Williston, North Dakota is a dusty, prairie town. It’s just a stone’s throw from the Canadian border. Up until a few years ago, few Americans had ever heard of it. Now they’re flocking there in droves. Even strippers from Vegas are making the migration.
You see, there’s no recession in Williston. Far from it: The city’s unemployment rate is close to zero. The majority of the jobs sport starting salaries north of $100,000 a year. That’s not a typo: Six figures to start. It’s a real honest-to-goodness Western boom town.
The city’s two strip clubs are packed seven nights a week. They’re a good place to check out if you’re job hunting. Many workers find a job a few hours after they arrive.
And the strippers? They’re in seventh heaven. Even an average stripper can make $1,500 a night in tips. That’s 10 times what she’d make in Vegas. Good ones make double that.
What on earth is going on in this once quiet town in the middle of the northern prairie? Williston is ground zero for the new oil and natural gas boom that’s happening in the “Rough Rider” state.
Need a job? Pack your bag and head on up. Just bring a place to live with you. The few hotels are booked for several years by the oil companies who operate there. The housing shortage is Williston’s biggest problem. If you’re lucky enough to find a place to rent, you’ll pay four times what you would have just a couple of years ago.
The real estate market? In one sense, it’s booming, especially if you’re a seller. But there’s no thick listing book to look through like there are in most other cities. As soon as a house is put up for sale, it’s as good as sold. They’re quickly snapped up by the new wave of oil and natural gas workers who’ve moved in.
The Bakken Boom
It’s all due to the “Bakken Boom” – a revolution in shale oil and shale gas that’s taken this area by storm in the last few years. It’s the primary reason North Dakota’s overall unemployment rate is a whopping two percent – less than a quarter of the nation’s average.
The Bakken formation is a 25,000 square mile chunk of rock that underlies part of North Dakota, Montana and Saskatchewan. Estimates for how much oil it contains vary, but the latest are north of 50 billion barrels. That would run the entire country for about four years at present usage rates.
The oil- and natural gas-bearing rock is an average of 150 feet thick, but can be as thin as fifty feet in some places. Oil and natural gas were discovered here way back in the 1950s. It proved impractical to extract either, mostly because they were tightly trapped in the shale rock that makes up the Bakken formation.
But horizontal drilling and hydraulic fracturing changed all that. Drilling companies are able to drill down to the oil- or natural gas-bearing layer, turn the drill bit, and then follow it for miles.
Once the well is completed, the surrounding rock is hydraulically fractured, and the cracks are propped open. This allows oil and/or gas to flow out of the well to the surface. These two processes have completely changed oil and gas drilling in the United States. Nowhere is that more apparent than in the Bakken.
The Bakken Boom is responsible for the quadrupling of North Dakota’s oil production since 2005. Take a look at these charts from the EIA. The data is based on information from the North Dakota Department of Mineral Resources.
This past September, the state’s oil production averaged over 460,000 barrels per day (bbl/d). That’s nearly five times September 2005 levels. Oil production has increased to the point where North Dakota oil production is only surpassed by Alaska, Texas and California.
But the Bakken is just beginning to be exploited in terms of its oil content. Just over 200 rigs are currently drilling there, with 10 more added by the end of the year, according to a study undertaken by The Associated Press.
All that drilling has created a backlog on the back end of the process. North Dakota Department of Mineral Resources (DMR) data currently indicated there are over 350 drilled wells awaiting fracturing services.
As a result, the DMR is forecasting an oil production increase of nearly 100 percent to as much as 750,000 bbl/d by 2015. This is higher than the 700,000-bbl/d estimate it gave earlier this year.
Thus far, the crude oil takeaway capacity (via truck, rail and pipeline) is keeping up with the increases in production. The DMR doesn’t expect a problem, as all three are increasing their capacity in the region to handle the ever-increasing production.
So don’t count on a letdown any time soon.