Frack to the Future
Can small-town North Dakota survive an oil boom?
Jun 24, 2013, Vol. 18, No. 39 • By MICHAEL WARREN
Some left, including Doris. After graduating from high school, she moved to Los Angeles, where she got married and lived her entire adult life. When she died (young, at the age of 45), arrangements were made to have her buried back home, in the Stanley cemetery. Her husband, a native Californian named Joe, traveled to North Dakota for the funeral and stayed at Hynek’s farmhouse. Hynek, 66 years old and a commissioner for Mountrail County, recalls a change in Joe’s demeanor after being in Stanley for three days.
“I could see that he was becoming agitated or nervous,” he tells me, his eyes narrowing. “He was not comfortable like he was when he first got here two days prior. I asked him, ‘Joe, what’s the deal? You look kind of ill at ease here. What’s going on?’ And he looked me square in the eye and he said, ‘I can’t stand the quiet.’ ”
Hynek, wearing a plaid flannel shirt, blue jeans, and large-framed glasses, leans back slowly in his chair. He lets Joe’s words sit a moment. Then he continues.
“Over the last several years, I’ve been thinking to myself, ‘Uncle Joe, you’d fit right in.’ ”
Today, Stanley is anything but quiet. There’s a nearly constant roar of diesel engines as tanker trucks haul oil barrels down Route 2. The Cenex gas station and truck stop in Stanley, once a lonely outpost for the occasional truck driver or farmer, is full of customers. Even on a rainy morning, the sound of power tools echoes from the new mid-rise hotel being constructed across the street. The Subway next door, only a few weeks old, has a line out the door by noon. The people waiting, young and old, chat with one another about job openings (“Hess is hiring in Tioga”), where they’re living (in a busted RV, at the Microtel), where they come from (every place from Louisiana to Alaska), and how they ended up in this forgotten corner of the country. Where there once was silence there’s now a hum.
That hum is fueled entirely by oil. Since 2007, petroleum production in North Dakota has increased 600 percent, nearly all of it coming from the Bakken shale formation underneath most of the western third of the state (as well as parts of Alberta and neighboring Montana). Locals say the geologists had been promising for years that the North Dakota Bakken probably contained an unimaginable wealth of the black stuff. The locals were suspicious, particularly since the last two oil booms, in the 1950s and 1980s, ended in crippling busts. The discovery of a major oil field in eastern Montana in 2000, where the earth above the Bakken rock is the thinnest, was more evidence of treasure to be found in North Dakota. The problem was one of access, since the North Dakota reserves were much deeper beneath the surface—about two miles down, as it turns out—and encased in solid shale and sandstone.
That’s where new technology stepped in. By 2008, engineers had developed a more efficient, cheaper way to drill into the Bakken and other thick rock formations containing petroleum and natural gas. Hydraulic fracturing (or “fracking”) revolutionized the energy industry, and in North Dakota it works something like this: A well is drilled vertically into the ground, followed by miles of piping. When the drill and pipe hit the Bakken shale, they curve horizontally, drilling through the upper layer of rock into the middle of the formation. A water-based fluid is then shot down into the pipe. When the extremely pressurized fluid reaches the Bakken, the rock fractures, releasing the embedded oil back up the pipe. The well is active and ready to pump barrels of that sweet, sweet crude.
The benefits of fracking go beyond its ability to reach the previously inaccessible. The technological advances in horizontal drilling mean a well on the surface can be placed miles away from a deposit of oil that might lie beneath a functioning farm or ranch. And the use of the technology in exploration is only begetting more knowledge about what exactly lies below the surface.
“Almost every time they drill a new well, they learn something new about that formation,” says Hynek. “And when they learn new things, they develop new technologies for extracting the oil.” The flow hasn’t stopped, either. In the first two months of 2013, oil production already far outpaced last year, and the number of active, producing wells has doubled since the end of 2008. Even in oil-rich places like Texas and Alaska, a miscalculation might give you a dry hole, a large, expensive well that produces no oil. You never hear about dry holes in North Dakota.
The fracking process is not without its drawbacks. After drilling is complete, the fracking fluid—water laden with chemicals—is pumped into the ground in deep reservoirs. In some places, there is a risk the fluid could seep into the groundwater, which is often used for irrigation and drinking water. Local leaders use this fact as a way to lobby the state for access to better sources of water than wells, like the Missouri River. Environmentalists decry not only the risk these chemicals pose to surrounding bodies of water but also the aesthetic damage to the Great Plains landscape, which from parts of the highway is dotted with seven-story drills, grasshopper pump jacks, and natural gas flare stacks.
But it’s impossible to ignore the overriding economic benefits of fracking. A study from the U.S. Bureau of Economic Analysis found that in 2012, North Dakota had the fastest-growing economy in the country for the third straight year. The state’s growth rate of 13.4 percent was three times that of its closest competitor, Texas, and five times the rate of the country as a whole. North Dakota’s unemployment rate is under 3 percent, and the state’s population, which had been in decline since the 1930s, is at its highest since the Great Depression.
Before the latest boom, western North Dakota was aging, and not gracefully. While agriculture in the fertile Red River Valley, back east near Grand Forks and Fargo, kept the state afloat through the past half-century, the towns and communities of North Dakota’s oil country were shriveling away, especially after the boom of the late 1980s busted hard. Places like Williston, Keene, Stanley, and Watford City looked more like ghost towns every day.
“They were dying,” says Rob Port, an influential political blogger in Minot. “The oil went away. There’s not a lot of other employers. So a lot of the people went on disability or they had to move. It was very much dying.”
They may have been dying, but locals say the small-town ethos survived in these communities. For decades after America’s major cities were ravaged by crime, and even suburbanites learned to lock their front doors every night, a simpler way of life endured in western North Dakota. Neighbors watched out for each other and held each other accountable. “We’re accustomed to knowing everybody,” Dave Hynek says. “You’ve probably known not only their children, but you’ve known their parents and some instances their grandparents.”
Brent Sanford, the 41-year-old mayor of Watford City, is a fourth-generation North Dakotan descended from Norwegian homesteaders. After witnessing the post-oil-boom recession of his high school and college years, Sanford left home, working as a CPA and living in Fargo, Phoenix, and eventually Denver. But his home in Watford City was always on his mind.
“I didn’t like doing business in Denver, where a handshake meant nothing and it was like, there’s no trust,” Sanford says as we sit in the family car dealership he now owns. “It was like, ‘Here’s the keys for this car and here’s the title. Give me that cashier’s check.’ And, you know, boom, gone. You never see each other again. No trust at all. In a small town, there’s trust there. And mainly it’s out of the peer pressure that the person you’re dealing with across the table might be related to you or might be your wife’s best friend or your grandma’s best friend. It’s going to get directly back to them in two seconds, on either side of the table, if you’ve got a bad attitude or you’re crooked.”
In 2004, Sanford and his young family moved back to Watford City, and he immediately knew he was home. “When I moved from Denver to Watford, I walked down the street the first day, and I talked to more people than I had in three years in Denver. ‘Hey, how’s it going?’ ‘Brent, welcome home.’ All the way down the street,” he says.
Coming home years before the oil boom, Sanford was an anomaly. Most in his generation stayed in Fargo or Phoenix or Denver, working good jobs, raising their families, and not thinking twice about moving back to western North Dakota. Beyond the romantic notions of small-town life and refuge from the hustle and bustle of the big city, there was nothing there to come home to—no jobs, no industry, no future. The population of Watford peaked at just over 2,100 in 1980, according to the U.S. Census Bureau. In 1990, it had fallen to fewer than 1,800 people and by 2000, fewer than 1,500.
By 2010, as the oil boom began to spread to the smaller towns like Watford, nearly as many people were living there as had been 20 years before. And today Watford City is bigger than it’s ever been, close to 2,500 people. Sanford says a lot of thirtysomethings originally from the area are moving back as he did, but plenty of new faces are coming, too, looking for a place to live in the middle of the oil patch. That’s created some tangible problems, like a housing shortage. New apartment complexes and single-family homes are starting to be built around town, but supply is far behind demand. Sanford says rents can reach $3,500 a month—prices more like those in a big city than in rural North Dakota. Locals rent out rooms in their houses to newcomers. “There’s not enough motels,” he says. “So every available bedroom becomes a motel room. Everything’s a hundred bucks a night.”
Traffic and crime have spiked, too. Decades-old roads and infrastructure were built for a population half the size of today’s. No one anticipated the fleets of trucks that now pass through town on a regular basis. And earlier in the week, Sanford tells me, a drunk set himself on fire outside a bar on Main Street. Drugs and prostitution, unheard of in a small town where everyone knows your business, are small but noticeable problems now. Watford City had four policemen when Sanford was first elected mayor in 2010. Now it has 10, and Sanford says they probably need 15. Many of the new cops in small Bakken towns are rookies from cities in Minnesota where budget crunches have cut police departments.
Well-drilling in the Bakken will continue for a few more years, but the important jobs of oil production, refinement, and distribution could remain in North Dakota for the long haul—maybe even the next 40 or 50 years. The industry will need a workforce of permanent employees. Sanford says that Watford City’s goal is to be a place for families to settle down. He’s optimistic that the new North Dakotans of the oil boom can revive and maintain the old spirit of Watford City—or at least give it a future it hadn’t had.
“My daughter’s a sixth-grader. There were five kids born that year, the year she was born. There’s 80 kids in her class now. Five kids in a generation? That’s no way to continue your community,” Sanford says. “So no matter what we think, this is better than that.”
Small-town America may have limped along during western North Dakota’s long, uneventful decline, but can it survive a boom? That’s on my mind as I drive across the state. There are times when the landscape looks like a Remington painting, the faded green and yellow hills rising softly above the flat prairie, a farmhouse planted proudly on the horizon. These are the scenes of Dave Hynek’s and even Brent Sanford’s childhoods.
But around a bend in the road, I’m looking at the new frontier. There, in the center of a field, is an active oil well, the pump jack swinging up and down in a steady, hypnotic rhythm. Next to the oil tanks, natural gas burns off in a brilliant flare you can see from a mile away. The farmer who owns the surrounding field is plowing right up to the oil company’s fence, his tractor circling the well with grudging deference. The farmer may have title to the land, but these days, the oil company controls the riches below.
“I don’t think it gets much better than this,” says Fred Evans, wearing a wide-brimmed cowboy hat and an infectious grin. “There’s action going on!”
Evans is the oil boom’s most enthusiastic local booster, and he’s been interviewed by almost every major news outlet about the benefits of oil and fracking. The owner of the TTT Ranch in Mountrail County, Fred and his wife Joyce became millionaires overnight when the oil companies moved into town. That’s not just because Evans’s ranch sits atop plenty of oil-rich reservoirs, which it does; he’s also taken advantage of North Dakota property law.
As the New York Times reported in its 2011 profile of Evans, the 75-year-old rancher spent years buying up the mineral rights of his neighbors. Property owners in the United States typically obtain not just the right to build, farm, and live on the surface of their property, but also title to the natural resources underneath. North Dakota is among the states where these mineral rights are severable from the surface rights. Selling your mineral rights is a bet against there ever being any resource of value, like gold, coal, or oil, under your land. In hard times in the past, a farmer might have sold his mineral rights to his neighbor for some much-needed funds. Evans, his faith in the eventual recovery of the Bakken’s oil fortune never wavering, spent years purchasing or leasing these mineral rights from his neighbors. When oil fever arrived in Mountrail County five years ago, Evans was able to lease all those mineral rights he had accumulated to the exploration companies and reap the royalties. For those with Evans’s foresight, it’s been a bonanza. But for those who made the wrong bet and sold their rights?
“Those are the people that I feel sorry for,” says Dave Hynek, shaking his head. “I really do. They have virtually no say in the matter. Minerals take precedence over surface, and that’s the law. In most instances, the mineral owner and the oil exploration company try to do a reasonable job of compensating those surface owners, but in some instances it just simply doesn’t work. There can be enormous hard feelings created [over] that.”
This facet of the boom has transformed the formerly egalitarian social structure of the agrarian society. As I’m waiting to pay for my sandwich at the Subway in Stanley, I see Fred Evans open his wallet to pay for his. While the cashier is counting out the change, Evans pulls a pair of tens out of his wallet and unceremoniously drops them in the plastic tip cup that’s otherwise filled with ones and coins.
It takes a while to get back on the highway, with one big rig after another zooming down the tired asphalt, their tanks filled with oil, rushing eastward to distribution centers in Minot, Bismarck, Grand Forks, or Fargo. Meanwhile, I’m headed west, toward Williston, the alpha boomtown and the heart of the Bakken. The signs of development begin miles outside of Williston city limits, chiefly in the form of brand-new, full-service truck stops. Ten miles from the city center there’s an extended-stay hotel that offers rooms with full kitchens for $599 a week. That’s high, but so are the salaries. At the new, massive Walmart down the street, there’s a help wanted sign offering entry-level jobs with starting wages at $17.50 an hour. Restaurants, bars, hotels, gas stations, retail shops all line the main drag into town, each with its own “Help Wanted” sign. There’s work here, if you can find a place to live.
It’s not unheard of for men to sleep in their cars in a lot behind a truck stop, using the facilities to steal a shower when they can. There are also the infamous “man camps,” some of which are exactly what they sound like, tent cities on the outskirts of town. They house temporary workers, roughnecks who took the tough jobs on the drilling rigs and need a place to park their carcasses at the end of the day. But as demand for temporary housing rose and locals became weary of the unsightly settlements, the man-camp professionals came in. Companies like Target Logistics manage collections of modular homes for oil workers and other temporary laborers, complete with full board, on-site laundry and canteens, and 24-hour security. In North Dakota, these man camps can house anywhere from a few hundred to a few thousand workers. When the temporary jobs dry up, the companies pack up the supplies, put wheels under the trailers, and move on to the next boomtown.
On the northern rim of Williston is the next phase in the development of a boomtown in transition. Turning off Dakota Parkway onto 26th Street, the older apartments and trailer parks thin out to reveal Williston’s second boom: housing. Specifically, single-family homes. Thousands of lots have been cleared. New subdivisions have been partitioned, streets and sidewalks paved. The suburbs have come to the Bakken. Plenty of the new houses are already occupied, and it even looks like some of the major energy companies have purchased homes for their workers. My eye catches a completed neighborhood of charming (if seemingly out of place) pastel-painted two-story houses. Parked outside each and every one is a white pick-up truck with red letters on the door: “Halliburton.”
I meet a subcontractor in Williston named Bobby Solarz, a 30-year-old Minnesotan. He’s the only gringo working on an all-Mexican crew, installing cabinetry in a couple of housing developments. He takes me into a house he’s been working on. A ranch-style with three bedrooms and a basement, the home is cozy and would be a welcome change for an oil rig worker stuck in a man camp and looking to move his family up from Louisiana. Solarz doesn’t know how much this house is selling for, or even if it’s already been purchased, but homes like these are going for more than $300,000. That may sound like more than they’re worth, but it’s closer to affordability than most have seen in four years in Williston. As in Watford City, the housing supply is coming, slowly.
Solarz, meanwhile, lives with his crew in a mobile home less than a mile from the neighborhood where he’s been working. It’s an unofficial man camp. “I walk to and from work every day,” he says. “It’s not that bad.” His rent’s cheap, but he sleeps on the closet floor of a bedroom housing four others. The Mexican food his crewmates cook up every night is a big plus, he says, but he likes to get out to a couple of the good bars and restaurants when he can.
Some nights, Solarz ends up in one of the city’s two strip clubs, Whispers or its next-door neighbor, Heartbreakers, with the rest of Williston’s unattached males. There’s a sign on the door of Heartbreakers that says the club is closed temporarily for “repairs.” The real story, I’m told, is that there was a shooting in the club a few weeks back. That’s why the bouncer at Whispers frisks every guy who enters.
Five years in, Williston is desperately trying to move on from the Wild West period of boom, away from the strip clubs and seedy bars that men without wives and families and real homes frequent—and where they frequently get in trouble. That’s the philosophy behind the plan for the Williston Area Recreation Center, a multimillion-dollar facility near the state college. The rec center, opening up next year, promises an indoor water park, tennis courts, basketball courts, batting cages, meeting rooms, two pools, a fitness center, and much more. It’s the kind of building project a growing, prosperous city undertakes, and it’s the kind that might sell a city in the middle of nowhere to a reluctant wife or girlfriend.
One afternoon, I drive downtown, past the rec center and new hotels and restaurants into old Williston, a city that came of age in the 1950s, during the first oil boom. All along Main Street sit relics of Williston’s past. There’s the postwar modernist First Lutheran Church, with its tan bricks and freestanding bell tower. Farther down the road is a two-screen movie theater and another tan brick building, an Eisenhower-era J. C. Penney still with its original block-letter signage.
At the southern end of Main Street, near the train station, is a tiny city park. In the middle of the park is a restored locomotive of the class that once pulled cars through Williston along the Great Northern Railway. It’s a reminder of how the rail industry tamed the frontier and helped build cities like Williston at the turn of the 20th century. Two young men who work for the city are watering the freshly planted flowers that surround the park’s tidy courtyard. If the locomotive is a symbol of Williston’s past, the immaculately landscaped park is a sign, like the rec center across town, of its promising future.
Suddenly, I spot something in the engine’s shadow. It’s two men, wearing oil-stained blue coveralls, passed out side by side on the manicured lawn. Whispers is only a block or so away. There’s a half-empty soda bottle between them. Not even the loud horn of a passing freight train rouses them.
Michael Warren is a reporter at The Weekly Standard.
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