In the Colosseum
Lessons From North Dakota’s Oilfields
Building the right climate for energy development can produce remarkable results.
Delayed energy projects and regulatory hurdles to domestic oil production not only cost the United States economy billions of dollars and millions of jobs, but they also stand in the way of an elusive goal: true American energy security.
I believe, however, that our nation is within striking range of that goal and, with the right approach, can achieve it within five to seven years. We have the resources and technology to produce more energy than we consume and break our long-standing dependence on foreign sources of oil. All we need is the will.
In fact, there’s a path to follow, one that North Dakota blazed over the last decade by building a comprehensive energy plan we called Empower North Dakota. We worked to create a business environment that encouraged energy companies across all industry sectors to invest in our state. We created the kind of legal, tax, and regulatory certainty that attracted capital, expertise, and jobs.
North Dakota’s oil industry is just one example of how this building the right climate for energy development can produce remarkable results. Just 10 years ago, oil companies had left or were leaving our state’s oil patch, the Bakken formation, for a host of reasons: inadequate technology, an aging workforce, lack of transportation infrastructure, and insufficient data about our oil reserves. Industry leaders decided they had better places to invest shareholder dollars and earn a return.
But North Dakotans decided to turn this situation around. Our measures included:
• Creating a pro-growth tax environment that invited investment
• Updating geological studies of the Bakken oil formation
• Establishing an oil and gas research fund, paid for by the industry
• Improving infrastructure
• Creating a pipeline authority to expand transport capacity, and
• Establishing a petroleum safety and technology center at Williston State College to train skilled workers.
These steps improved the business environment and drew new technologies and billions of dollars of investment capital to the Williston Basin, which unleashed the potential of North Dakota’s oil patch.
Since 2006, we have surpassed Alaska, Oklahoma, Louisiana, and California in oil production to become the second largest oil-producing state in the nation, trailing only Texas. In 2012, North Dakota produced more than 245 million barrels of oil and provided nearly 11 percent of all U.S. output.
Notably, North Dakota’s policies weren’t about government spending for its own sake. They were about creating an environment for private investment. That approach generated revenues for the state, broadened the economic base, and actually enabled us to reduce taxes several times over the past decade.
SINCE COMING to Washington, I have advanced similar initiatives in the U.S. Senate, measures that will provide the energy industry with the certainty and business environment it needs to thrive. For example, the Domestic Energy and Jobs Act (DEJA), which I introduced this summer with 29 co-sponsors, is a package of 13 diverse energy bills addressing both traditional and renewable development.
Letter to the Editor View all comments (11) | Leave a comment
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Appleby| 2.14.13 @ 7:10AM
Can we set up these programs on private land the way North Dakota did, and sidestep the "public lands" that the Suzuki Creeps want to abandon to the polar bears for eternity? That's the best solution, isn't it?
Bob K| 2.14.13 @ 9:37AM
There is one more step needed if we want "true American energy security" in 5 to 7 years.
We need to build some new oil refineries for this Bakken Shale crude oil right there in North Dakota in the next 5 years? Fat chance of that!
WE CAN'T EVEN BUILD EVEN ONE MORE OIL REFINERY ANYWHERE IN THE USA IN THE NEXT 5 YEARS!! We haven't built a new one in 35 years!
Because if we can't we will not have "true American energy security" in the next 5 to 7 years and all those big ideas that Mr. Hoeven calls for, except for the creation of a big new bureaucracy; a Federal Pipeline Authority, will be wishful thinking. But there should be plenty of votes for another government agency to foul things up!
And so we will end up piping the Crude Oil down to the Gulf where it will be put on tankers and shipped for sale to Europe and the Far East.
Even now Pipelines are being built to transport Marcellus Shale Natural Gas to ports in New Jersey for shipment to Europe.
We have seen that there are plenty of ideas and money available for getting this stuff out of the ground and selling it abroad but very little, if any, for keeping it here in the USA!
Mr. Hoeven should start working on that part of it.
John Navratil| 2.14.13 @ 2:55PM
Bob K,
Not to pick a nit, but building a refinery at the well site doesn't really solve anything. Other sources of crude must still be piped in and then the finished goods must be trucked out, or piped out in individual product pipelines or in a, much harder to operated, batched product pipeline.
There is a pretty good reason for refineries being close to ports.
Bob K| 2.14.13 @ 6:34PM
OK. I knew this wasn't easy to do and your explanation is welcome.
But more refineries are needed to replace our aging ones so build them where they work best but build them here in the USA where the Nation's economy is first in line to use the finished goods.
Alan| 2.14.13 @ 7:16AM
Well, the parasites, thugs and marxists in DC are going to have to do something about this, this is heresy. How dare this state choose prosperity, how dare them.
c. j. acworth| 2.14.13 @ 8:40AM
Drill here, drill now. Ethanol belongs in a glass, not a gas tank.
Pecos Pete| 2.14.13 @ 9:59AM
Senator John Hoeven (R North Dakota) offers reasonable legislation providing for fossil fuel energy independence.
But, it won't happen in the next two years because the democrat controlled Senate will never pass any bill that improves economic conditions in the USA. And for the next four years, regardless of which party controls the Senate, King O would veto any such legislation.
Paul Murphy | 2.14.13 @ 10:54AM
Dear Mr. Hoeven:
This whole article is about claiming that actions taken by state government enabled the North Dakota boom, but the reality is that the boom was enabled more government inaction than by government action.
There are eight known Bekken sized deposits in the United States, The two being developed (Bekken and Eagle Ford) differ from the other six in one significant way: enough of the resource is accessible from privately owned land.
That's what made the difference, not government action, but the relative minimization of the government impediment.
And, FYI in the context of your mention of the research authority? Bet you didn't know this, but the combination of pressure/catalyst fracturing with horizontal drilling was the subject of a federal R&D program in the early 70s, with funding terminated by..yup... the Carter administration.
John Navratil| 2.14.13 @ 2:51PM
Paul Murphy,
The lefties, like Jack London, like to claim that hydraulic fracturing was a product of government investment. They give no credit to George Mitchell and the years of testing and experimenting he did to solve the problem AT HIS EXPENSE.
http://www.chron.com/business/.....742206.php
http://www.oilandgaslawyerblog.....n-who.html
Bob K| 2.14.13 @ 6:12PM
The idea for it goes back to the Depression days when Clayton Glenville Dorn (C. G. Dorn) from Western PA made a fortune in Oil by developing a technique known as "back flooding" which he used to revive supposedly exhausted oil fields.
bluecollarbytes| 2.14.13 @ 8:18PM
The North Dakota 'miracle' is a direct threat to Obama-goals and related propaganda.