By Kristy Hartman
North Dakota’s once largely inaccessible and marginally profitable Bakken shale formation has turned into one of the fastest growing oil producing areas in the United States.
According to the U.S. Geological Survey, the Bakken formation is the largest continuous oil accumulation the agency has ever assessed—stretching across more than 200,000 square miles. Up to 7.4 billion barrels of recoverable oil reside between the Bakken and the underlying Three Forks formation, according to U.S. Geological Survey estimates.
This is not the first time the state has seen large production growth from its oil resources. North Dakota experienced its first drilling boom in the 1950s when oil was found on the farm of landowner Henry Bakken. Since then, North Dakota has enjoyed a few, short boom periods, especially in the 1970s and again in the 1990s.
Resource extraction technologies have significantly changed in the last decade so there is optimism that this oil boom will be different. Hydraulic fracturing and horizontal drilling have increased the domestic supply of crude oil and natural gas and continue to reshape the U.S. energy economy.
Earlier this year, North Dakota’s oil production surpassed 1 million barrels of oil a day—increasing 177 percent since 2010. The state’s oil production now accounts for approximately 12 percent of total U.S. crude oil production, helping the U.S surpass Saudi Arabia and Russia in 2013 to become the world’s leading producer of oil and natural gas.
In June, a bipartisan delegation of state legislators—representing eight states—traveled to North Dakota to see first-hand how the state is using a range of modern technologies to extract fossil resources. The National Conference of State Legislatures (NCSL) coordinated the energy tour, which was hosted by North Dakota’s House Majority Leader Al Carlson (R) and Senate Majority Leader Rich Wardner (R).
Legislators toured locations in the Williston area including a drilling rig, a hydraulic fracturing job, and an oil production site. Legislators also had time to discuss the effects of the oil boom on the state economy and how the state is addressing infrastructure and environmental needs. Oil production contributes $50 million per day to the state’s economy, with more than $11 million per day paid in state oil and gas taxes, according to the North Dakota Petroleum Council.
The state’s rapid increase in oil production has also contributed to major growth in the production of natural gas. Some of the gas, however, is burned on site (flared), primarily because of the lack of pipeline infrastructure to get the gas to market. Legislators met with the North Dakota Pipeline Authority as well as the state Department of Mineral Resources to discuss state efforts to harness the natural gas currently being flared.
Shortly after this discussion, North Dakota approved a new flaring reduction policy that will require drilling operators to capture 74 percent of the gas produced, with the requirement increasing to 90 percent by the end of 2020.
The delegation also spent time at a railroad loading facility for crude oil, where they met with experts to talk about the state’s growing reliance on rail to carry oil to domestic markets. There was a discussion over the volatility of Bakken crude given several recent North American rail accidents.
The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) released a report in July concluding that Bakken crude has a higher degree of volatility than most other crude oil in the U.S. A recently released report commissioned by the North Dakota Petroleum Council, however, reinforced preliminary results from May that found crude from the Bakken is similar to crude found in other parts of the U.S. and poses no greater risk to the transport by rail.
But oil and gas are not North Dakota’s only energy resources. North Dakota holds the largest proven reserve of lignite coal in the world and coal provides almost 80 percent of the state’s net electricity generation.
Legislators toured several coal facilities, including the only commercial-scale coal gasification plant in the country that manufactures natural gas. The $2.1 billion Great Plains Synfuels Plant gasifies more than 6 million tons of lignite coal and sells more than 54 billion standard cubic feet of synthetic natural gas each year.
Additionally, legislators met with experts and toured the Coal Creek Power Plant, the largest power plant in the state, with a capacity of more than 1,100 megawatts. They also toured the largest producing lignite mine in North America, the Coteau Freedom Coal Mine.
Kristy Hartman is a senior policy specialist with NCSL's Environment, Energy and Transportation program.