North Dakota's great oil rush

October 24, 2011
North Dakota's great oil rush
By Larry Oakes | McClatchy-Tribune News Service

WILLISTON, N.D. — School bus driver Barb Russell heard there was good money to be made here in the oil fields of North Dakota, so last month she packed a bag, locked her Farmington, Minn., home, and headed west. She tripled her income.

The 60-year-old grandmother rose every morning at 3 a.m. in September to drive a bus full of Halliburton workers to drilling rigs in a place where trucks roar non-stop and everybody who wants a job has one.

Finding somewhere to lay your head is another matter. Russell ended up living in one of the dormitory-style "man camps" that have sprung up across the booming oil patch to help house the influx of an estimated 35,000 workers.

"I wish 'em the best on getting housing for everybody, especially with winter coming," said Russell, who stands out among the men in her pink cap. "I'd hate to see people sleeping in their cars."

There's no place like it anywhere else in America.

New drilling technology has freed up vast reserves of oil in the Williston Basin of western North Dakota, fueling an economic bonanza that has become a flat-out gold rush. As the rest of the country desperately tries to skirt a double-dip recession, North Dakota boasts a $1 billion budget surplus and the nation's lowest unemployment rate. Recruits from Minnesota, Texas and both coasts keep arriving, reversing a long population decline. Schools are rushing to hire more teachers. Towns are adding more cops.

And the boom keeps booming - almost 200 drilling rigs are boring 100 new wells a month. The state's most recent figures show 16,435 job openings, 48 percent more than a year ago.

But so many workers have flooded the oil patch that many long-time residents and officials are beginning to complain about something most places in the country could barely comprehend: Too much prosperity; too much rapid growth.

In a region burned twice by oil booms that went bust, memories run deep. Towns such as Williston are caught trying to foster roots for workers, many of whom have no intention of settling in North Dakota, while figuring out how long this boom could last. It takes up to 100 workers to drill and prepare a well, but only one to operate it once it's producing.

"We got caught off-guard, thinking this would be another blip on the radar screen," said longtime Williston dentist, umpire and sports announcer Ron Seeley. "We need schools, roads and housing so that we can welcome both workers and their families."

In 1806, Lewis and Clark reunited near what is now Williston after splitting up on their return trip to St. Louis during their famous expedition.

On a butte southeast of town, overlooking undulating brown ranchland and the winding Missouri River the explorers followed, Kodiak Oil and Gas is drilling a new well. Kodiak names its drill sites after bears; this one is Koala.

The 170-foot tall drill rig is one of 195 operating in western North Dakota, compared to 107 in the spring of 2010. That was when Denver-based Kodiak asked longtime oilman Jerry Myers to open a branch office in his hometown of Dickinson, N.D. It's his job to help Kodiak tap a share of the oil in the vast "Bakken" formation 2 miles into the Earth's crust.

"The oil industry is runnin' and gunnin'," Myers said. "The opportunities are astounding."

Prospectors first discovered oil in the Bakken in 1951, but the layer of oil-bearing rock is thin, and early vertical wells didn't produce much. Smaller booms in the 1950s and late 1970s-early 1980s petered out when oil prices fell.

But around 2005, new advances in precision horizontal drilling and multi-stage hydraulic fracturing, or "fracking," changed everything. Terry Ness, who oversees drilling on the Koala site, explained that using high-tech sensors and computers they can change from vertical to horizontal drilling in a long, perfect arc and follow the oil formation up to 2 miles.

Ness, who spent two years drilling for Halliburton in Siberia before moving back to Williston in 2005, said his team was drilling three horizontal wells on the Koala site, each a 30-day process. Once the holes are drilled, a "frack team" pumps chemicals and sand into the wells, opening fissures in the oil-bearing rock, and wells begin to produce.

The new techniques make nearly 100 percent of new wells productive. North Dakota went from producing 110,000 barrels of oil a day in the fall of 2006 to 444,000 barrels a day today. It is expected to pass California and Alaska to become the second-highest oil producing state, behind Texas.

Experts say the industry could conceivably pump between 4 billion and 24 billion barrels of oil out of the Bakken oil formation, which also extends into Montana and Canada. They say there appears to be enough oil to support drilling 48,000 more wells in North Dakota during the next 20 years and give the region a large role in allowing America to achieve energy independence.

It would have been impossible for the region to handle all the workers without temporary cities known as man camps or crew camps. Officials estimate up to 20,000 workers are living in such camps, scattered across 17 counties.

One of the largest, Bear Paw, houses nearly 1,000 people, 15 percent of them women, just north of Williston, on what was a wheat field 18 months ago. Each bedroom was spoken for even before it was built.

The camp consists of 215 prefabricated buildings bolted together to form a sprawling complex of sleeping quarters, a convenience store, free laundry facilities, an Internet cafe with 20 computers, and a rec center with poker tables and big-screen TVs. Most bedrooms have private baths, flat-screen TVs, Internet access and DVD players. Alcohol is banned.

The dining room seats 300 and is staffed by professionals.

"Nobody goes hungry around here," said Travis Kelley, local manager of operations for owner Boston-based Target Logistics. "Our baker makes fresh pastry every morning."

But Bear Paw and other camps have strained roads, water and sewage systems. Last spring, the Williston wastewater treatment system reached capacity and stopped accepting sewage from Bear Paw.

Now trucks haul 36,000 gallons of sewage from the camp each day to Minot, 126 miles away, as Target Logistics builds its own treatment facility.

Two of the most heavily affected counties last month voted to stop permitting new man camps until they have time to measure the impact of those they already have.

"People are coming here with their campers and setting up, and they don't have the proper protections or services that they need," said Stanley Mayor Mike Hynek, who proposed the 18-month timeout for Mountrail County. He said local governments need time to expand water and sewer systems, rebuild roads and hire more police officers.

"We have to make sure there's some kind of quality of life for people," he said.

It's not hard to understand why workers are drawn, as one local official put it, like moths to the flame of western North Dakota's economy. They see a chance for a better life.

Kenny LeBaron, 24, uprooted his wife and 4-year-old daughter and left Prior Lake, Minn., in April to more than double his salary driving a semi in the oil patch.

He'll make $60,000 to $90,000 annually hauling water - a byproduct that comes up with the oil - to sites where it's pumped back into the ground.

LeBaron and his brother, Joshua, 22, work seven days a week, each taking turns driving while the other sleeps in the passenger seat. Kenny LeBaron and his wife plan to "save every dollar" they can for a couple years, then return to Minnesota, and open some kind of retail store.

"I took advantage of this opportunity," he said. "There's a huge need for people here. Since I've been here, I got three friends jobs, too."

For Russell, the bus-driving grandmother, it was about more than just money. It was an adventure. "It's my turn to do what I want to do," she said. "I'm having my midlife crisis."

Williston is straining at the seams. The population grew from 12,500 to around 20,000 in the past five years. Dozens of oil companies and an army of support workers have snapped up nearly every available house, motel room, apartment and tent site, at prices double what they were a few years ago. Short-staffed stores can barely keep shelves stocked.

"There are people living in basements, in campers, in back yards," Mayor Ward Koeser said. "There are hundreds of homes and apartments going up, but people are coming faster than they can build them. It's wild and crazy."

If drilling continues as projected, western North Dakota will have 45,000 wells within two decades, each with a life expectancy of 30 years or more, supporting 45,000 long-term jobs. That's in one corner of a state with 647,000 people.

It would mean not only growth but change - from a nearly empty landscape cloaked at night in darkness to one covered with bobbing mechanical grasshoppers and licking flames of natural gas. It means dealing with environmental concerns about wasting natural gas and the effects of so much fracking, even if it occurs 2 miles below ground.

For towns such as Williston, it means trying to remain a place where people go to live, not just work. "The town needs to catch up," said Seeley, the dentist and sports announcer, watching Monday night football at J-Dubs sports bar with buddies from their 26-year-old fantasy football league.

The city added eight employees in 2010 and is adding 20 more this year, including six police officers. Police calls jumped from 6,500 in 2009 to 16,000 last year.

The school district added 28 teachers and 10 prefabricated classrooms this year to handle the 25 percent increase in students in the past two years. Both the city and school district had to secure apartments and subsidize rent by as much as a third so new hires would have affordable places to live.

"The oil field companies pick up places left and right, and they don't think anything of paying $1,000 or $1,500 a month, but my teachers can't afford that," said schools Superintendent Viola LaFontaine. "I can't keep a janitor because they all want to go work in the oil fields."

Public officials in the oil patch say that they need a greater share of the extraction taxes that oil companies pay the state - 11.5 percent on every barrel, currently more than $1 billion a year - to correctly plan for the growth and build what's needed.

"Eighty-eight percent of that money stays with the state," Koeser said. "We need a lot more money out here to deal with the impacts."

LaFontaine said she anticipates 600 more students in 2012 - double the increase the district saw this year. A bill in the state Legislature last year that would have given her district $12 million to add on to an elementary school didn't even make it out of committee, she said, because lawmakers from the eastern part of the state said it wouldn't be fair.

Her Plan B is to try to persuade 10 oil companies to pony up at least $1 million each. So far, she said, they're not too receptive to the idea, saying they already pay the state so much.

"It's a good thing Williston is coming alive and thriving," she said. "But it's scary because we're not prepared. We're trying to rush around and plan and build. Some of the older people are scared we're going to see another bust. And in some ways, I think they wish we would."

Larry Oakes writes for the Star Tribune (Minneapolis).

Read more: http://www.mcclatchydc.com/2011/10/24/128112/north-dakotas-great-oil-rush.html#storylink=omni_popular#ixzz1bifcc5M5