Northern Oil and You

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It’s no secret Murka uses quite a bit of oil, the most in the world in fact. But we also produce our fair share, 3rd most in the world, still the discrepancy between daily use and production is about 10 million barrels of crude. Barrels we import from a multitude of countries, Canada being the largest supplier. But can’t we produce some more of our own gas/oil energy? Maybe lower our reliance on foreign oil in the coming years (I said, ‘lower’, not ‘end’, I’m not that obtuse)? Maybe create a job or two?

Before I continue, a note to environmentalist types; back off, I agree cleaner energy is good and should continue to be worked towards but until then, something needs to keep America functioning in a cost effective sort of way. Oil stays, so simma down nah.

I Drink Your Milkshake

As it turns out, we have been lowering our reliance on foreign oil as import trends have gone down since 2005, drinking less of the world’s proverbial milkshake. We’ve decreased our imports by about 2.4 million barrels a day while increasing our production by about 1.5 million barrels a day from 2005 to 2009 and last years imports decreased 3%.

Make em say ugh, ugh, na na na na, na na na na.

While the issue gets tossed around in political discourse, from nifty slogans like ‘drill baby, drill’ (which takes on a whole different meaning if you shuffle the comma; drill, baby drill) to the general debate about off-shore drilling, North Dakota is quietly experiencing a boom.

You see, the Williston Basin, which actually encompasses portions of South Dakota, Montana and Saskatchewan as well, is the home of the Bakken Shale Formation. And what’s buried in the translation of that sentence is a good deal of oil and gas.

Current estimates of proven oil reserves put the United States at 20,680,000,000 barrels, good for 13th globally, though a full 240 billion barrels behind Saudi Arabia. Being 13th doesn’t feel great, not to mention that’s a pretty paltry sum in terms of what we use per year.

‘Proven’ in that context is defined by the CIA factbook as; …those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with a high degree of confidence to be commercially recoverable from a given date forward, from known reservoirs and under current economic conditions.

An ‘economically recoverable resource estimate’ that increases in accordance with the technology of the day.

The Department of  Mineral Resources in North Dakota estimated that:

 ‘…up to 167 billion barrels of oil (oil in place) and approximately 2.1 billion barrels of that oil (the estimated ultimate recovery) can be produced using early 2008 technology. The 2.1 billion barrels of estimated ultimate recovery represents only 1.4% of the original oil in place (167 billion) and is likely to increase with future advances in drilling and completion technology’

USGS, however, being slightly more optimistic, put the estimate at 3 to 4.3 Billion Barrels in 2008, which was up 25 fold from it’s 1995 estimate.

‘Technology and the price of oil will dictate what is potentially recoverable from this formation’ says the North Dakota government.

The tech in question; a combination of the noncontroversial, ‘horizontal drilling’ and the massively controversial, ‘hydraulic fracturing‘. Scratch that, technically horizontal drilling is also controversial, controversial to hippies and the like because it’s still drilling.

A crash course on why fracking (the colloquial term for hydraulic fracturing) is necessary: Bakken is a shale formation. Shale has low matrix permeability, so gas production in commercial quantities requires fractures to provide permeability. You’re now caught up.

The controversy can be summed up by the Josh Fox directed documentary ‘Gasland‘, which won the Grand Jury prize at Sundance a couple years ago.

Here’s a less sensational video that explains fracking without any of the ‘trying to sell you a movie’ theatrics.

With these technologies in a tango, ‘(North Dakota) government and industry officials believe North Dakota’s oil patch contains more than twice the amount of oil previously estimated and that the state’s already record crude production will double within the decade. If the forecast is correct, North Dakota could leapfrog in a few years from the fourth-biggest oil producing state to No. 2, trailing only Texas’ according to AP.

The state has reportedly bumped it’s estimate to 11 billion barrels.

All this has led the USGS to mount a reassessment of the Bakken, ‘The new scientific information presented to us from technical experts clearly warrants a new resource assessment of the Bakken…The new information is significant enough for the evaluation to begin sooner than it normally would. It is important to look at this resource and its potential contribution to the national energy portfolio.”

The Energy Information Administration estimates that with the shale gas resources recoverable in the future stand at 862 trillion cubic feet, which quadruples the proved cubic footage now of 272.5 trillion.

So what does this mean?

There Will Be Blood

And by ‘blood’, I mean ‘jobs’ of course. Jobs in North Dakota. High paying oilmen (and women) jobs for some mothafrackers in North Dakota, cause the ground ain’t gon frack itself.

The oil workforce has tripled from 5,000 in 2005 to 18,000 in 2009 and is growing exponentially. 1,676 new permits to drill were issued in 2010, doubling the total from 2009. 1,379 have already been issued this year, 61 from just October 3rd to the 7th.

Unemployment in North Dakota is the lowest in the country at 3.5% and they’re not just hiring for oilfield jobs, there are boom towns popping up all around the hotbed of oil that need what every city needs. From constructing housing for the massive influx of warm bodies to serving tacos, there are all kinds of jobs. All that pay well above normal. $15/hr for the taco gig (double minimum wage), $25/hr to be a server.

People pulling $100,000 a year are living in Wal-Mart’s parking lot, waiting for houses.

‘North Dakota today is like a inverse image of the U.S. economy at large. The state’s budget is balanced, housing prices are rising and the labor market is tight. A virtuous circle is in play. More economic activity leads to more investment, which leads to more employment, which in turn creates more demand for all sorts of goods and services. The state has natural resources in abundance, and is prospering by exporting them. But if North Dakota’s boom is going to spread into a long period of prosperity, it’s going to need to figure out a way to import more human resources.

Daniel Gross, Yahoo Finance

The state has .7 people for every job opening. That’s a ludicrously gaudy stat.

Not only that, Lynn Helms, the cat at the helm of the North Dakota Oil and Gas division is aiming to keep the ball rolling for decades, ‘about 4 billion of barrels of oil beneath North Dakota’s surface, Helms said, that should make for about 30 to 40 years of production and  if technology improves, possibly more. “We’re not trying to promote this as a gold rush,” Helms said. “We want sustainable growth and sustainable production.”

If you’re unemployed and complaining about it, I suggest you move to North Dakota, looks like you’ll have work there til your dead.

More on the booming north at CNBC and The LA Times

More on fracking at The Wall Street Journal

Here’s 17,953 jobs available in North Dakota, 1,211 of which pay $100,000+. You can go from part of the 99% to part of the 1% overnight. After all it only takes $343,927 to achieve that statues as News Burner’s own Ed Rodfree pointed out here.

P.S. This article is mostly repentance for the shellacking I give the Midwest in my award winning News Burner exposé, which you can read here.


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