North Dakota Oil Boom Bringing Jobs, Wealth—and a Looming Humanitarian Crisis

A story about the booming oil industry in North Dakota and how it could create a humanitarian crisis.

Indian lands are thought to contain at least 10 percent of the energy reserves in the United States, and the Bakken formation in western North Dakota and eastern Montana is estimated to contain 18 billion to 25 billion barrels of oil. The number of oil wells in just a five-county area in northwest North Dakota has increased from 800 a few years ago to more than 6,000 today. The boom in natural gas has been just as dramatic—one company has already spent $2 billion to build two natural gas–processing sites there.

North Dakota is now the fourth-largest oil-producing state in the U.S., recently passing Louisiana. At the present rate of growth, it will knock California from third place later this year. The unemployment rate in the state has dropped to 3.3 percent, the lowest in the nation. The unemployment rate in the Williston area, in the heart of oil country, is less than one percent. Business growth in the western counties continues. The average salary in the five northwest counties is at an all-time high of almost $60,000, a 79 percent increase since 2007, but the cost of living has also rocketed.

The population in the state, after a decade of decline, is on the rise. At an October 2011 law-enforcement conference for North Dakota’s western counties, officials reported that Williston had a population increase from 14,500 to more than 20,000 in four years and it may have been greater, since statistics become out of date almost immediately. The population in Minot, the next-closest big town, jumped 9,500 in three years and is still growing. Typically, there are 4,000 job openings in the five-county area at any given time, but there is no place to put additional workers. Multiple- and single-family dwellings are in such demand in the Williston, Watford City and Newtown areas that a two-bedroom apartment rents for $2,000 a month and a four-bedroom house goes for $4,000, if you can find one. Exacerbating the crunch is the lack of manpower for construction work and the inability of construction companies to house workers, even temporarily.

Along with this huge economic bounty, however, came a slew of negatives. The oil rush has been particularly hard on public services like law enforcement and emergency-response teams. There has been a sudden influx of people and vehicles (cars, trucks, heavy trucks, trailer houses) and a frightening jump in traffic fatalities, as well as arrests for DWI, prostitution and drugs.

The boom has torn many families apart. Some have been forced to live hundreds of miles away while one member works in the energy industry. Workers are coming from as far away as Florida and Idaho. Even though many workers have chosen to leave their families behind, housing is in short supply. Local officials say that this has led to a proliferation of “man camps,” which are essentially multiple-unit trailer homes. The city of Williston reports a proliferation of recreational vehicles, camping trailers and pickup campers, and has imposed a 48-hour restriction on parking on streets and other public areas. County officials have also had to limit the number of temporary man camps on farmsteads to no more than three because of the lack of sewer and water facilities.

The going rate to park a trailer or recreational vehicle long-term is $800 to $1,200 per month. Five new hotels are currently under construction in Williston.

The strain on law enforcement is demonstrated by statistics from the North Dakota Sheriffs & Deputies Association. The Williams County Sheriff’s Office in Williston reports that there are as many DWIs issued at 10 a.m. as are issued at midnight. Jail bookings have increased 150 percent, and bonds as large as $10,000 are routinely paid in cash. (One person paid a $65,000 bond by pulling the cash out of a Walmart shopping bag.) Law enforcement can no longer do anything but answer calls, make arrests and investigate crimes. The proliferation of strip clubs and “babe buses”—which are basically strip clubs (or worse) operating out of an RV—has also added to the frontier-town atmosphere, according to the Williams County Sheriff’s Office. The same sources say they are seeing hard drugs that they have never seen before, such as black tar heroin. The North Dakota Sheriffs & Deputies Association states that in Williston and Williams County civil process servings went from fewer than 2,000 per year to more than 4,000 last year.

Williams County and Williston statistics show a scarcity of service workers in the area because of higher wages for laborers in the oil fields. Restaurants in Williston can’t hire enough help and McDonald’s is paying workers $15 an hour (about double what they pay on average nationally) with a $500 signing bonus. Many restaurants have simply gone to window-service only. Grocery costs have risen 35 percent or more. Other services are also in short supply—the Williams County Sheriff’s Office says its vehicles must sometimes be trucked 250 miles to Bismarck for repair and body work because local body shops are booked up and prices there have tripled in the last three years.

Educational facilities are being tested to the limits. The Williston schools superintendent reports that approximately 4,000 primary school children will attend district schools in 2012 and 2013. Those schools were built to handle just 2,000 kids. The state has responded with a $90 million appropriation for new schools that will be tacked on top of local revenue normally dedicated to new facilities. That money has to be spread over 17 counties, and Williston schools superintendent Viola LaFontaine says her district estimates it will need $87 million in new facilities in the next few years to meet demand. And even that still may not be enough, as housing construction races to catch up to the needs of thousands of new workers. And once additional housing is available, even more workers and their families will move into the area.

A good portion of the Bakken formation lies under the lands of the Three Affiliated Tribes of the Fort Berthold Reservation. Since 2009 there has been a 400 percent increase in oil revenue paid to either the tribes or individual members, and income from oil and gas leasing for tribal owners rose from $4.5 million in 2008 to $116.4 million in 2011. With that windfall, unfortunately, comes negative consequences, and Three Affiliated Tribes Chairman Tex Hall says that has neither been adequately studied nor addressed by federal and state officials. Both Hall and Fort Berthold Tax Department Director Mark Fox believe that a tax agreement between the tribe and the state in 2008 cheats the tribes out of tens of millions in tax revenues on oil and gas from lands on the reservation. The state receives 80 percent of the tax revenue from non-Indian lands and 50 percent from Indian lands, and the tribe receives the remainder. Hall says a more equitable share of the tax money would allow the tribe to alleviate some of the human and environmental impacts on the reservation.

When Hall testified before the U.S. House of Representatives Subcommittee on Indian and Alaska Native Affairs in April 2011, he said the tax-split agreement was never approved by the Bureau of Indian Affairs (BIA) and is subject to renegotiation. Fox added that the North Dakota State Senate recently voted down legislation supporting the negotiation of a new agreement on a vote of 42 to 2.

As in any humanitarian crisis, someone has to bear the fiscal responsibility for repairing the damage done, and usually this falls on the government. The rub here is that, according to tribal officials, it appears that neither the state nor federal governments view what’s happening on the Fort Berthold Reservation as a human crisis. This has placed the full burden on the tribes.

Hall told the congressional panel that the BIA estimates that the road damage on the reservation because of the influx of people and vehicles, and the cost of design and reconstruction is almost $90 million. Hall said that many roads were not built to support heavy trucks or the heavy traffic the boom has brought to the reservation. He says this is not only a safety issue but is also an issue regarding access to potential drill sites on Indian-owned property. According to the North Dakota Department of Transportation, the state has increased the budget for road and bridge projects in the impacted counties from $100 million in 2010 to $300 million in 2012.

However, Fox said that only a minuscule part of that $300 million is dedicated to the reservation. He said the Three

Affiliated Tribes have been forced to spend upward of $15 million in scarce tribal funds to address safety concerns regarding these roads. He added that this unanticipated expenditure, along with the increased spending on law enforcement and emergency response almost cancels out the tribe’s benefits under the tax agreement.

Hall testified that law enforcement agencies on Fort Berthold have been overwhelmed. He said the daily influx of oil field workers greatly increases the public safety needs of the reservation’s permanent population. The tribe spent $1 million in 2010 to supplement federal law enforcement resources, but there are still only 13 officers to patrol the million-acre reservation. Unfortunately, Hall estimated that the reservation has experienced a 250 percent increase in police calls, along with huge increases in traffic, traffic violations and traffic fatalities, and that patrol cars sometimes must travel 1,500 miles a day and that the emergency response time on most calls has risen to one hour.

At a law enforcement conference in January, Hall argued that the oil industry must be held accountable for what this boom is doing to the area, and that every federal agency that can assist the tribes should be assisting the tribes. He spoke again of his deep concern regarding transportation safety. Hall said the huge increase in truck traffic has rendered stretches of road on or near the reservation among the most dangerous in the country, and that traffic fatalities have increased significantly because of the big rigs that service the wells.

The increase in truck traffic has spurred the creation of a tribal department of transportation. According to the North Dakota Sheriffs & Deputies Association, law enforcement officials report that one major intersection on Highway 85 south of Williston, on the road to the reservation, a traffic count logged more than 29,000 vehicles in a 24-hour period; 60 percent of those were heavy trucks. Three years ago, a typical 24-hour period would have counted less than a 1,000 vehicles, and trucks were in the minority. When Hall testified before Congress, he told them that a new bridge at Four Bears, which connects truck traffic on Highway 85 to the oil fields on the west side of the Missouri River, was not constructed with such traffic counts in mind. He said local people worry about the deterioration of bridge safety and the aggravation of traffic jams. Some days, a crossing can take two hours, which adds to emergency response times to many areas of the reservation.

Hall’s other major concern when he addressed Congress was the environmental impact the oil and gas development has had on the reservation. This includes all the dust kicked up by the thousands of trucks driving each day on dirt roads, and the illegal dumping of well-waste.

The scarcity of water is looming as another crisis. The Bureau of Reclamation and the U.S. Army Corps of Engineers estimates that 5.5 billion gallons of water will be needed over the next two decades for fracking, which uses a slurry of water, sand and other substances to push oil up to the wellheads. Pollution is another worry; fracking has already been associated with pollution of the water supply at the Wind River Reservation in Wyoming.

Despite Hall’s calls for federal and state assistance, he says the tribes are getting little assistance from government agencies that have been left pretty much to their own devices to cope with this overwhelming human crisis with scarce resources. When he testified before Congress, Fox summed up not just the frustration of the tribes and tribal leadership with the tax agreement, but with the larger challenge presented by this boon. “If the only end result of our [tribes ’] valuable oil is to offset the negative impact caused by oil and gas development,” he said, “then we’re better off leaving it in the ground.”