Oil prices have shown a recent dip due to worries about the upcoming fiscal cliff as well as a lowered forecast for demand. If a major drop in oil prices ensues, it could threaten the activity in places like North Dakota, which just today announced a record for annual oil production.
Construction, investment and the population have all taken off in the state, thanks in part to advances tapping the oil-rich Bakken shale formation. Initially discovered in the 1950s, it covers 25,000 square miles of North Dakota, Montana and parts of Canada.
Ron Ness, president of the North Dakota Petroleum Council told Fox News, companies have found the Bakken's edges and technique has improved. "You begin putting multiple wells on a pad... the drilling rigs are becoming more efficient. You can walk your rig, you can slide your drilling rig," and begin producing oil immediately, Ness said. Production has jumped from less than 500,000 barrels a day in December 2011 to the current rate of more than 728,000 barrels a day.
Ness said oil prices are always a concern because it costs a lot to develop the Bakken's high demand, sweet crude. He added the investor community is critical and the fiscal cliff would mean less money for investors to put in. "There's only one Bakken at this point. Other people are searching for it (another one) across the world, but the Bakken is a world class resource."
Williston, North Dakota is in the the thick of it all. "Just the oil companies alone are spending about 2-billion dollars a month on their investments, just to drill the wells out here," Tom Rolfstad, executive director of Williston Economic development, said.
Rolfstad said there is a ripple effect of new homes, businesses and infrastructure, "There is a tremendous amount of new, new, new, pretty much everywhere you look."
A typical Bakken well is projected to produce for 30 years. Ness said this means domestic energy, "For every barrel we produce in the Bakken, we need one less barrel from some unfriendly country."
Lynn Helms, Director of North Dakota's Department of Mineral Resources said besides oil prices, the threat of federal regulations and taxation are also risks to the Bakken's bright future, "...we're constantly making trips to Washington, D.C. We're always in contact with our senators and our congressman and we're working really hard to try to avoid any kind of train wrecks."
Helms said it helps that the state has a high percentage of privately owned property, it's booming because there is not a lot of federal land. And the state has a reputation for being business friendly, "...we have a very rigorous process you have to go through in North Dakota if you're going to impose rules or regulations on the private industry."
It could be argued this is paying off for North Dakota, which enjoys an estimated $1.6 billion budget surplus and the lowest unemployment rate in the nation. The state has also moved up the ladder past states like California and Alaska... it's second only to Texas in oil production.