Joining the elite: 1 million barrels launches North Dakota into an exclusive club

By Tessa Sandstrom | June 23, 2014

North Dakota will reach a significant milestone this spring that will catapult the state to heights that few countries and even fewer states have achieved: 1 million barrels of oil production per day.

 One million barrels of daily oil production is a milestone only four states—Texas, California, Louisiana and Alaska—have ever reached in U.S. history, but for about a decade, only Texas has continued to produce more than seven figures per day in the U.S. Over these past 10 years, Texas’s status has been a lonely one, as it serves as the only U.S. representative in an exclusive group of only 20 countries, and one Canadian province that currently produce 1 million barrels per day.

Upon reaching this milestone, North Dakota will find itself among top energy producing countries, thanks in large part to innovation by industry leaders who have developed and successfully deployed the technologies that have unlocked the Bakken. Production from the Bakken accounts for 90 percent of North Dakota’s oil production, and its impacts continue to reverberate throughout the nation and the world.

In fact, the Bakken, along with other shale plays like the Eagle Ford and Permian, are leading a shale revolution that is reducing our nation’s dependence on foreign oil. The Permian, Eagle Ford and Bakken are three of just nine super-giant oil fields in the entire world to ever produce 1 million barrels per day. These and other smaller U.S. shale plays now account for more than 10 percent of the world’s oil supply.

North Dakota’s role in this is a significant one. Since the Bakken discovery well was drilled in 2006, U.S. oil imports have dropped 18.5 percent. At 1 million barrels per day, North Dakota’s production alone is equal to 76 percent of the oil imported from Saudi Arabia and would be enough to fuel nearly 48,272 cars per day. The impacts on our national—and international—energy security are immense. According to energy and financial advisor Tom Petrie, the Bakken and “this new era of growing domestic supply prospects should significantly facilitate America’s leadership in fostering global and economic stability.”

One needs to look no further than right here at home to see how energy development is bringing economic stability. Since 2006, North Dakota has seen its oil output grow six-fold, creating tens of thousands of jobs and careers within the state and contributing billions to our state’s economy annually. At 1 million barrels of daily production, it is estimated that $50 million will be pumped into our state and local economies per day.

Energy development is also fueling income growth. Since 2011, the rise to 1 million barrels per day has meant 56,000 new jobs—well-paying jobs. Because of North Dakota’s strong economy, we have seen our average per capita incomes grow to become the second-highest, behind only Connecticut.
Our state and local governments remain among the major beneficiaries of oil and gas development. In 2013, the petroleum industry contributed $2.9 billion to state coffers, accounting for more than 50 percent of total revenues collected that year. Since 2006 when oil production was only 109,400 barrels per day, oil and gas industry contributions to state revenues have grown by 1,507 percent. That is not a typo—the oil and gas industry’s tax contributions have truly grown 1,507 percent from $180.5 million in 2006! At $100 per barrel, it is estimated the industry will pay about $11 million per day in production and extraction taxes, further growing state revenues.

The state will continue to see a significant portion of oil and gas taxes funneled to the North Dakota Legacy, or “Rainy Day” Fund. In just a little over four years, the fund has accumulated $2 billion. Another $1 billion is expected to be deposited into the fund during the 2013-2015 biennium, further strengthening this fund for North Dakota’s future.

This growth to 1 million barrels should not be taken for granted. Three other states were once a part of this elite group, but have seen production decline, leaving only Texas and soon, North Dakota in that club. The right policies, however, can ensure North Dakota maintains its spot with Texas and the positive effects are lasting.

It is estimated that North Dakota has another 14 to 17 years’ worth of drilling left to fully develop the Bakken with today’s technology, leading to several decades more of production. Considering today’s technology is only capable of recovering 6 to 8 percent of reserves, however, the future recovery rate could be even higher. Every additional 1 percent of recovery would mean an additional 1 billion barrels of oil from the Bakken.

North Dakota’s future is bright, and it is a reflection of the many hard-working men and women who are living, working and investing in our strong and growing communities. We appreciate the patience and support from communities, landowners and North Dakotans as we tackle the challenges of rapid growth.

In appreciation for this support, the North Dakota Petroleum Council will host a “Million Barrels—One Million Thanks” Celebration on June 25 in Tioga. The celebration will be free and open to the public and will include a BBQ, talks from state and industry leaders, tours of the Clarence Iverson No. 1 well, a mini-museum, aerial tours of the Tioga area, and an airshow by the Texas Flying Legends. We welcome you all and hope to see you there.

Author: Tessa Sandstrom
Communications Manager,
North Dakota Petroleum Council