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.

Quite interesting, in terms of all-politics-is-local observations. From Alan Greenblatt at Governing:

Few legislative chambers changed hands yesterday. Those that did reflected the increasingly regional nature of the major parties’ strength.

“This wasn’t a big, overwhelming night for Democrats,” says Tim Storey, of the National Conference of State Legislatures. “They definitely got their wins, but they didn’t command legislative elections like they did two years ago.”

Democrats won the biggest prize of the night, taking control of the New York Senate for the first time since 1966 — and gaining control of the entire New York State government for the first time since the Depression. They now hold at least 32 seats in the 62-seat chamber.

But Republicans pulled off the biggest surprise of the cycle, taking the Tennessee House for the first time since 1971. They also broke a tie in the Tennessee Senate, winning a solid majority that gives them total control of the legislature for the first time since Reconstruction.

Republicans also broke a tie in the Oklahoma Senate, taking control of that chamber for the first time ever.

Finally, congratulations to your correspondent’s former boss, Governor John Hoeven of North Dakota, the first governor in the state to win election to a third, four-year term. Seventy-four percent!  Hoeven has emphasized jobs-creation in North Dakota, where economic growth and the expansion of manufacturing has been driven by the energy sector — coal, some ethanol, and oil, lots of oil. 

USA TODAY returns to North Dakota, land of the Bakken Formation, plumbing the depths of social tension produced by a sudden flow of wealth into a laconic, taciturn, restrained people, i.e., Americans of Norwegian descent. From “Oil boom creates millionaires and animosity in North Dakota“:

Now, after decades of watching their children flee the prairie for brighter futures elsewhere, North Dakotans in the state’s sparsely settled west find themselves sitting atop the largest contiguous oil deposit in the lower 48 states. There are an estimated 4.3 billion barrels of recoverable oil in a deposit under parts of the Dakotas, Montana and Canada — about half what the USA uses in a year.

“It’s bigger than Texas,” says Herb Geving, 75, of Parshall, a former landfill owner who has two oil wells on his land.

“It’s unexpected, a blessing,” says Larry Lystad, 57, of Stanley. He is among the descendants of Scandinavian and German homesteaders now looking to reap as much as $1 million a year per well from oil leases and royalties.

“These people have been farming rocks for generations,” he says. “It’s like winning the lottery.”

Well, not quite. There’s quite of bit investment involved. Good thing oil companies make profits.

So it’s an international story now, and more than just Canadian coverage. The U.K. Telegraph reports on the Bakken Formation, using the town of Killdeer, North Dakota for illustration:

Mr Kupper, 55, and his wife Dawn, 46, long lived hand-to-mouth raising livestock on land first settled early last century by his grandfather, an ethnic German immigrant from Russia. But the dark days of debt and juggling bills are a thing of the past for the Kuppers. For like hundreds - and soon thousands - of other families in this remote and sparsely-populated region, America’s newest Black Gold Rush is making them millionaires.

Thanks to oil, America’s least-visited state is one of just three with a budget in the black - a surplus of $1 billion for its 635,000 residents.

And with its three bars, two motels, car dealership, pharmacy and post office, Killdeer is an implausible boom town.

Actually, it’s quite a plausible boom town. Back during the last oil boom of the 1980s, western North Dakota towns like Dickinson, Watford City and Williston flourished, grew, grew too fast, and then crashed when oil prices tanked.  Some 40,000 to 50,000 people left the state. An extended drought didn’t help.

We hear this time there’s more appreciation of the commodity cycles, for energy AND agricultural commodities — at least among the public. State government’s spending like a roustabout on a weekend, so that’s a lesson yet to be learned there.

Meanwhile, Agence France Presse last month takes note of the Bakken, reporting: “Entre derricks et éoliennes, l’Amérique balance” — “Between derricks and turbines, America in balance:” “In the face of expensive gasoline and “dependence on foreign oil — an obsession in the United States — two great projects are dividing America: The massive relaunching of oil expolation or betting it big on wind and solar power.”

Looks like shale is where the action is these days, at least when it comes to oil and natural gas development. We’ve previously mentioned development of the Barnett Shale formation in Texas, the Bakken in North Dakota and the Marcellus formation in Pennsylvania and New York, and now add to the list the Haynesville Formation.

From Dow-Jones, an article that focuses on Chesapeake Energy’s activities:

Chesapeake has been a particularly active acquirer of land in the Haynesville play. Like other shale reservoirs, Haynesville requires more costly and technologically advanced drilling techniques to extract gas embedded deep in rock formations, but high natural gas prices have made such endeavors profitable.

 

According to the most optimistic estimates, Haynesville could produce up to 245 trillion cubic feet equivalent of natural gas, enough to supply the entire U.S. for a decade.

High energy prices and new technological developments in horizontal drilling and hydrofracturing have made these kind of developments profitable. To be sure, there are obstacles to overcome. From the Shreveport Times.

BATON ROUGE — Producing natural gas from the Haynesville Shale is not as simple as drilling a hole in the ground,  says Don Briggs, head of the Louisiana Oil and Gas Association.

Unlike most places, the gas is not trapped in reservoirs. It’s in small vertical fissures in the horizontal bands of shale that have to be fractured by intense water pressure pumped 12,000 feet underground.

When the gas is in a pool big enough to remove, “we do not have today the infrastructure in north Louisiana to take that gas out” because of an insufficient pipeline system to handle it, Briggs told the Baton Rouge Press Club on Monday. Roads in the largely rural area also are a problem.

“Water is a big concern right now,” he said, because aquifers in northwest Louisiana are insufficient to supply the millions of gallons of water needed for the fracturing process. “They may have to transport water long distances.

The Times also has a location map on the drilling, very interesting.

In addition to the technical problems, there will also be the political challenges, that is, opposition from constituencies who do not acknowledge the energy needs of a modern, prosperous, free society.

Appreciated the reaction from the head of the North Dakota Petroleum Council to this story about a $1 million federal grant to the University of North Dakota intended to fund research into enhanced oil recovery in the Bakken Formation, “Prof says recoverable oil in Bakken could increase“:

Ron Ness, president of the North Dakota Petroleum Council, said the more the Bakken is researched, the better. He doubts if the university’s research alone will be responsible for doubling the production in the formation.

“It’s all good - everybody looking at this thing is helpful and we support the university,” Ness said. “But the real breakthroughs are going to come out in the field.”

Eighty-one oil rigs were operating in North Dakota this week, and each costs about $50,000 daily to operate, Ness said.

“The reality is, from an industry perspective, that’s $4 million a day that’s going into research,” Ness said.

Good thing oil companies make a profit.

From the Regina Leader-Post, a wonderful story and headline, “Striking it rich.”

REGINA — Saskatchewan pulled in $242.7 million from the August sale of Crown petroleum and natural gas rights, adding to the province’s already record-smashing 2008.

Monday’s sale was the second-best single land sale ever, bringing the year-to-date revenue from land sales to a record $848.1 million, according to figures released Thursday.

Nearly 90 percent of the August sales came from the Weyburn-Estevan area across the North Dakota border, site of the Bakken oil play.

Meanwhile, Saskatchewan is also starting development of the province’s oil sands.

More from the Globe and Mail:

VANCOUVER — British Columbia and Saskatchewan raked in a combined haul of $745-million in land rights yesterday, strengthening their claims as the hottest exploration zones in the country and edging Alberta into third place.

While Alberta, anchored by the oil sands, remains Canada’s energy king, the province is being left behind as companies race to open new oil and natural gas frontiers. For the first time, it looks like Alberta will not take in the most money this year for new exploration rights and may actually finish third behind Saskatchewan.

An ascendant Saskatchewan represents quite an economic, social and political change for Canada.

Featured on the front page of CNN.com, “North Dakota’s real-life Jed Clampett“:

STANLEY, North Dakota (CNN) – Herb Geving unleashes a broad smile in his 11,000-square-foot mansion. The former cattleman, farmer and owner of a North Dakota garbage business is now retired, able to count the dollar signs brought in by three oil wells.

“Oil,” he says, “it’s amazing. You don’t have to work at all. You just walk to the mailbox and there it is.”

The 74-year-old grandfather receives whopping checks at the end of every month for the oil. He’ll never forget the time the first check came in January.

“Thousands, I guess you’d call it,” he says.

Geving chuckles when asked if it was for $2,000.

Was it closer to $10,000?

“You can keep going up and up and up,” he says from his home, decked out with a massive fire pit in the living room, semi-circular leather couch and bright orange shag carpet.

That’s the setup to report on energy development surrounding the Bakken Formation, an oil-bearing shale formation now profitable because of horizontal drilling, hydrofracking and the high price of oil. The U.S. Geological Survey estimates 3 to 4.3 billion barrels of recoverable oil given current technology.

But what about the environmental damage, the frightened animals, the threatened biospherical emanations?

Well, the mountain lions seem OK: “North Dakota cougar quota increased.”

Ah, sure, you say, but that’s out there in the hinterlands. A little energy development’s OK when it’s so sparsely populated, and besides, it’s not pristine like the pristine ANWR, pristinely speaking. (Someone must say that.)

From the Wall Street Journal, August 2, “How Texas Struck It Rich Beneath Suburbia” by Texas Railroad Commissioner Elizabeth Ames Jones, writing about the 7,500 natural gas wells tapping the Barnett Shale formation, some deep in the heart of the city of Fort Worth:

What I’ve seen is that while Congress balks at drilling in the Arctic National Wildlife Refuge in Alaska out of fear of disturbing a few caribou, we’ve moved ahead to safely tap into an energy reserve located underneath suburban homes. And there is no better example of how Texas gets the balance right between energy and the environment than the development of the Barnett Shale.

By the way, CNN reports its Bakken Formation story and worldwide oil prices fall. Coincidence?

As the Congressional debate between supply and no-more-supply continues this week, we highlight the benefits of energy development.

From Marketplace Morning, “Energizing Fort Worth charities“:

Kate Archer Kent: In the heart of Fort Worth, energy company money is funding the construction of an enormous steel skeleton. This isn’t another headquarters for big oil. It’s the Fort Worth museum of Science and History, getting a $75 million makeover.

The construction activity above ground mirrors what’s going on a mile-and-a-half below. The same firms that are helping refurbish the museum are drilling into the Barnett Shale, one of the nation’s largest natural gas fields.

Pittsburgh Tribune-Review, “Natural gas in Marcellus Shale can create revenue, jobs“:

Higher gas prices coupled with the abundant natural gas reserves trapped in Marcellus Shale underneath Western Pennsylvania have been good for those who own the rights to the gas, the drillers and gas companies, and job-seekers, say industry experts.

“It is the last great natural gas play in the United States,” said Kent F. Moors, director the Energy, Policy and Research Group at Duquesne University in Pittsburgh.

For the moment.  And from the Canadian Great Plains, a report from the Neue Zuricher Zeitung, the big Swiss paper, “Goldgräberstimmung in Kanadas Westen,” i.e., “Gold Rush Mood in Canada’s West”:

The economic balance is shifting west in Canada. Following in the path of the energy province, Alberta, now Saskatchewan is experiencing a boom. The province is Canada’s grain bin but is now profiting more and more from production of oil, uranium and potash.

Included is a discussion of the Bakken formation and horizontal drilling. Here’s a nice headline: “Rising standard of living.”