California had its Gold Rush in the 1840s and '50s, and now North Dakota and eastern Montana are at the center of their own rush — a pell-mell race for oil riches that has ignited a surge in jobs and tax revenues but also fueled worries about environmental damage and social upheaval.
Beneath the two-state region lies the Bakken Formation, a massive oil shale deposit that is the largest oil resource in the continental United States.
The Bakken contains approximately 3.6 billion barrels of oil, and perhaps as many as 4.3 billion barrels, according to the most recent U.S. Geological Survey (USGS) estimate, completed in 2008. For comparison, the United States consumed roughly 6.8 billion barrels of petroleum products in 2011. USGS is conducting another estimate because recent drilling in the formation suggests that it may hold even more oil.
The Williston Basin, where the Bakken Formation is located, has been a well-known oil production region for decades. Until recently, however, most of the oil in the area was not economically recoverable because it was trapped tightly between rocky layers in shale beds. (In conventional oil formations, oil accumulates in a pool under a dome or vault of impermeable rock and can be pumped out more readily than it can be extracted from shale.)
Now, however, energy companies are using a combination of techniques to produce oil from tight shale. Engineers drill horizontally along seams in the oil-laced rock, then pump in massive quantities of water laced with chemicals to fracture the rock — a technique called hydraulic fracturing, or “fracking.” Horizontal drilling and fracking have produced massive yields from U.S. natural gas fields in the past several years. But fracking is controversial because it also has the potential to pollute groundwater and creates huge quantities of wastewater.
An oil well is drilled near Tioga, N.D., amid the state's oil-rich Bakken Formation. (AFP/Getty Images/Karen Bleier)
In 1995 the USGS estimated that the Bakken Formation contained about 150 million barrels of “technically recoverable oil” — oil that could be extracted with commercially available technology. The agency increased that estimate by a factor of 25 in its 2008 update, based on new insights into the area's geology derived from horizontal drilling.
“Horizontal drilling exposes more of the formation to the wellbore [the vertical shaft drilled from the surface], so you can get a much better picture of the resource,” says Stephanie Gaswirth, USGS's task chief for the new assessment of the Williston Basin. “It's important to understand the source rock, which produces the oil, and also how … thick [the reservoir] is, whether there are spaces in it, the composition of the rock, how porous and permeable it is, and whether there are trapping mechanisms for oil.”
USGS does not drill its own wells when it assesses formations, but the service uses data from energy companies, along with other geologic information such as seismic data. “In cases like the Bakken Formation, where there is a lot of production data, we use as much of it as we can to understand what energy producers are seeing,” says Gaswirth. “We have several years to produce an assessment, but some people who work for private companies have been working this formation for their entire careers.”
The Bakken boom has brought jobs and tax revenues to North Dakota. Oil companies are hiring hundreds of workers, who spend their earnings (including overtime pay) at local restaurants, bars, stores and motels. Many entry-level jobs in the oil region, such as waiting tables and stocking grocery shelves, pay $12 per hour or more.
But energy booms also cause stresses, especially in rural areas. Sudden influxes of workers can lead to housing shortages, traffic jams and rising crime rates. Some rural counties in North Dakota are putting moratoriums on construction of new “man camps,” where oil drillers and truckers live in temporary housing compounds.
One community that has been especially hard-hit by the oil boom is the Fort Berthold Indian Reservation, home to the Mandan, Hidatsa and Arikara nations. Energy companies started leasing rights to develop underground oil and gas from residents of the reservation in 2007, and now many tribal members live on royalties. But critics say the federal Bureau of Indian Affairs — which is legally responsible for verifying that leases are in the best interests of the Indian mineral owners — has rubber-stamped leases that paid less than market value. And the tribe has spent most of its earnings from oil rights held in common on such expenses as repairing roads damaged by heavy trucks, building houses for oil workers and prosecuting energy companies that dump waste illegally.
“These oil projects could dramatically change life on Fort Berthold,” The Bismarck (N.D.) Tribune observed recently. “How that change goes down will be determined largely by how well federal, state and tribal agencies respond to the rapid growth. It will be a challenge all the way around.”
— Jennifer Weeks