The news from North Dakota's oil patch has been super. The state recently surpassed Louisiana in oil production, making North Dakota No. 4 among crude oil producing states. At the same time, the benchmark price for crude has risen to nearly $80 per barrel. It means high volume production at a better price, which translates to jobs, business and strong state tax revenues, and unfortunately, but necessarily, higher prices at the pump.
The oil industry in North Dakota has been a steady provider of late, with a growing role in crafting the state's economic future. There seems to be less boom and bust and more continuous performance.
There are issues. Getting North Dakota crude to market, causing a discounting on price from the state, continues to be a problem. There are pipeline projects in the works that may take some of the edge off that issue; especially if the state can confirm the potential of the Three Forks-Sanish pool and give critical mass to the need for additional pipelines.
There's also environmental concern. The U.S. Fish and Wildlife Service has begun a fisheries experiment related to the impact of oil exploration on Lake Sakakawea fish. Of particular interest is whether seismic blasting used in oil exploration affects fish. On another front, it has been discovered that volatile organic compounds (hydrocarbons) are escaping as a vapor from oil sites in the Bakken area. The seriousness of the releases, and what's to be done about them, has not been determined.
North Dakota has a long history with the oil industry and, as a result, has been cautious about becoming too dependent. Past busts have taught cities, counties and state government agencies hard-earned and expensive lessons.
ADVERTISEMENT
The biggest cloud on the horizon for North Dakota oil comes from Washington, where Congress and the Obama administration are working on energy and environmental legislation that may increase the costs for energy companies to do business. There are a lot of unknowns, with even more federal uncertainty related to the state's coal-fired power plant operations.
North Dakotans also see growing fields of wind generators; meaning that the state isn't wearing blinders as it looks toward an energy future. Many energy alternatives are in play. The keys in the short run, however, belong to oil and coal.
And more and more, it looks like the Bakken and Three Forks-Sanish crude production will be critical in helping the state sustain jobs, business and a high quality of life in North Dakota.
