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In North Dakota, more emphasis on meeting infrastructure needs of communities and planning for post-oil boom

by Ilene Grossman ~ May 2012 ~ Stateline Midwest »
In 2005, before the oil boom in North Dakota, 6,000 people in the state were employed in the oil and gassector. Six years later, that number had jumped to 35,000, says Lynn Helms, director of the North Dakota Department of Mineral Resources.
 
All of the activity has been part of an economic boom that is the envy of other states: Oil production in North Dakota has reached a half-million barrels a day, a figure that puts the state behind only Texas and Alaska, and tax revenues have doubled over the past two years.
“We started the Bakken [shale] development with just 4,000 wells,” Helms notes. “We now have 7,000, and we are headed for 40,000 wells.”
The dramatic rise in production has put a greater burden on regulators like Helms, while also causing major changes in the areas where it is taking place.
The more wells in use, Helms notes, the more imperative it becomes to reduce the impact of hydraulic fracturing on the surrounding land and communities.
“As regulators, our biggest concern is reducing the footprint of these drilling operations, the amount of surface area used to extract minerals,” he says. “Our efforts are really focused on making that footprintsmaller and smaller per well, so that we end up with as little disruption of the surface as possible.”
That means, in part, clarifying and extending state oversight of hydraulic fracturing activities. For example, North Dakota is implementing a new rule that will require the mud from drilling activities to go into tanks, rather than into pits.
“Our footprint on the landscape should be reduced by 25 or 30 percent, just by this one change,” Helms says. But for local communities, concerns aren’t just about the fracking operations themselves or state oversight of these activities.
“Infrastructure needs are the biggest concern of everyone at this point,” Helms notes, including housing, water resources and roads.
Compared to some of its neighboring states, North Dakota has provided less funding for local communities to cope with the challenges associated with the oil boom, according to a report done by Montana-based Headwaters Economics.
In 2011, the report found, local governments received 8 percent of total state oil and gas revenue directly.
That share is expected to reach 11.2 percent in the next fiscal year due to a new distribution formula. Still, this figure is low compared to what is set aside for affected communities in states such as Colorado, Montana and Wyoming.
However, in the coming fiscal year, North Dakota will make a one-time infrastructure assistance payment of $885 million to impacted local communities.
Researchers at Headwaters also note that state planning now can help prevent a downturn after the oil boom ends. They suggest that states establish “legacy funds” to provide long-term benefits once resources are depleted. North Dakota established such a fund in 2011, and the state’s first deposit gave the fund a beginning balance of $67 million.

 

Ilene Grossman serves as staff liaison to the Midwestern Legislative Conference Energy Committee. . The committee’s co-chairs are Iowa Rep. Chuck Soderberg and Nebraska Sen. Deb Fischer.