North Dakota’s hunt for black gold
North Dakota’s oil boom: How long will the black gold flow?
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Home on the range: Where the donkey heads roam
WILLISTON, N.D.– The Great Plains – where the donkeys now roam.
These donkey heads pump oil from rock formations deep beneath the ground, and the rigs are spreading fast.
The rural countryside of northwest North Dakota is in the midst of an oil boom larger than any this state – and most other states – have ever seen. But new technology is making new reserves accessible elsewhere and states can learn from the political and economic debates in small towns such as Williston.
Today, North Dakota is the second largest oil producing state, extracting some 640,000 barrels of oil a day as of May, according to the Environmental Information Administration.
“North Dakota is a microcosm of what can happen to an economy that stagnates” and then erupts with a new industry, said Lynn Helms, director of North Dakota oil and gas division.
Population is on the rise after decades of decline from the 1930s until recent years, he said, adding 50,000 to 60,000 people to a state population of about 680,000.
It took the improvement of a technology called hydraulic fracturing or fracking, to extract oil from shale rock formations that trap reserves deep inside the earth. Fracking uses water, sand and other chemicals that are pumped under high pressure to force out the oil.
The extraction method is controversial because it involves the use of different kinds of chemicals, some harmless and some toxic. Harmless chemicals include salts or citric acid; some that are extremely toxic can involve benzene and lead, according to a congressional report issued in April 2011.
However, strict state and federal regulations have been put in place to protect against water contamination, Helms said.
Part of his job is building stronger relationships between the state, private energy companies and the public, he said. This is why he and Gov. Jack Dalrymple spoke at an informational event sponsored by both the state and the industry called the Bakken Rock Cook Fest.
Industry and government officials hold these educational sessions in a town hall setting on the rules and regulations on drilling at least twice a year. At the same time, energy companies put on a free barbeque for the community, giving residents a chance to meet those faces who are now part and parcel of North Dakota’s economy.
But talking about the issues isn’t the same as addressing problems, according to state Rep. Ryan Taylor, Democratic gubernatorial candidate. He said he believes North Dakota can do a better job on regulations.
“I don’t believe we have the political infrastructure to make sure that we come through this with our values intact,” said Taylor, referring to his call for more oversight through a state ethics commission.
Taylor and his supporters criticize campaign financing from energy companies drilling in North Dakota and Dalrymple, the GOP incumbent, for receiving campaign contributions from those energy companies.
Taylor said the fact that Dalrymple receives contributions from the energy industry and is chairman of the state’s industrial commission, which overseas the oil and gas divisions, create a problem. He said both situations could lead to ethical questions and conflict of interest.
“It really isn’t a conflict of interest,” said Amanda Godfread, a campaign spokeswoman for Dalrymple, referring to both campaign contributions and to Dalrymple’s role as head of the commission. “The commission does not make rulings of any kind.”
Permits given for drilling are governed by state laws and the industrial commission “essentially” verifies that drilling requirements already in place are being met in order to receive a permit, Godfread said.
Taylor campaigned at the recent state fair in Minot with his supporters and has made transparency a major campaign policy. He refuses to accept money from the oil industry and has called upon Dalrymple to do the same.
Godfread said that contributions are from individuals and not corporations. “They [contributors] are from the energy industry but that doesn’t make them any different from people who contribute to campaigns from other industries and who are interested in their own issues,” Godfread said.
In 2011, Taylor served as the Democratic minority leader in the state legislature and tried, unsuccessfully, to pass a bill creating a state ethics commission that would provide oversight on conflicts of interest and other areas.
Forty-one states have such commissions; North Dakota is one of nine states that doesn’t.
John Contino, executive director of Pennsylvania’s ethics commission, said he has seen cases of potential conflict of interests between government and energy companies in his state. But, he said, generally speaking many of these conflicts of interests occur on local levels since there has been an increase in drilling in recent years.
“One of the benefits of an independent ethics committee,” Contino said, “is that we can offer guidance and advice in these potential conflicts.”
So what makes North Dakota different?
Godfread said that transparency operates in government at all levels and that North Dakota has among the strongest open record laws in the country.
“To say we would somehow be more transparent as the result of a committee, which would actually add a layer of government, is very questionable,” Godfread said.
Because of North Dakota’s small population of about 680,000, there is what Godfread called a “tight-knit sense of community” between politicians and their constituents throughout the state.
North Dakota has a part-time legislature and elected legislators are only in session for 80 days every two years.
“Our state legislators actually live and work in the communities they serve alongside those who have voted them into office,” Godfread said.
“Because of these factors, North Dakotans can have a much closer relationship to their government and to the people they elect,” she said.
State Rep. Shirely Meyer, a Democrat from a district where lots of the drilling takes place, expressed the same sentiment.
“We are a citizen legislature. We all have our own jobs, we farm and ranch for livings.” With the state’s small population, elected officials are directly accountable to their “neighbors,” she said.
“They know who you are, they know your telephone number and it creates a system where you don’t really do you anything you shouldn’t do,” Meyer said.
While state officials may disagree on politics and how drilling should be conducted, Taylor and Helms do agree that the state was not prepared for the oil boom.
“On the negative side, it happens much faster then anyone could ever imagine, and we were unprepared how this moves and grows,” Helms said.
Taylor is concerned with the lack of the basic infrastructure – more homes, schools and roads to support the boom. The roads, he said, were not made to handle trucks with heavy loads.
The lack of housing and the need for schools in these oil-producing towns have generated shortages in daily life. The lack of housing has become so critical that some oil industry workers sleep in their cars and many live in trailers and RV camps.
In Williston, one of the major oil producing boom towns, rental rates are closer to rates in Manhattan than in a small city of around 16,000. The lack of housing has caused rapidly rising rents.
Trying to get a reservation at one of the local hotels or motels in the city is near impossible even when calling a week in advance.
“From the first day you need to be looking at the rules and regulations, taxes and your infrastructure and local communities and really plan for how you want those communities to look,” Helms said. “Because this thing grows so fast it can get ahead of you before you even know it.”