Until recently, few people had warm thoughts whenever they thought of North Dakota–not because they held any animosity towards Dakota denizens, but because the place is really, really cold in the winter.
Well, we all better get used to the idea of a red-hot North Dakota.
While the rest of the nation struggles to recover from the economic hangover of the Great Recession, North Dakota is surging forward with 7 percent annual growth and the lowest unemployment rate in the U.S.¬†The reason ND is expected to hold its position at the top of the national economic charts for some time to come can be summarized in two words: shale oil.
The Bakken Shale Formation stretches down from Canada into North Dakota and Montana. Centered on an area known as the Williston Basin, the formation has long been known to hold a rich deposit of oil. In fact, the U.S. Geological Survey determined about 15 years ago that Bakken Shale contains the largest continuous oil accumulation it has ever assessed.
But when the USGS made this assessment in 1995, it also gloomily predicted that only a small portion of black gold could actually be extracted from the oil-rich basin. In its 1995 survey, USGS declared that barely 151 million barrels of oil could be squeezed from the Bakken Formation, a drop in the bucket compared to past production in Texas or the 10 billion barrels that eventually will come out of the Alaskan oil fields.
This all changed in 2000, when the large oil companies perfected a technique called horizontal drilling and figured out how to pull oil out of shale. Drillers now can send a shaft vertically down to the shale layer (which is two miles below the surface) and then change direction and drill horizontally along the oil seam.
The successful execution of horizontal drilling in the Bakken Formation induced a quantum reassessment of the amount of recoverable oil there: the total is now believed to exceed 3.65 billion barrels.
There are now more than 4,000 active oil wells in North Dakota, with most of the activity centered in Dunn, Montrail and Mercer counties. The black gold rush has turned landowners into instant millionaires and spawned a job surge and a housing shortage in the three counties as oil rig workers have surged into North Dakota from across the nation.
As new wells are drilled in Montana’s portion of the Bakken Formation, the expectation is that Big Sky Country soon will give North Dakota company at the top of the annual economic growth surveys.
This growth will be long-term: the average production life expectancy of a Bakken well is about 28 years. And when the oil gets tapped out, there’s an estimated 2 trillion cubic meters of natural gas down there.