North Dakota oil boom

Night view of H&P drilling the Bakken.

The North Dakota oil boom was the period of rapidly expanding oil extraction from the Bakken Formation in the state of North Dakota that lasted from the discovery of the Parshall Oil Field in 2006, and peaked in 2012, but with substantially less growth noted since 2015 due to a global decline in oil prices.

The oil boom was largely due to the successful use of horizontal drilling and hydraulic fracturing, which made unconventional tight oil deposits recoverable. Contributing to the boom was a push to commence drilling and production on oil and gas leases before the expiration of their primary term, commonly three to five years, at which time the leases would terminate unless a producing well was drilled on the lease. But once production was established, the leases continued as long as oil and gas were continually produced.

The boom created new jobs and economic growth in tandem with long-lasting negative effects, such as environmental degredation, pollution, infrastructure collapse, and an increased rate of sexual assault and other violent crime perpetrated by workers living in the area’s “man camps” against Indigenous women and children in neighboring reservations.

Economic effects

Despite the Great Recession, the oil boom resulted in enough jobs to provide North Dakota with the lowest unemployment rate in the United States from 2008 to at least 2014. The boom gave North Dakota, a state with a 2013 population of about 725,000, a billion-dollar budget surplus. North Dakota, which ranked 38th in per capita gross domestic product (GDP) in 2001, rose steadily with the Bakken boom, and had a per capita GDP 29% above the national average by 2013.

By 2012, income from oil royalties was reportedly paying many local mineral owners $50,000 to $60,000 per month, and some more than $100,000 per month. Bruce Gjovig, head of the UND Center for Innovation Foundation in Grand Forks, estimated that the boom was creating 2,000 millionaires per year in North Dakota. By 2010, the average income in Mountrail County more than doubled to $52,027, putting the county into the top 100 richest counties in the United States.

The oil boom reduced unemployment in North Dakota to 3.5 percent in December 2011, the lowest of any state in the US.

The number of actively-drilling rigs in North Dakota peaked at 217 rigs in Spring 2012, with the rig count averaging 180-190 throughout 2013. Each of the rigs is estimated to create roughly 125 new full-time jobs. This means a total growth of around 25,000 jobs, including an extra 10,000 jobs for workers who lay pipes to producing wells and produce processing plants. Some estimates predict that North Dakota could have as many as 48,000 new wells, with drilling taking place over the next two to three decades.

Drilling the Bakken formation in the Williston Basin.

The Bakken boom propelled North Dakota into the top ranks of oil-producing states. By 2007, North Dakota ranked 8th among the states in oil production. In 2008, the state overtook Wyoming and New Mexico; in 2009 it outproduced Louisiana and Oklahoma; and in 2011 and 2012 it surpassed California and Alaska respectively. By 2012, North Dakota was exceeded only by Texas in oil production.

By October 2020, total oil rig count in the state had fallen dramatically. According to the North Dakota Department of Mineral Resources, the total oil rig count in the state had fallen from 58 active rigs on October 3, 2019, to only 11 active rigs on October 3, 2020, a reduction of over 80 percent.

Government revenue

The North Dakota state government receives through severance taxes 11.5 percent of the gross value of all oil produced. The boom gave the state of North Dakota a billion-dollar budget surplus in 2011.

In addition to severance taxes, the state of North Dakota owns extensive mineral rights, which are leased by competitive bidding. In fiscal year 2010, the State Land Department reported that mineral income on its land earned $265 million for the North Dakota school trust fund, and that the trust fund had grown to $1.3 billion.

The federal government is also a major owner of mineral rights in the region, and leases the rights to companies in competitive bidding. In a January 2013 federal lease sale, the top bid was $19,500 per acre for a lease on one tract in North Dakota. Of the lease sale and royalties from the federal tracts, the federal government keeps 52 percent, and passes 48 percent on to the state of North Dakota.

Infrastructure effects

Bakken oil fields in work.

The industrialization and population boom put a strain on roads, water supplies, sewage systems, and government services in the Bakken Formation and Williston Basin area. For context, this area covers over half of the state. Some counties increased in population by almost double from 20,000 to 40,000. The population increased in men and decreased in women, as the physically laborious jobs attracted some, while crime drove out others. Long term viability of a boom area generally will not last, as the services do not expand at the same rapid pace of population growth. Examples of services that were not maintained in North Dakota include school consolidations and size accommodations, lack of goods on demand, poor health care availability, loss of human capital, inadequate elderly care, and road development.

Social effects

Sociologist John S. Gilmore presents the idea of a boom town 'problem triangle'. The notion is as follows: Local services do not keep up with population growth, degrading the quality of life in the community. Lower quality of life creates more difficult in attracting additional population needed to support growth of services. Private investors also are often hesitant to invest in services, as chaos/ crime is often perpetuated in these areas. The oil industry relies on employees, but these employees in turn rely on other employees (dining, retail, etc.) and services (law enforcement, school systems, health care, etc.). When additional population for other businesses and services are not present, the oil employees cannot live healthy, secure lives.

Example of makeshift housing in man camps due to lack of real housing to match booming populations

Effects on Indigenous Communities

Crime affected the relationship between boom newcomers and Indigenous peoples residing in those areas. Indigenous peoples saw newcomers as threats to their access to resources and services. However, the longest residing people, such as the Standing Rock Sioux and Lakota tribes, were completely disregarded in decision making in land usage and development for oil fields. One instance particularly caught the eye of the public, when the Dakota Access Pipeline risked the people's access to land, water, and sacred sites. The issue ultimately made its way to the U.S. Supreme Court. The pipeline disrupts water flow from the Mississippi to the tribal land in order to deliver oil from the Bakken to Illinois. The pipeline also directly violates the Fort Laramie Treaty (Article II), which guarantees [20] the 'undisturbed use and occupation of the sovereign nation's reservation lands.

Native American women were particularly targeted in violent crime, which was a factor in the rise of MMIW.

Man Camps and MMIW

The addition of thousands of oil workers led to a housing shortage, requiring the construction of man camps. These portable housing units were popularized due to North Dakota proliferating usage specifically. Law enforcement agencies reported sharp increases in violent crime, drug trafficking, and gun crimes in these areas, while nearby Indigenous communities reported increased rates of sexual assault, human trafficking, sex trafficking, and missing and murdered Indigenous women.

There is a prevalent notion among oilfield workers in the Bakken that there will be no consequences for assaults against Indigenous women. This exacerbates the ongoing Missing and Murdered Indigenous Women Crisis. Native American women experienced 2.5 times higher victimization of crime than other races- and women experienced 54% increase in unlawful sexual contact, most often statutory rape.

It has been reported by the National Institute of Justice that instances of sexual violence against Indigenous women and children increased 75% in Fort Berthold, a reservation in the Bakken region, post-boom. Further studies by have shown that this increase was dramatic and did not correspond with rates of violent crime in areas outside of the Bakken region, which actually decreased during this time.

According to a text by Indigenous scholars Sarah Deer and Elizabeth Kronk Warner, the vast majority of sexual assaults reported in this area have been perpetrated by workers living in the man camps who cross into the nearby Indigenous communities. These crimes often go unpunished, as Indigenous nations have been stripped of their ability to have criminal governance over non-Indigenous peoples who commit crimes on Indigenous lands. This stems from the 1978 case Oliphant vs. Suquamish Indian Tribe, in which the Supreme Court declared that because Indigenous nations were somewhat dependent on the United States federal government, their sovereignty was limited, as too was their ability to prosecute non- Indigenous peoples accused of committing violent crimes on their land. Thus, that ability was designated to the federal government only.

It is also not possible for tribal law enforcement to prosecute non-Indigenous peoples for violent crime against Indigenous women and children that occur outside of their lands, specifically inside man camps. This ability also falls to federal and state governments, which some Native advocacy groups have deemed unwilling to prioritize violent crime against Indigenous peoples.

A lack of background checking and disregard for criminal history in the employment process for the extraction industry exacerbates these increased rates of sexual violence. Those with background histories of sexual violence may find jobs in the extraction industry attractive for their inadequate background checking, as they are excluded from jobs in other fields. After the boom, it was determined by the US Marshall Service and the Fort Berthold tribal law enforcement agency that 20% of sex offenders present in the man camps were unregistered, compared to around 4-5% in the state of North Dakota in general.

The lack of adequate attempts made by state governments, the federal government, and local law enforcement to quell the rise in violent crime committed against Indigenous peoples, specifically the sexual assault of Indigenous women and children, by workers at the rig further exacerbates the MMIW(link MMIW wiki article here) crisis in the US. As A. Skylar Joseph explains in A Modern Trail of Tears: The Missing and Murdered Indigenous Women (MMIW) Crisis in the US, Indigenous women are murdered at a rate of 10 times the national average and are twice as likely to experience sexual assault than any other race in the US. Historic sexualization and objectification of Indigenous women fuels this crisis and ensures that cases of sexual, domestic, or fatal violence against Indigenous women are not taken seriously.

Environmental effects

Oil extraction in the Bakken contributes greatly to climate change and environmental degradation. According to Professor of Climate and Space Sciences and Engineering at University of Michigan, E.A. Kort, and his peers, the Bakken formation was responsible for 2% of total global ethane emissions in 2014. Ethane acts as a greenhouse gas when released during extraction, contributing to air quality reduction, pollution, and global warming. As Deer and Warner show, greenhouse gas emission is one of the most prevalent causes of climate change, which disproportionately effects Indigenous communities by causing erosion, severe weather, declining populations of salmon and other sacred fish species, and negative health effects overall. Thus, the negative effects of extraction harm not only the land that is being extracted from, but the original inhabitants of that land.

An oil pipeline running through lands precious to Tribal Nations including tribes such as the Standing Rock Sioux.

Oil rig count in the US

Decline

The oil boom in North Dakota experienced a brief decline in 2014 after the Saudi Arabian oil industry increased its output and the price of crude oil fell from $108 to $40. The price returned just as the U.S. economy recovered from the Great Recession which resulted in difficulties recruiting workers back to the region.

Resurgence

By October 2020, total oil rig count in North Dakota had fallen. According to the North Dakota Department of Mineral Resources, the total oil rig count in the state had fallen from 58 active rigs on October 3, 2019, to only 11 active rigs on October 3, 2020, a reduction of over 80 percent. However, oil production hit an all time high of 1.5 million barrels per day in 2019. Demand fell temporarily due to Covid-19. Oil prices have since recovered to over $70 per barrel in 2021 due to increased demand linked to the Covid-19 recovery. North Dakota remained the state with the second highest oil production, after Texas until overtaken by New Mexico in May 2021. As of February 2024, oil production has slowed, with plans being made to add one or two more drilling rigs in the area in 2024.

See also

• Bakken Formation
• Blood & Oil, a fictional 2015 TV series that takes place in North Dakota
• Keystone Pipeline
• Marcellus natural gas trend
• The Overnighters, a documentary film about workers in the North Dakota oil boom
• Peak oil