Oil and gas boom in North Dakota

The transformation of farmland to oil fields

By Casey Saltness

If, ten years ago you happened to hear North Dakota in the national news it may have been a story about the LA Lakers coach Phil Jackson (a North Dakotan) and how he and the Lakers had won their third NBA Championship under his leadership. Other news from North Dakota may have been about other notable exports from the state including barley, wheat, oats, big band director Lawrence Welk, or western writer Louis L’Amour. Recently, however, all the news out of North Dakota regarding exports is about an oil and gas boom this country hasn’t seen the likes of in years.

I recently took a trip back to the state of my birth to visit family and friends as well as to take a tour of the Western part of the state. I wanted to see for myself how this part of the state was being transformed. The state has always been industrious in agriculture, banking/ finance and energy. North Dakota has seen three or four oil and gas booms since the middle part of the 20th century. The regional focus has been in the Western part of the state referred to in geological parlance as the Bakken formation in a region known as the Williston Basin, which produces a crude oil known in commodities markets as North Dakota Light.

In the 1950s, oil was first discovered in North Dakota near a town called Tioga, on a piece of farmland owned by Henry Bakken. Oil drilling in those days was vertical in nature and the lifespan of wells was short-lived compared to wells of today. As advances in drilling technology have improved, they have allowed oil interests to drill to depths of six to eleven thousand feet into rich oil deposits; then the drillers can make a slow, 90 degree turn and continue drilling another eight to ten thousand feet and further, within the oil deposit stratum. Northern Oil and Gas Inc. has a great 6-minute video of the entire process and it can be found here:

http://www.northernoil.com/drilling

In the days leading up to my trip, I would often look up the weather forecast for Minot and Williston, ND.  I was shocked to learn that during my five day visit the lowest temperature for one of my days there could reach -30F and the expected high could possibly only reach -15F. After arriving, I found this was indeed the case and I wish I could explain to you how cold it felt, but I was actually never outside for more than 10 minutes. On the coldest day, I was lucky to have been introduced, through mutual friends, to Louis Longie. He and his brother own and operate D & L Paraffin, and I had never met Louis before. However, he knew I was interested in what was going on up there and he was more than happy to donate five hours of his time to give me some insight and perspective into the oil and gas industry. I can tell you I felt thrilled and grateful to spend this time with him. Louis drove me around Tioga, ND in his pickup truck and explained the history of the area. For instance, there are miles of underground pipelines and many pieces and parts that need to come together in order for this area to be successful in producing oil.

Louis’ company provides services to energy companies like Hess Corporation and Continental Energy. Hess and Continental have well sites that use small gathering pipelines to transport oil to larger pipelines that, in turn lead to refineries or transportation terminals like rail. These pipelines have a tendency to build up layers of wax within them as the oil moves through them. Louis’ business involves cleaning out these smaller gathering pipelines by redirecting oil directly out of the ground into one of his fleet of eight hot-oil trucks (costing $500,000 each), heating that oil to temperatures in excess of 200 F, and sending it down the pipeline consequently melting the wax build- up and allowing the wells to become more productive by increasing the flow rate of pipelines.

While in the Williston Basin I tried to make a point of visiting Neal Gillivan, a fellow Gilpinite who is currently working for Halliburton on a fracturing crew (“frac” crew). His job is to pump sand and chemicals, at very high pressure (six to nine thousand PSI) into recently drilled and perforated bore holes thus expanding arteries of cracks for oil to flow upward. He typically works two weeks on then is off for two weeks. He’s expected to work 12 hours at a time, but I bet he’ll argue that he’s asked to work longer. When I was there, I tried to meet up with him, but he was about to start a grueling 36 hour push to finish his two week hitch and he needed to grab some sleep.

North Dakotans have seen a lot of good (and some bad) that comes with the Bakken oil boom. My impression of the activity I saw during my stay was very positive. I did drive on bad roads beat-up by 18 wheelers, and I spotted a small bobcat scooping topsoil from a small oil spill on a well site. I also saw people from all over the country coming to North Dakota for various reasons. Some have come to start over with a new life, and some have come to start new business ventures. I met a truck driver in a café in Killdeer, ND that has worked in the oil fields for four years and finally saved enough money to put a sizable down payment on a house in Idaho. He and his wife had just returned from signing the closing contract. As he was smiling and telling me his story, I couldn’t help but think of the same dream that folks came to our part of the world in 1859 in search of their fortunes in gold.

For comparison, as of January 18th, the drilling rig count for the state of Colorado was 51, while North Dakota had 187 rigs actively drilling.

Crude Oil Prices for Upper Rocky Mountain Region (Spot price as of 8 Feb, 2013):

Colorado Western: $81.79

CO North Central: $85.13

N.D. Light Sweet: $87.46

Wyoming Sweet: $88.62

N Wyo./S Montana: $87.12

WTI Cushing OK: $92.28

Bakken Clrbrk MN: $89.28

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