North Dakota oil boom

The North Dakota oil boom refers to the period of rapidly expanding oil extraction from the Bakken formation in the state of North Dakota that lasted from the discovery of Parshall Oil Field in 2006, and peaked in 2012, but with substantially less growth noted since 2015 due to a global decline in oil prices. Despite the Great Recession, the oil boom resulted in enough jobs to provide North Dakota with the lowest unemployment rate in the United States. The boom has given North Dakota, a state with a 2013 population of about 725,000, a billion-dollar budget surplus. North Dakota, which ranked 38th in per capita gross domestic product (GDP) in 2001, rose steadily with the Bakken boom, and now has per capita GDP 29% above the national average.

There are three reasons for the oil boom, in North Dakota as well as elsewhere in America:

The leases expire after their primary term, commonly three to five years, unless the lessee oil company drills and starts producing, in which case the leases continue as long as oil and gas are continually produced. Expiring leases result in a push to commence drilling and production on as many as possible before they expire.

By 2012, income from oil royalties was reportedly paying many local mineral owners $50,000 to $60,000 per month, and some more than $100,000 per month. Bruce Gjovig, head of the UND Center for Innovation Foundation in Grand Forks, estimated that the boom was creating 2,000 millionaires per year in North Dakota. The average income in Mountrail County has more than doubled since the boom started, to $52,027 in 2010, putting it into the top 100 richest counties in the United States.

The oil boom reduced unemployment in North Dakota to 3.5 percent in December 2011, the lowest of any state in the US.

The number of actively-drilling rigs in North Dakota peaked at 217 rigs in Spring 2012, with the rig count averaging 180-190 throughout 2013. Each of the rigs is estimated to create roughly 125 new full-time jobs. This means a total growth of around 25,000 jobs, including an extra 10,000 jobs for workers who lay pipes to producing wells and produce processing plants. Some estimates predict that North Dakota could have as many as 48,000 new wells, with drilling taking place over the next two to three decades.

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