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North Dakota Is Bakken Business

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See how N.D. government is adapting to the infulx of thousands of workers and equiptment.
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The sun is rising on northwestern North Dakota, casting mottled light across the prairie and the faces of an army of oil workers. Some are ending shifts, others are just beginning. The rising light touches lines of tractor-trailer trucks clogging the roads and thousands of oil derricks nodding in the fields. And it also lights the construction crews who are racing to expand highways, extend utilities and build the facilities that an invasion of oil workers and their families requires.

Like the sun, the state's economy is rising, too, fueled by an ocean of oil freed by hydraulic fracturing, or "fracking." Recent improvements in the technique and horizontal drilling make previously inaccessible oil and natural gas recoverable. As of March, only Texas was producing more oil than North Dakota.

North Dakota has the nation's lowest unemployment rate—3.0% in May 2012—and fastest-growing economy. But in a few counties in the northwestern part of the state, at the oil boom's epicenter, the growth in the past three years has been exponential.

In the counties around the oil-rich Bakken shale formation—Williams, McKenzie and Mountrail—total construction starts averaged $52 million a year from 2000 to 2008. When the boom began, they hit $117 million in 2009 and $105 million in 2010. In 2011, starts soared to $406 million, according to McGraw-Hill Construction's Dodge database.

"The three counties saw construction starts increase 285% in 2011," says Bob Murray, vice president, economic affairs for McGraw-Hill Construction, New York City. Through the first five months of 2012, total construction starts for the three counties already has been reported at $471 million, he adds, "so 2012 is shaping up as another year of strong growth."

It is a brilliant star in an otherwise gloomy construction economy, although too small to move the needle, nationally. But for northwestern North Dakota, the microboom is sweet. As the oil workers stream in, the boom is driving big demand for housing, roads, utilities, pipelines and railroads.

Volume of Work

But opportunity brings baggage. "The boom is bringing in a lot more new firms who didn't used to work in the North Dakota market," says Paul Diedrich, president of Industrial Builders Inc., Fargo, and senior vice president of the Associated General Contractors of America. Local firms are seeing lots of competition moving in. "Without all the fracking, you wouldn't see anywhere near this volume of work," Diedrich says.

However, fracking has raised environmental worries. The Environmental Protection Agency warns of the risk of oil and fracking brine spillage and the need to properly dispose of the chemical-laced water that fracking employs. Indeed, the state's Dept. of Mineral Resources logged more than 1,000 oil spills last year, although officials say they were small.

The boom is soaking up resources. Not only is there demand for workers—24,000 jobs statewide are currently unfilled—but also for haul trucks.


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