Agfax Buzz:
    October 4, 2013
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    North Dakota Oil Boom Causing Problems for Farmers, Residents

    AgFax.Com - Your Online Ag News Source

    By Jim Patrico, Progressive Farmer Senior Editor

    A few years ago, some folks had written off North Dakota as a place of empty space and few people. Turn it and the rest of the High Plains into a huge national wildlife reserve and call it Buffalo Commons, they said.

    You don’t hear much of that now. North Dakota, especially the northwest quadrant, is suddenly booming — filling with new people and new construction. Oil pumps are sprouting on the landscape like toadstools after a spring rain. Everywhere you look on the horizon are derricks for drilling, tanks for storing and trucks for hauling black gold.

    “There is a lot of money in the country, and a lot of people are getting wealthy off of it,” says Powers Lake rancher Doug Feiring, 50. “I’ve seen a lot of oil booms and busts. But never anything like this.”


    Feiring has oil wells on his land and receives royalties from oil leases, so he has a vested interest in the boom. But he also has reservations about it. Tanker and construction trucks beat up the rural roads. The cost of everything has skyrocketed.

    Temporary housing facilities (“man camps” in the vernacular) appear in the most unlikely places — travel trailers pushed together on the edge of farming communities, apartments made from shipping containers plopped down on prairie potholes, senior citizen housing in Williston converted to long-term rentals for workers.

    Schools are overcrowded with newly arrived families. Crime is an unwelcome visitor (aggravated assault reports rose 55% during 2011 in boomtown Stanley). Traffic fatalities are all too common. And if you are a farmer or rancher, the oil boom has pushed wages way up, making it difficult to hire and keep good employees.

    There is evidence that the original rush is slowing, and infrastructure is starting to catch up. But the oil boom, Feiring says, so far has been “too much, too fast.”

    FREQUENT BOOMS

    Instead of Buffalo Commons, this corner of North Dakota is known as the Bakken Oilfield, named after a farmer on whose land oil was discovered about 60 years ago. It triggered a miniboom that was short-lived. Another boom hit in the 1980s, when spiking oil prices and tax incentives made the Bakken attractive again; it also petered out when oil prices dropped.

    The current boom is the product of technology and high oil prices. Hydraulic fracturing (fracking) is a process that allows oil explorers to use water, sand and chemicals under pressure to shatter rock formations and thus free trapped oil. Typically in the Bakken, a fracking well goes down two miles vertically then makes a 90-degree turn and goes as much as a mile horizontally to tap into oil deposits.

    The use of chemicals underground has some worried about aquifer contamination. (More on that later.) Others are concerned fracking substrata of rock can lead to earthquakes.

    But none of these concerns has stopped or even slowed the boom. Dozens of drilling companies have set up shop in the area. By the end of 2011, North Dakota had 6,202 oil-producing wells, according to The Bismarck Tribune. In just one week in June of this year, the state issued permits for 42 more wells. Growth may be slowing, but you’d never know it by the number of trucks on the road.

    Estimates of the amount of oil stored in the Bakken vary greatly. Deposits of up to 50 billion barrels are possible, perhaps 30 billion being recoverable with current technologies. By many estimates, fracking wells could be pumping in the Bakken for the next 30 to 40 years.

    PROSPERITY’S FACE

    Fred Evans is a happy man — and he should be. He lives in a stunningly beautiful valley formed millennia ago when cascading water from melting glaciers created a washout that formed a large bowl with rolling hills as its fluted edges. Evans and his wife, Joyce, moved to the Little Knife River Valley, just south of Stanley, in 1960 with not much to their names. They have since acquired several thousand acres and turned cattle and other business ventures, including fee hunting on their TTT Ranch, into a comfortable living. About 10 years ago, the oil boom began making their lives even more comfortable.

    Several oil wells, which Evans has named for his children and grandchildren, now dot that beautiful valley. “Savannah TTT” is here; “Ramona TTT” is there; and in the background is “Joy” (no TTT).

    The pumps’ seemingly intrusive presence on the landscape does not bother Evans. In fact, while taking a visitor on a tour in his new pickup, Evans has nothing but praise for the way the oil companies have treated him and the land. He points to where pipelines lie buried below the surface. Wheat grows lush over them. It is proof, Evans says, that the pipeline company did a good job laying the pipes and restoring the land above them.

    Outside his valley, new investment has made “the roads the best they have ever been,” Evans says. “I think it’s funny all these people who drive new pickups bought with oil money and complain about dust on the roads.”

    Indeed, a lot of new pickups cruise through the Bakken. The oil boom has created millionaires, 2,000 a year by one estimate. People are reluctant to talk about newfound wealth, but a 2012 report cited by Reuters indicates many landowners could reap royalties of $50,000 to $100,000 a month. The annual average income of citizens of Mountrail County, which sits at the epicenter of oil activity, doubled in five years to more than $52,000 per person in 2010 and has risen since. It now ranks in the top 100 counties in the U.S. for income per person.

    Much of the oil income flows to new businesses, which generate new tax revenues. The Associated Press reports that in June of this year, the state of North Dakota had an almost $850-million budget surplus at a time when many states are having to trim their budgets.

    MONEY IS NOT HAPPINESS

    Greg Tank might be an oil patch millionaire because of both oil leases and lawsuit settlements. The Keene, N.D., rancher says he won a multimillion-dollar settlement against an oil company that did him wrong with slow payment, lack of payment and environmental destruction to his property.

    Tank and his family have had raw relations with oil companies since the boom of the 1950s. “The companies deceived us,” Tank says about mineral rights and leases. In the 1980s, a new oil boom brought more confrontation for the Tanks. But this boom at the beginning of the 21st century is beyond anything Tank has experienced.

    “I live right in the middle of this crazy thing,” he says.

    His attitude toward the boom is polar opposite of Evans’. Anger and frustration are two key emotions Tank displays. But not helplessness. His desk and office area are buried beneath file folders and papers related to his lawsuits — past, present and future.

    Included in Tank’s complaints is a well site abandoned on his property five years ago that has not yet been reclaimed. “They [the oil company] just walked away from it,” he says. He also rails against water pollution he says tainted his water well. He now triple filters water from his kitchen faucet before drinking it.

    Despite his loathing of oil companies, Tank is profiting from the boom. Besides lawsuits and leases, he is also part owner of a company that recycles wastewater used in fracking by removing the salt and chemicals with centrifuges. The company sells the water back to the drilling companies. Tank’s business card features both cattle and an oil pump.

    TRAFFIC JAMS

    Among the crazier aspects of the Bakken boom is the traffic. Tank says he has counted 3,300 trucks in one day roaring down the gravel road past his house. The two-lane Highway 23 is a quarter mile away. Day and night it is alive with the constant whining of tires, grinding of gears and belching of exhaust pipes.

    Accidents are frequent; the oil counties of North Dakota now lead the state in traffic fatalities. “It’s not a matter of if you are going to be involved in an accident, it’s when,” says Curt Trulson, of Stanley, a fourth-generation farmer. The 61-year-old farms several thousand acres of spring wheat, durum, canola, flax, field peas and other crops. He owns mineral rights and leases them to oil companies, so he shares in the boom. He also plans to start a business to recycle fracking wastewater.

    Despite his financial interest in the boom, Trulson is concerned about its negative effects on the area, especially on its infrastructure. When you see a “Rough Road” sign in western North Dakota, he says, take it seriously. Between visits by county maintenance crews, the roads become strewn with potholes that scrape car bottoms and blow tires. Plumes of dust create a yellow haze in summer skies.

    School overcrowding is another concern for Trulson: “When I graduated in 1970, my class had 70 students. Now the [Stanley] high school gets 120 to 130 new students every year.” While the school district is struggling to keep up, it can only build and staff so fast.

    The same is true with hospitals, housing and services of any sort.

    Counties depend on the state for financial support to cope with the boom. About 11% of state oil tax revenues go to local communities through an “energy impact fund.” Communities and school districts can apply for grants to build and repair infrastructure.

    That helps, but so far, the boom has outdistanced funding.

    “My hope … is that we will finally be able to get our hands around the issue … that we will be able to get ahead of the cascading collapse of our western infrastructure, stabilize our communities and, finally, after this long slog … begin a systematic rollout of the future we want for our beautiful state,” Sen. John Warner told his colleagues this spring.

    WATER WORRIES

    A concern for some is water pollution as a result of fracking. Trulson is taking a wait-and-see approach. Since fracking occurs two miles below the surface, and since water wells go down less than 1,000 feet in most areas, there should be no problem, he reasons. “But I guess we’ll know for sure in 50 years or so.”

    In July, a federal study showed no evidence that fracking chemicals were contaminating wells in Pennsylvania near oil fields.

    Rancher Feiring is not confident the same is true in all cases. Pipes used in fracking are supposed to be encased in concrete to prevent leaks. That sounds safe, Feiring says, but only if the concrete is properly applied. “That’s OK if you’re pouring concrete on a nice summer day,” he says. “But in the winter when it’s 20 below zero and the wind is blowing, guys aren’t going to be as careful as they should. All they want to do is get the job done and get inside. It’s human nature.”

    NO GOING HOME

    There are other, more primal, reasons to be wary of the boom. The Bakken has become a land of strangers. When a newcomer walks into a cafe in most rural American communities, the regulars turn to get a look at the stranger. Not in the Bakken. Nobody turns and looks because everyone is a stranger. The sense of community is gone, and no one is sure what will replace it.

    Aaron Jacobson, 43, went away to college before returning to Noonan to run the family farm and ranch. He came back because he liked the quiet, the solitude of western North Dakota. Now, the boom “is destroying my life,” he says. “The roads are wrecked, and I’m losing pasture to pipelines and power lines.”

    Worse, an oil company built a new tanker truck depot 3/8 of a mile from his house, and traffic is constant, loud and dangerous. If that weren’t enough, a well 1¼ miles from his house flares natural gas all day and all night. “It’s never dark here anymore,” Jacobson says.

    So much for quiet and solitude.

    Heightening his frustrations, perhaps, Jacobson does not have mineral rights to his land. Mineral rights and surface rights are separate under North Dakota law. Over the years, mineral rights have been sold in previous booms or to speculators. They have been lost in foreclosures and generally dispersed. Unlucky landowners like Jacobson, therefore, do not share in the boom’s prosperity.

    It’s what Feiring calls a “double curse.” If you don’t have mineral rights and don’t reap oil’s benefits, all you get is the destruction of your way of life.

    For his part, Feiring tries to keep a positive attitude.

    “I like to think of the glass as half full,” he says.

    Trulson has a similar philosophy: “It [the oil boom] has changed our lives. Whatever we say or do, we are not going back.”

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