Why Back The Bakken?

The Bakken has clearly transformed North Dakota. Across the state, housing demand is strong, schools are full, and businesses are thriving. Rob Lindberg, director of the Bakken Backers, provides facts about the Bakken's impact.
By Rob Lindberg | May 16, 2014

The Bakken has clearly transformed North Dakota. Across the state, housing demand is strong, schools are full, and businesses are thriving.  After fighting out-migration (remember that term?) and a graying population for years, North Dakota has become the most youthful state in the nation and a place to start a career in any field and at any level. In fact, average income in our state has risen from 39th in the nation to second in little more than a decade.

No city has captured the impact better than Grand Forks. Leaders there have identified 110 companies generating more than $300 million annually from the Bakken’s energy industry. These are construction, manufacturing, engineering and other businesses that work in the Bakken or provide products and services to it. And while the Bakken is only a part of their overall business, the impact of Bakken-related business activity is comparable to the total budget of the University of North Dakota.

While Grand Forks is unique in recognizing and pursuing the boom, the Bakken has impacted all of our cities. With an annual economic impact of $30 billion dollars to the North Dakota economy, we can all name a friend or relative who benefits directly from the Bakken. Certainly, we can see the growth the Bakken has on our hometowns.

The wide impact of the energy industry prompted the formation of a group to express the importance of the Bakken to everyday businesses and people. Bakken Backers are entrepreneurs, business and government leaders, energy workers, and everyday people in Eastern and Western North Dakota who support what the Bakken means for North Dakota's economy and American energy security.

Members are located in every corner of the state, span all age groups, and range from energy professionals to local small-businesses owners and retirees. They are concerned about keeping North Dakota’s economy successful.

And they should be. Our economy has become the brightest in the nation and a model for how to let the economy drive prosperity and job creation.

Often, the state’s success is attributed to the lucky development of hydrocarbon formations millions of years ago, but the Roman philosopher Senaca had a different perspective on luck, stating “Luck is the meeting of opportunity and preparation.” For decades prior, North Dakota hungered for economic progress and prepared for economic opportunity by putting in place reasonable policies for the economy to succeed. Before oil, we advanced our value-added agricultural, manufacturing, and technology industries and experienced better than modest income growth. We muted and slightly reversed out-migration, and we did this by trusting economic growth to entrepreneurial leaders.

North Dakota’s recent success in the oil and gas sector is little different. While the opportunity for a strong energy industry in North Dakota has been known since the 1950s, preparation by the industry, in terms of technology, was not yet ready to meet the opportunity of the Bakken. It would take decades of technology investment, trial and error, and a few lost fortunes before the pioneers of the oil and gas industry would advance their ability to economically harvest hydrocarbons trapped within the shale formations. Today, it seems unbelievable to think these processes became economically feasible for application in North Dakota only seven years ago.

Fortunately, when technological preparation met the opportunity, North Dakota had already put in place good regulatory preparation (though our rules have been adjusted since). North Dakota had, and largely still has, a pragmatic approach to energy development. It, by and large, applies the same long-term, results-based regulatory approach to the energy industry that it successfully applies to all industries. It requires the oil and gas industry to reclaim lands once production ceases. Our pragmatic approach protects the outdoors and water sources with stringent environmental rules, regulations, and fines that focus on outcomes and it lets leading experts determine the best methods to achieve outcomes, which over time, allows flexibility and innovation and results in better methods to protect the environment.

The opposite regulatory attitude very much exists, much to the detriment of the economy and wages, in other states. Importantly, the attitude of regulators extends from industry-specific bodies to almost every agency such as worker compensation, public utility, and taxing agencies and policies.

For instance, the early exploration of the Bakken began in Montana with few in the industry expecting North Dakota to become a viable play. While challenging geology has slowed exploration, Montana has further crimped its ability to take advantage of the Bakken in non-production businesses with difficult regulatory requirements and worker compensation costs among the highest in the nation. With surging power consumption on both sides of the North Dakota-Montana border, utility providers have often found it easier to work within North Dakota than inside Montana’s borders. High tax rates and heavy regulation on pipelines have limited pipeline expansion in the state, a function that provides high numbers of construction, maintenance, and engineering jobs in North Dakota.

Other states place much greater regulatory restrictions on the energy industry to the detriment of their business communities and working population. States like Colorado and especially California, as well as communities within them, have taken steps that block any development, responsible or not, within their borders. In Colorado, setback restrictions cost millions of dollars in lost opportunity for the state, industry and local businesses, while some local governments have outright banned industry practices such as hydraulic fracturing, despite any credible evidence anywhere that suggests the practice has produced a harmful outcome. Meanwhile, in California, which holds the Monterey formation containing twice the estimated reserves of the Bakken, the county planning commission for Santa Barbara County denied a proposal by Santa Maria Energy LLC to drill 136 wells, despite a staff recommendation to approve the project.

The story is considerably better for North Dakota, where support for energy development in the state remains extremely strong, consistently polling above 80 percent. Here people recognize the need for industry in providing opportunity for job creation and business expansion. They recognize reasonable regulation protects our state’s outdoors and water sources while giving far greater benefits to our workers and entrepreneurs.

Bakken Backers was created to help promote this message. We must acknowledge the good works the industry does in reclamation, for the outdoors and charitable organizations. We too can endanger our state’s energy industry with over-regulation in small measure and in certain ways, we are on just that track. We have attempted to give voice to out-of-state environmental activists.

Too often, these groups scream and shout while the rest of us go about our jobs and daily lives, never standing up to their attempts to stop an industry that benefits us all to varying degrees. But we must stand up. We must tell the story of how we benefit in small and great ways from what’s happening right here in North Dakota. We must remember the decades we only dreamed of a nation-leading economy and we must work to keep it so.

Bakken Backers is here to give voice to North Dakota’s hardworking majority. The group promotes what the Bakken means for North Dakota’s entire economy, promotes the development of western communities and fights to keep the industry strong, and I hope you will help us tell the story of why the Bakken is important to you. Together, we’ll keep North Dakota a friendly place for every business.

Author: Rob Lindberg
Director, Bakken Backers

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