Oil was first found in North Dakota in 1951, near Tioga by the Amerade Oil Company. The discovery set off an oil boom in the Western part of the state. Western North Dakota is estimated to hold 400 billion barrels of oil, even more than the Arctic Natural Wildlife Refuge. Yet presently North Dakota produces less than 2% of the nations oil.This is because the oil is located in a geological formation called the 'Bakken,' shale. It is named after Bakken, the owner of the land where oil was first found. Hitherto technological limitations and the low price of oil made extracting this oil economically unviable. But thanks to new technology and high oil prices, oil companies are scrambling to get sites to start drilling.Even major oil companies are excited and they are investing hundreds of millions of dollars in new wells and production is picking up. Over the last one year 198 new wells have been drilled. What was once agricultural land which was easily available, has suddenly seen its value jump several times over.
The North Dakota oil industry has gone through several boom and bust cycles in the last 50 years. This is because the oil here is expensive to produce. Therefore in the past when oil prices were high the economy boomed, and when they fell the economy slumped. But analysts believe that this time round the boom is here to stay. They argue that oil prices are unlikely to fall below $50 per barrel and therefore the North Dakota oil boom will sustain over the long term.
Some uncertainties do remain however, as the oil is in a layer of rock almost two miles below the surface which presents technological challenges, and how much of it can be extracted is also not known. But the effort is worth it, as getting to all this oil is equivalent to finding five and a half new Saudi Arabias. The levels of exploration and drilling activities are rising, and North Dakota officials expect to approve permits for 500 new wells this year.
This high level of activity is straining the existing infrastructure. The roads and water systems are strained. As the oil industry encourages workers to switch from other jobs to oil, other businesses are now facing labor shortages and rising costs. Much of the natural gas that has also been found is presently being flared till new natural gas plants come up. All this has led to a boom in connected industries such as new pipelines to transport the oil and the natural gas, more housing for workers, electricity to run the various plants.These point to fundamental changes taking place in the local economy which is likely to be transformed for ever.