Sharing the riches of mining

The Daily Mail has a long article about fracking and how it has become the new gold rush.

As he takes me on a tour of his buzzing little town, mayor Brent Sanford points out the acres of development that have already happened — the giant grocery store, the smart restaurant, the school extension and the endless housing developments.

And he tells me what’s still to come — a smart new recreation centre, a state-of-the-art hospital, public housing, a day-care centre and even an 18-hole golf course.

There’s a new bank, which is essential, as so many local businesses are flourishing and so many more are clamouring to move in.

But it’s not always easy to hear what he’s saying.

His voice is drowned out by the rumble and roar of oil tankers, drilling trucks and the vast articulated lorries carrying waste water, clattering around his roads like an invading army on a never-ending victory parade.

The traffic noise and congestion are a pain, he admits, as are rocketing property prices — and the occasional punch-up as oil men hit town for a hard-earned drink or two.

North Dakotans are a conservative bunch who appreciate the solitude, the wide-open spaces and a simple way of life.  

But they are sure of one thing — Watford City and the rest of western North Dakota is the land that was saved by fracking.

Only ten years ago, this region was dying on its feet — its farming industry finished, and businesses refusing to move somewhere so remote and empty.

Young people moved away to find jobs and only the elderly remained.

Geographers were even suggesting getting rid of the humans, and turning over the land to the buffalo that once roamed here.

‘Their reasoning was pretty good,’ says 41-year-old Mr Sanford, a fourth-generation North Dakotan.

‘The town has been shrinking since the Depression — but now we can get back to work.’

Two miles beneath our feet is the discovery that has changed everything here — the Bakken Shale formation, 360 million years old and the richest oil find in North America for 40 years. The figures are mind-boggling.

Geologists estimate the 15,000 square mile region of oil that has been dubbed ‘Kuwait on the Prairie’ could be worked for 25 years, using the controversial process known as hydraulic fracturing, or fracking, to produce some 14 billion barrels of high-quality crude oil.

At current rates, that’s enough to meet Britain’s total energy usage for 24 years.

Simon Bridges needs to look at sharing royalties locally (god help us how the numpty local councillor s would spray it around) maybe councils might try a bit harder to attract drillers, Invercargill, Taranaki and the Coast do it.

Why not stick an X% increase in royalties and flick it to the local community, sort of a Norway-lite arrangement. That is one way for sure that the Government can bring the provinces with them for drilling, mining and jobs growth.

Watford City is the epicentre of the Bakken boom and, like everyone round here, Mr Sanford admits that it’s not the best time to see the benefits of fracking while the actual drilling is still happening.

In two years, the town’s population has exploded — from 1,700 to 25,000. Inevitably, the infrastructure, especially housing, is struggling.

But come back in five years, local bigwigs assured me, and it will have calmed down. The building work and road widening will have eased, and pipelines will have been installed so there won’t be the endless procession of tankers.

Then there’s the prickly issue of who gets the tax revenues from the oil and gas.

In Britain, pro-fracking advocates predict there would be much less opposition to it if local people benefit more, rather than all the proceeds being split between the mining companies and the Treasury.

‘There’s nothing northern England could do more to spur employment than drill for shale gas.’

Chris Wright, American engineer

Mr Sanford says he is fighting for his town to get a bigger share, too — it gets eight per cent of the 11.5 per cent tax on the value of the oil that comes out at the well head. The state government keeps the rest.

The other key difference with the UK is that American landowners can sell the rights to the minerals under their land, while in Britain they are owned by the Crown.

In the U.S., companies that want to extract oil from the land — and most of it lies under farmland — must give the owner a lump sum to drill a well, then pay them a royalty for every barrel extracted.

Some North Dakotans have become very, very rich out of the Bakken boom, and state taxation records show around 12 new millionaires are created every week.

Not that you would notice — the plain-living, God-fearing locals don’t go in for flashy displays of wealth.

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