Impact Funding For Western North Dakota

Workforce remains a primary challenge for the petroleum industry, but improved roads are also important to continuing oil and gas development, which, in turn, protects the state's tax revenue stream.
By Tessa Sandstrom | November 12, 2014

I remember my family’s first mobile phone. It was a bag phone that had to be plugged into the cigarette lighter and a big magnetic antenna was placed on the top of the vehicle. It was archaic by today’s standards, and some would argue could hardly be considered a mobile phone, but back then, it was pretty neat. As a farming family, we could call home to make sure no one needed anything else from town. And our parents could rest easy knowing that if we got stuck during the 14-mile drive to town, we were a phone call away from help.  As phones became more mobile and affordable, the benefits of convenience and security only became more evident.

In the book, “How We Got to Now,” that I wrote about in last month’s column,  author Steven Johnson talks about the unintended consequences of Google. Similarly, I doubt many of us who had one of the early cell phones ever could have anticipated the unintended consequences we have come to see: texting and driving, the disconnect we have from actual verbal and personal communication, or the “electronic leash”―the inability to get away from work email or phone calls after hours or while on vacation.

Oil and gas technology is no different. When oil and gas development really took off following the 2006 Bakken discovery well near Parshall, North Dakota, state and local leaders did anticipate some of the consequences they would see as a result—a growing population, the need for more housing, hotels, restaurant or retail, a chance to see communities grow. What they did not anticipate—nor did the industry—was the extent to which we would see this growth.

Like Google founders, the industry did not, and could not foresee the social impacts shale development would bring to the state because shale development was, and still is, a modern technological marvel.  As well after well would soon show, however, oil and gas development would become so successful that North Dakota would be catapulted to the national and world spotlight as an economic miracle. Young people who had been leaving the state in droves were staying or coming back to North Dakota for plentiful and lucrative jobs and careers. Rural communities that had been slowly dying were growing.

For those who remembered past boom and bust cycles, making major investments was hard in those early stages of development, but today, we know oil and gas development is here to stay and is generating billions of dollars every year in tax revenues. The positive news is that the impacts or consequences from development we face today should only be temporary, but it will require using those tax revenues to invest in our impacted communities.

Returning more of these dollars to western North Dakota will be the North Dakota Petroleum Council and its members’ No. 1 priority when the 64th Legislative Session convenes Jan. 6, 2015. The first step in this will be to urge for the expedient passage of $800 million in surge funding for oil and gas producing counties so they may begin crucial infrastructure projects as soon as possible next spring. Subsequent efforts will be focused on redrafting the formula so western counties and local governments get more oil and gas tax revenues from the start to meet needs, rather than waiting until the next session.

This will be critical over the next few years as employees make decisions on whether to make these communities their home. Adequate affordable housing is important to this, especially as attracting workers becomes more difficult as the demand for qualified workers and job opportunities elsewhere in the country improve. More and more, a solid quality of life gained from good schools, public services, and amenities like entertainment, restaurants and shopping, is essential to attracting and retaining employees and their families.

Workforce remains a primary challenge for the petroleum industry, but improved roads are also important to continuing oil and gas development, which, in turn, protects the state’s tax revenue stream. Impacts from shutting wells down due to poor road conditions are felt over a longer period of time.  Many non-pumping wells require rig intervention to get them flowing again, which ultimately adds more trucks on the roadways. A one-day shutdown can result in an oil well being down for a week or more. A well shut-down will impact overall production, which impacts taxes that are needed to continue investing in schools, roads, law enforcement and other services for our communities. This is important because new housing and road infrastructure will vastly improve the quality of life in western North Dakota and benefit the entire state as communities catch up and continue their contribution to a growing, diversified statewide economy.

Of course, oil and gas development has many other impacts that we must continue to work through, but many of these, such as building pipeline infrastructure, are challenges that the industry can and will meet through time and investments. The underlying challenges, however, are tied to the resources needed for western North Dakota: more homes for employees to build a stronger road and pipeline infrastructure for our state.

We have seen many improvements over the course of the year with many small towns voting to expand or build new schools, new retail and restaurants opening every day, and the opening of the by-pass around Watford City, but there is still much more needed. We encourage you to join us this legislative session in advocating for more resources for western North Dakota. Together, we can turn those unintended consequences into additional opportunities for progress and growth.

Author: Tessa Sandstrom
Communications Manager,
North Dakota Petroleum Council