eddie Hibbs III
ehibbs@countrymedia.net
Posted July 5, 2013

Western North Dakota has had its share of oil booms and busts, but the most recent oil boom appears to have “staying power,” according to state and industry leaders.
An initiative of the Strom Center for Entrepreneurship and Innovation at Dickinson State University, a series of Shale Projection Webinars were conducted in recent months in western North Dakota. Lynn Helms, head of the N.D.  Department of Mineral Resources, was a lead analyst in the webinar as were Dean Bangsund and Dr. Nancy Hodur, NDSU.
In 1952, North Dakota’s oil production measured at 3 million barrels, with the bulk of the production in Williams County. The state’s first boom took place eight years later and lasted eight years. The bulk of the new production took place in two counties: Bottineau and Stark. Oil production peaked during the initial boom in 1967 with approximately 27 million barrels. The “boom,” however, didn’t last and during the next seven years, production slid to near 21 million barrels in 1974.
A second “boom” took place starting in 1975, but exploded from 1978 to 1983, crossing the 50 million barrel plateau in 1983. The bulk of the new oil production took place in McKenzie and Billing counties. The five-year growth in the state’s oil production was followed by 10 years of falling production, dipping to less than 30 million barrels in 1994.
A small bump in oil production, largely in part to production in Bowman and Stark counties, reversed the downward trend for four years. Oil production had a slight dip from 1996 to 2003. Since then, it has been game on with oil production reaching 80 million barrels in 2009 for the first time in the state’s history.

Dunn County Housing Projections
According to information released during the same webinar, Dunn County had 2,220 permanent “houses” for a population of 3,780 in 2012. In 14 years, both numbers will nearly double. By 2020, the permanent housing in Dunn County is projected at 3,180 for a permanent population of 5,440 (a 4.4 annual percent growth from 2012 to 2020). In 2036, permanent housing projections for the county are listed at 4,090 for a permanent population of 6,990 (a 1.6 percent annual growth from 2020 to 2036).
The analysts for the webinar also stated the numbers reflect the first comprehensive projection of employment, housing and population and is the likely scenario for the future, but is not a precise prediction. They added, “This boom is much longer-lived than the 80s boom.”
The webinars were conducted in an effort to help provide community leaders across western North Dakota information to base local decisions. The analysts offered the following thoughts to local decision making:
If community leaders are too cautious:
• Your community will under-invest in public infrastructure and private development;
• Your community will fall short of maximizing the number of workers, new residents, and economic activity;
• A cautious region will have short-term crowding out of secondary spending; and
• Long-term without enough temporary housing, oil workers may crowd out others and other sectors will lose.
If community leaders are too aggressive:
Over-investment in public infrastructure and private investments could lead to bankruptcy and/or higher taxes for residents left holding the bag.

Wild Cards to the Future
The future looks promising for sustained Bakken/Three Forks development, but there are some wild cards in play. For instance, a BLM Hydraulic Fracturing rule could double federal drilling permit approval time or worse. A draft EPA guidance on diesel fuel in hydraulic fracturing could triple drilling permit approval time or worse. The current administration budget contains tax changes that reduce drilling capital 35 to 50 percent. World and U.S. economies continue to struggle. If China joins the downward spiral, oil price could fall enough to make some areas uneconomical.


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