Shopfloor.org has posted often on the development of the Bakken Formation’s oil in North Dakota, Montana and the Prairie Provinces because it’s such a huge economic success story. The profitable development despite the depth (2 miles) of the shale formation testifies to the importance of new technology — advanced seismic exploration, hydrofracturing and directional drilling — and reaffirms the economic impact of domestic oil development.

The Wall Street Journal today reiterates these points with a well-done piece, “Oil Industry Booms — in North Dakota.” Excerpt:

The Bakken Shale deposit has been known and even tapped on occasion for decades. But technological improvements in the past two years have taken what was once a small, marginally profitable field and turned it into one of the fastest-growing oil-producing areas in the U.S.

The Bakken Shale had helped North Dakota oil production double in the past three years, surging to 80 million barrels in 2009—tiny relative to the more than seven billion barrels consumed by the U.S. every year, but enough to vault the state past Oklahoma and Louisiana to become the country’s fourth-biggest oil producer, after Texas, Alaska and California. If current projections hold, North Dakota’s oil production could pass Alaska’s by the end of the decade.

The Journal reports that the oil now pays off when prices hit $50 a barrel, down from $80.

Thanks largely to the oil boom, North Dakota’s economy has fought off the recession. The state’s unemployment rate in December was 4.3 percent.

Labor shortages are the inevitable downside. The Williston Area Development Foundation in northwestern North Dakota has a website set up to attract potential employees, RockintheBakken.com. There’s a jobs fair in Williston Thursday for people who hold commercial drivers licenses.

It’s trouble other states would love to have. The first step to get there: Regard domestic energy development as a boon, not a bane.

NBC Nightly News on Sunday ran a segment on the thousands available jobs in Bismarck and the rest of North Dakota, attracting out-of-state residents for jobs in health care, IT, energy, manufacturing and construction.

Energy has driven economic growth in the state, thanks to coal and, since earlier this decade, oil and gas development from the Bakken formation. An e-mailer — not me — expounded on NBC’s misdirected coverage today at National Review’s The Corner blog:

I think it would be important to point out to everyone, that ND’s job growth is fueled by the oil boom in that state from the Bakken shale formation. The video ignores that fact because it doesn’t fit the MSM’s sense of justice to grow our economy by doing something evil like developing our natural resources.

A hundred-year supply of natural gas has just been discovered in the last couple of years in the Marcellus Shale which underlies much of PA, NY and to a lesser extent other eastern states. If these states are open to the development of the natural gas like ND has been to the oil, they could enjoy the same economic situation. Unfortunately for the laid-off blue collar workers from those industrial states, the elitist environmental-minded politicians and ngo’s will likely block the potential economic boom.

To drill and produce the natural gas you need, drill rig hands, welders, electricians, road builders, general construction crews, engineers, petroleum geologists, environmental scientists (to do it cleanly), regulators (to make sure it is done cleanly), truck drivers, accountants, bankers and more. In addition to all those directly employed by an oil and gas boom, add all the support services those new people to an area need. Oil or gas booms can literally be like gold rushes of Western lore.

We don’t think the anti-energy forces will win in the end, but they’re definitely trying with the usual fear and falsehoods.

The Pittsburgh Post-Gazette covered the Marcellus Shale’s potential in a major Sunday business piece, “Natural gas locked in the Marcellus Shale has companies rushing to cash in on possibilities“:

According to a report released in July by Penn State’s College of Earth and Mineral Sciences, the Marcellus Shale helped create more than 29,000 new jobs in Pennsylvania in 2008. Of those, about 14,000 were directly related to Marcellus development. The remainder were created by what the study calls “indirect and induced impacts,” such as a restaurant near a drilling site hiring more staff because it is serving a larger lunchtime crowd.

The study predicts more than a decade of dramatic growth, with more than 48,000 new jobs this year, then another 98,000 in 2010.

By 2020, the study says, Marcellus development could add $13.5 billion to the state’s economy and create more than 176,000 new jobs in a single year.

NAM President John Engler is expected to talk about new natural gas developments in remarks tomorrow at the State Chamber of Oklahoma’s public affairs conference. Oklahoma is home to the Woodford Shale deposit.

The natural gas industry group, Energy in Depth, has lots more information on shale gas at its website, www.energyindepth.org.

UPDATE (2:45 p.m.): Now that you’re considering a move to Bismarck, take a look at Bismarck Tribune’s excellent website. Most popular stories:

It’s about 0 degrees there at the moment, but the big Midwestern storm passed it by.

Speaking at the Great Plains Energy Expo and Showcase in Bismarck, N.D., on Monday, Secretary of Interior Ken Salazar:

I don’t want you to be scared, those of you here who are supportive of coal and oil and natural gas…The fact remains that oil, gas and coal are a very important part of our energy portfolio and will remain a part of the energy portfolio in the future.

That’s from The Bismarck Tribune’s story, “Salazar says N.D. coal is part of U.S. energy future.” The quote doesn’t appear in the Secretary’s prepared text.

The keynote speaker at the expo sponsored by Sen. Byron Dorgan (D-ND) was Harold Hamm, chairman and CEO of Continental Resources, an independent oil company heavily invested in North Dakota. From AP:

BISMARCK, N.D. (AP) — Billionaire Enid oilman Harold Hamm said Monday North Dakota’s oil reserves could be double the federal government’s estimates….Hamm said U.S. Geological Survey’s estimate of 4.2 billion barrels of oil in the Bakken shale formation could be “100 percent off.”

“I think we’re going to be twice that,” said Hamm, chairman and chief executive officer of Continental Resources, an independent oil and gas company based in Enid. His company was one of the first to tap the Bakken formation in North Dakota’s oil patch 20 years ago. Hamm also said the underlying Three Forks-Sanish formation could hold as much oil as the Bakken.

The Bakken Formation is a shale formation, the crude oil of which has become available through advances in seismic exploration, directional drilling and hydrofracturing. Its development has pushed North Dakota into a new status as the fourth most productive oil state in the country, surpassing Louisiana.

See also Forbes, “Billionaire Harold Hamm’s New Play“: “Oklahoma billionaire Harold Hamm is rushing back into the North Dakota Bakken with an ambitious new drilling program after pulling back from the oil shale just a year ago.”

From Marketplace, the public radio business show, a report, “Need a job? North Dakota is calling“:

DAN BOBKOFF: Here in Ohio, the recession has only added to the woes of foreclosures and plant closings. It can be a little depressing.

So when I called up Shane Goettle, who heads the North Dakota Department of Commerce, it was a bit like stepping into bizarro world.

SHANE GOETTLE: Overall our unemployment rate is 4.2 for June. We’ve had real good strength in energy, agriculture. Tourism has actually been good for us.

And then, there’s this:

GOETTLE: We have thousands of jobs available in the state. As of July 1, there are about 9,000 openings.

Good story in that it doesn’t engage in the usual belittling of the state, albeit mentioning the cold winters. (And in that it quotes our friend, Shane.)

The report also correctly attributes much of North Dakota’s good fortune to the high prices of energy and agriculture commodities, which topped out in 2008. (The wheat market is bearish.) But North Dakota — and the rest of the country — would not have been in position to take advantage of the soaring oil prices if it hadn’t been for technological advances in the area of seismic exploration, horizontal drilling and hydrofracturing — making the Bakken Formation — profitable to develop. So thanks oil industry!

Speaking of Bizzaro worlds, here’s Michael Barone’s column in The Washington Examiner, “Michigan Madness.”

Ordinarily a pretty savvy political operator, [Democratic Party Chairman Mark Brewer] is now suggesting five ballot propositions for the 2010 ballot. Their aim apparently is to improve the lot of Michigan citizens. But the result, as anyone with an iota of sense can see, would be to inflict horrifying damage on an already staggering state economy. They include:

• Mandating all employers to provide affordable health care for all their employees and dependents or pay a penalty.
• Raising the minimum wage from $7.40 per hour to $10 per hour and covering all workers with no exceptions.
• Increasing unemployment benefits by $100 a week, making all workers eligible and adding six months to the time one can receive benefits.
• Cutting utility rates by 20%.
• Imposing a one-year moratorium on home foreclosures.

Why not raise the minimum wage to $100 an hour, Barone asks?

(Hat tip, Instapundit, who also links to The Hill’s story on the NAM/ACCF study about Waxman-Markey.)

Following up on yesterday’s Senate EPW hearing on energy policy and the states, where North Dakota Gov. John Hoeven called for a comprehensive national energy strategy (see post), the good people at Energy in Depth pass on an exchange the governor had with Sen. Jim Inhofe (R-OK):

Key Excerpts From Yesterday’s U.S. Senate Environment and Public Works Hearing
Dialogue starts at 101:50.
Click HERE to view.

U.S. Sen. Jim Inhofe (R-OK):  “Governor Hoeven, the thing I was going to bring up is there’s a lot of discussion, when you talk about your offset capabilities there, and what you’re doing, that’s great. We’re doing somewhat the same thing, although most of ours is marginal production. But there is a, I’d suggest to you, the use of hydraulic fracturing is necessary in your state to be able to explore, to retrieve all these oil capabilities.”

Gov. John Hoeven (R-ND):  “It’s absolutely vital. You know, you mention some of these new formations. They are not, uh, the oil isn’t connected. You’ve got to go underground. And you’re talking two miles underground. And make a fracture in order to get the oil to flow. That’s vitally important.”

U.S. Sen. Jim Inhofe (R-OK):  “I wanted to get that into the record, because there are some efforts to do away with hydraulic fracturing, and it would be devastating.”

Just so. Energy in Depth has been a strong voice defending hydrofracturing technology, in which pressurized water is pumped in subterranean strata to make the oil or natural gas accessible via drilling. Without hydrofrac, development of the Bakken Formation oil as well as our vast natural gas resources in Texas (Barnett Shale) and Pennsylvania/New York/Ohio (Marcellus Shale) would be prohibitively expensive.

The activist group, ProPublica, has been leading a bizarre campaign against the widely accepted technology, and by offering its agenda-driven reporting for free has been successful in getting newspapers to publish the articles. Apparently if it’s gratis, editing is optional.

This is a telling observation from an Energy in Depth rebuttal, which explains why we refer to ProPublica as an activist outlet, not a journalistic venture, “Separating Fiction from Invention in ProPublica’s Latest Anti-HF Attack Piece“:

Earlier this week, ProPublica author Abrahm Lustgarten released the latest installment in his series of advocacy pieces attacking the commonly used energy technology known as hydraulic fracturing. Instead of simply running on the ProPublica blog and website, however, the article was co-published with Politico and appeared in the paper’s news section (a letter to the editor from Energy In Depth policy director Lee Fuller will appear in the paper this Tuesday).

It wasn’t the first time that a mainstream news outlet provided ProPublica with a platform for this kind of product - although, for papers such as the Pittsburgh Post-Gazette, the determination has been made that ProPublica articles, when run, are more appropriately filed on its “opinion/perspectives” page than as part of its straight-news reporting.

Prior to its release, Energy In Depth spoke at length with Mr. Lustgarten about the direction of the (presumably already written) piece and the myriad mistakes he was making in issuing a blanket indictment of recent government and third-party reports finding that EPA regulation of hydraulic fracturing would cost Americans jobs, revenues and future security.  

Regrettably, none of those explanations made it into his final piece.

 And regrettably, ProPublica appears to be a model for future journalistic ventures.

As previously noted, this blogger once worked for Gov. John Hoeven. But it’s been eight years now.

From the testimony of Lynn Helms, director of the Department of Mineral Resources of the Industrial Commission, North Dakota, at Thursday’s hearing by a House Natural Resources and Environment Committee subcommittee hearingo natural gas and hydro fracturing. Helms was also representing the states of the Interstate Oil and Gas Compact Commission.

As the head regulator of oil and natural gas development in the State of North Dakota and an officer of the IOGCC representing all oil and natural gas producing state regulators, I can assure you that we have no higher priority than the protection of our states’ water resources – let me repeat no higher priority. Much of our entire regulatory framework, from drilling to completion, production, and finally plugging and abandonment, is centered around measures to prevent any contamination of the water resource. As a component of the completion of a well, hydraulic fracturing operations are thus thoroughly regulated and supervised by the states.

A major component of production operations is the proper storage and disposal of all production wastes, including hydraulic fracturing flow back water. These operations are carefully monitored, audited, and regulated in our state programs.

As I noted in my testimony above, hydraulic fracturing is a critical component of developing the Bakken formation, indeed every shale play throughout the U.S. and Canada. Without hydraulic fracturing, under regulation of the states, this resource could not be produced.

As Helms notes, the Bakken Formation can yield 4-7 billion barrels of oil and 4-7 trillion cubic feet of natural gas — using current technology, which now includes hydrofrac.

That’s energy security at work.

We also commend the testimony of Mike John, Vice President of Corporate Development and Government Relations, Eastern Division, Chesapeake Energy Corporation:

The topic of this hearing is very exciting because shale gas no longer just has “potential.” It is real, and it is a game-changer not only for America’s natural gas industry but also potentially for our nation, our economy and our environment! In fact, North American natural gas supply is so plentiful it has been described recently by some experts as a virtual “ocean of natural gas. As such, this shale gas revolution has made greater energy independence, enhanced national security and a significantly cleaner environment, attainable goals today. The real issue is no longer whether there is adequate supply, but rather whether there is adequate demand for this clean-burning, domestically produced fuel to continue the development of these enormous resources bases.

The House Energy and Natural Resources Committee, Subcommittee on Energy and Mineral Resources, holds a hearing Thursday, “Unconventional Fuels, Part I: Shale Gas Potential.” Shale gas is natural gas, and there’s nothing unconventional about that energy source.

Relatively new, however, is the effective and remarkable expansion of U.S. domestic natural gas resources made possible through technological advances, in this case hydraulic fracturing, or hydro-frac, the process of pumping pressurized liquids into gas-bearing shale deposits to fracture the stratum and release the gas.

Some environmental groups and other activist outfits like Propublica have targeted hydraulic fractioning, claiming it harms the environment. You’ll hear some of that criticism from witnesses tomorrow.

Fortunately, there are several witnesses who can bring real-world experience to the discussion, including Mike John, a vice president with Chesapeake Energy Corp., a global leader in natural gas development. John represents the company’s eastern region, which is where a lot of action is under way with the Marcellus Shale.

Also testifying is Lynn Helms, director of the Oil and Gas Division, North Dakota Industrial Commission. Helms has been a key state regulator and smart observer as hydrofrac has been used to develop the Bakken Formation, an oil-bearing shale formation in North Dakota, Montana and Saskatchewan. The technological advances represented by hydrofrac and horizontal drilling have helped make billions more barrels of oil available for drilling  — creating a much-welcomed energy boom in the prairies. (Lynn testified last year before a Senate Budget Committee hearing on the Bakken Formation.)

The American Petroleum Institute has developed many resources on hydraulic fracturing at its API website here, including a Q&A.

Our view is that if anyone claims to want “energy independence” or “energy security” and then attacks the new technologies that make more domestic natural gas and oil available, they’re just not very serious.

Haven’t had a post about the Bakken Formation in a while, that vast and already proven layer of sweet crude in the Upper Midwest and Prairie Provinces, accessible via horizontal drilling and hydrofrac technology. And there are interesting things going on with clean coal out there, too.

From Bismarck Tribune, “Oil leases still vigorous in Mountrail, McKenzie“:

While far off the all-time highs, bids for oil and gas acres in North Dakota brought top dollar at the quarterly Bureau of Land Management auction Tuesday.

A Kansas company bid $3.5 million for a 10-year lease on 1,358 acres in Mountrail County, making the highest total bid of the sale, said BLM spokesman Greg Albright.

From the Oil and Gas Journal, “Final EIA figures show US oil reserves grew 2% in 2007“:

WASHINGTON, DC, Jan. 28 — Proved US oil reserves rose by 345 million bbl, or 2%, during 2007 to 21.32 billion bbl from 20.97 billion bbl at the beginning of the year, reported the US Energy Information Administration on Jan. 28.

The increase was a contrast to the rapid decrease in domestic crude reserves that began in 1970 but which have moderated in the past decade, EIA said as it released final yearend numbers for 2007. The federal energy research and statistical service will begin gathering 2008 numbers in February when it distributes proved reserves data survey forms to more than 1,400 US well operators…[snip]

EIA said Alaska, Texas, and North Dakota accounted for a majority of the year’s new reserves with a combined 605 million bbl of net additions. Eight other states showed relatively small increases while 13 states and the Gulf of Mexico reported declines, it said.

As for coal, “5 coal-fired power plants studying carbon capture“:

Five coal-fired power plants in the U.S. and Canada, including one in central North Dakota, are studying the feasibility of retrofits to capture and store carbon dioxide, a nonprofit industry research group says.

Electric Power Research Institute said studies are being done at Great River Energy’s Coal Creek Station near Underwood, and at plants in Illinois, Utah, Ohio and Nova Scotia. The group said the research could help guide development of future power plants and how they deal with carbon dioxide emissions blamed for global warming.

Which makes this Economist story all the more timely, “North Dakota is one of many states waiting for an energy policy from Washington.”

P.S. Crambe!

There tends to be a quick drop-off in significance in the North Dakota AP’s annual list of the state’s 10 major news stories. But there’s no doubt developments involving the Bakken Formation were not just the No. 1 story in North Dakota, but big news nationally and internationally, as well.

1. Oil: North Dakota moves into 5th place among the states in oil production as prices soar, but the year ends in uncertainty after the prices plummet. In a long awaited study, the government estimates up to 4.3 billion barrels of oil can be recovered from the Bakken shale formation in North Dakota and Montana, using current technology.

The Bakken Formation is a shale structure accessible through horizontal drilling and hydrofracking, technology made possible through the profits of oil companies.

AP reported on the effects of the price drop on the Bakken Formation earlier this month, “Oil prices temper boom in ND oil patch“:

Drilling in North Dakota’s oil patch is expected to be slashed by at least a third next year, industry officials say, citing slipping crude prices and a slumping U.S. economy.

But no hint of an ’80s-type bust, observers say.

And Harold Hamm of Continental Resources is upbeat about his company’s prospects, in part because of its investment in the Bakken Formation. (From The Enid, OK, News.)

That’s a connection worth considering: Energy production helps boost the economy, government tax revenues and employment in states like North Dakota, where the Bakken Formation and good ag prices have spread the wealth.

From The New York Times, “ A Placid North Dakota Asks, Recession? What Recession?”

While dozens of states, including neighboring ones, have desperately begun raising fees, firing workers, shuttering tourist attractions and even abolishing holiday displays to overcome gaping deficits, lawmakers this week in Bismarck, the capital, were contemplating what to do with a $1.2 billion budget surplus.

And as some states’ unemployment rates stretched perilously close to the double digits in the fall, North Dakota’s was 3.4 percent, among the lowest in the country.

And…

North Dakota’s cheery circumstance — which economic analysts are quick to warn is showing clear signs that it, too, may be in jeopardy — can be explained by an odd collection of factors: a recent surge in oil production that catapulted the state to fifth-largest producer in the nation; a mostly strong year for farmers (agriculture is the state’s biggest business); and a conservative, steady, never-fancy culture that has nurtured fewer sudden booms of wealth like those seen elsewhere (“Our banks don’t do those goofy loans,” Mr. Theel said) and also fewer tumultuous slumps.

The increased oil production comes in great part from development of the Bakken Shale, a formation that has been accessed profitably through hydrofracturing and horizontal drilling.

Falling oil prices will obviously have an impact on the energy production, and farm commodity prices are also slumping. Manufacturing has also suffered its hits. Still, we bet there are a lot of states that would love to have North Dakota’s problems.

In related developments….

• We see that new Energy and Commerce Chairman Henry Waxman is opposed to hydrofracturing, and the anti-business investigative journalistic outfit ProPublica is pushing a campaign against hydrofrac. The new puritanism is progressivism: The haunting fear that someone, somewhere, may be making money.

• The New York Times story on North Dakota was reported by Monica Davey, who always does a nice and accurate job on North Dakota stories. Sunday’s paper also carried a Davey story, “Drone to Patrol Part of Border With Canada“:

FARGO, N.D. — Federal Customs and Border Protection authorities are preparing to launch unmanned aircraft patrols from this state, the first time such monitoring will occur along the nation’s northern border.

A Predator B aircraft, delivered to Grand Forks on Saturday, will make runs along the northern edge of North Dakota using sensors that can provide video and detect heat and changes to landscape, Customs and Border Protection officials said.