January is the month for governors to deliver State of the State addresses, and again this year we’ll highlight the sections of their speeches that discuss manufacturing.

While new governors have already delivered their inaugural addresses, the first State of the State speech we find comes from North Dakota Gov. Jack Dalrymple, who was sworn in last month to the office as Gov. John Hoeven resigned to take a seat in the U.S. Senate.

Unlike other states, North Dakota faces no budget crisis — unless you count the potential of overspending as a crisis — thanks largely to the amazing oil and gas boom from development of the Bakken Formation (and high agricultural commodity prices). Economic growth and a 3.8 percent unemployment rate make for more positive rhetoric than we’re likely to see from, for example, in today’s speech from New York Gov. Andrew Cuomo.

Dalrymple acknowledged energy’s important contributions in his speech, delivered Tuesday to a joint session of the North Dakota Legislature in Bismarck.

The energy industry has long provided a major opportunity for job growth.  To foster that growth, we have promoted the development of all forms of energy, traditional and renewable. For instance, in the oil and gas industry we facilitated a dramatic expansion in transportation infrastructure.  By expanding our pipelines and rail transportation, we’ve doubled capacity from 230,000 barrels of oil per day in 2007 to nearly 460,000 barrels in 2010.  This obviously is a critical element in expanding the job opportunities in the energy industry.

Jim Arthaud saw opportunity in our growing oil and gas industry. He and other family members established Missouri Basin Well Service with one truck in 1979.  Today, the oilfield logistics company is the largest private employer in Stark County with 500 employees, 130 contract workers, 200 company trucks and 150 leased trucks. Their company transports oil, sand, water and other oilfield products throughout western North Dakota.  When we talk about developing the energy industry for North Dakota, we’re talking about entrepreneurs like Jim Arthaud and his family.  Jim, please stand so we can thank you for all those jobs.

Dalrymple, a Republican, also discussed the state’s emphasis on technology, tourism, and value-added agriculture as target industries. The other, advanced manufacturing, is sought because “here state-of-the-art equipment provides not only greater efficiency but also higher-paying jobs that require advanced skills learned in North Dakota.”

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“Drill, North Dakota, Drill,” is the headline on a recent editorial in Investor’s Business Daily hailing the economic benefits from energy development in North Dakota.

One state, North Dakota, is in a boom of sorts, so much so that it was rated by the Adversity Index as the first state to have moved out of the recession and actual expansion mode.

The key may be North Dakota’s development of the energy resources under its soil and in its rocks, something the Obama administration is loath to do nationally. Instead we get drilling moratoriums and polar bear habitat protection that serve to make America the only industrialized nation not developing its domestic energy resources.

North Dakota is simply gushing. It has a billion-dollar budget surplus and oil revenues ready to shoot up 70% over the next two years.

Contrast this with the Gulf states, where job losses could reach tens of thousands as the oil industry atrophies and rigs leave for foreign waters.

North Dakota has risen to become the fourth largest oil-producing state in the nation. Along with a friendly population and reasonable regulatory environment, thanks for the boom go to the technological advances like hydrofracturing and horizontal drilling that have made it profitable to develop the oil-rich Bakken Shale formation.  

Hydrofrac is already helping to create thousands of jobs in the states that lie above the Marcellus Shale. From AP:

A recent report by Pennsylvania State University, commissioned by a natural gas industry group, predicts that in 2010 drilling in Pennsylvania’s shale formations will add 89,000 jobs and inject $8 billion in spending into the state.

And consumers of natural gas are welcoming low prices. Analysts predict heating bills this winter could be as low or lower than last year and sharply lower than in recent years. Through the first six months of 2010, average residential gas prices were 9 percent lower than for the same period in 2009 and 18 percent lower than in 2008, according to the Energy Information Administration.

Pennsylvania’s political leaders are stuck on the details of an excise tax on the natural gas, but by and large the state seems welcoming to the Marcellus Shale development. In New York, unfortunately, the environmentalist reactionaries and anti-energy forces are slowing the development and jobs that come with it.

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.

When Daniel Yergin writes about historic development in energy production, one pays attention. In today’s Wall Street Journal, joined by his colleague Robert Ineson, Yergin examines the rise of natural gas production in the United States made possible by technological advances that open up vast shale deposits to exploitation. From “America’s Natural Gas Revolution“:

The biggest energy innovation of the decade is natural gas—more specifically what is called “unconventional” natural gas. Some call it a revolution.

Yet the natural gas revolution has unfolded with no great fanfare, no grand opening ceremony, no ribbon cutting. It just crept up. In 1990, unconventional gas—from shales, coal-bed methane and so-called “tight” formations—was about 10% of total U.S. production. Today it is around 40%, and growing fast, with shale gas by far the biggest part.

The potential of this “shale gale” only really became clear around 2007. In Washington, D.C., the discovery has come later—only in the last few months.

Making this development possible has been hydrofracturing, or fraccing, the technique of injecting pressurized liquids into the strata to fracture the shale and free the gas. (See Shopfloor.org’s previous posts on the topic.) The potential of this gas development is especially important economically to northeastern states — and industry — because the Marcellus Shale is close to markets in New York, Pennsylvania and other heavy energy consuming areas.

Earlier in the decade, natural gas prices soared as demand grew, spiking as Hurricane Katrina disrupted supplies. Price and price volatility were big factors in driving natural-gas consuming industries like fertilizer and chemical manufacturing overseas, but now…well, there’s reason for optimism.

Except, as the authors note:

[Industrial] users and the utilities with their long investment horizons—both of which have been whipsawed by recurrent cycles of shortage and surplus in natural gas over several decades—are inherently skeptical and will require further confirmation of a sustained shale gale before committing.

Skepticism also arises because of the growing environmentalist/NIMBY alliance dedicated to regulating hydrofraccing into submission, with the activist journalism outfit, ProPublica.org, serving as the movement’s house organ. States now regulate this aspect of drilling, and the regulators stand by the quality and safety of their oversight. (See the Interstate Oil and Gas Compact Commission for details.)

But federal regulation is always superior to state regulation, right? That at least is the theory of sponsors of bills – H.R. 2766 and S.1215 — to bring hydrofraccing under the Clean Water Act authority, even though as Yergin and Ineson note, shale strata lie much, much deeper than watersheds. Today, the predictable New York Times adds its support for the bills in an editorial, “The Halliburton Loophole.”

State regulation is not a “loophole,” and even invoking the bugaboo of Halliburton does not make it one.

History tells us the real goal, at least for the environmentalists, behind legislation to impose a Clean Water Act regime over hydrofracturing is project-halting litigation. So you can understand industry’s skepticism.

More…

• Houston Chronicle, “Louisiana shale could change fate of U.S. energy supply“
• Houston Chronicle, “Shale gas is producing jobs, stimulating the economy“
• Natural gas producers group, EnergyInDepth

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.