ND Oil Industry Value Triples from 2005-2009The economic impact of North Dakota's oil industry more than tripled between 2005 and 2009, from $4.2 billion to $12.7, according to a study from North Dakota State University study released Tuesday.
By: Associated Press,
BISMARCK, N.D. (AP) — The economic impact of North Dakota's oil industry more than tripled between 2005 and 2009, from $4.2 billion to $12.7, according to a study from North Dakota State University study released Tuesday.
The $30,000 study paid for by the North Dakota Petroleum Council looked at the gross business volume of oil and gas production, exploration, refining, payroll and other activity. Gross business volume accounts for "dollars circulated and re-circulated in the economy," said research scientist Dean Bangsund, one of the study's authors.
The direct impact of oil and gas development in the state increased from $1.29 billion in 2005 to $4.9 billion in 2009, the study said.
Ron Ness, president of the North Dakota Petroleum Council, said the study validates what most people in North Dakota already know: "The industry is growing substantially."
The oil industry accounted for 18,328 full-time jobs in North Dakota in 2009, more than triple the jobs in 2005, the report said. The number of active oil wells increased from 3,391 in 2005 to 4,190 in 2009. Each new well adds an estimated $3 million impact on the state's economy, the study said.
Bangsund, who wrote the report with Larry Leistriz, a professor in NDSU's agribusiness and applied economics department, said the results "shouldn't come as a surprise to anybody."
Gov. Jack Dalrymple said the study confirms that the oil industry's contribution to North Dakota's economy has grown rapidly. But with it has come greater costs for road repairs and other infrastructure improvements in oil-producing counties in western North Dakota, he said.
"We want this great development to continue doing great things for our state," Dalrymple said. "All of this is positive as long as we don't let infrastructure become a problem."
He has recommended that the Legislature spend $229 million repairing and improving state roads in the oil-producing region during the next two years. Dalrymple's plan includes $142 million in road aid for counties and townships.
North Dakota's oil boom started in the mid-2000s with advances in horizontal drilling and hydraulic fracturing techniques. Hydraulic fracturing, a process that uses pressurized fluid and chemicals to break open oil-bearing rock some two miles underground. Cracks, propped open by injected sand or ceramic materials, provide a pathway for oil to flow to the well.
Bangsund and Ness predicted the 2009 economic impact numbers will soon be overshadowed by those from 2010, a year of record production.
"Last year will be a magnitude bigger than 2009 but we don't have all the data to look at that yet," Bangsund said.
State officials estimated North Dakota produced about 110 million barrels in 2010, up from 79.7 million in 2009. Ness estimated the number of jobs in the industry has increased to 25,000, and there are now about 5,300 producing oil wells.
North Dakota mineral rights owners received $559 million in lease and royalty payments in 2009, up from $302 million in 2007, the study said. Lease and royalty payments from 2005 were not available, Bangsund said.
The study said that every dollar spent in the state by the oil industry in 2009 generated $1.58 in additional business activity.