Search

NACo > Research > County Research Connections > Posts > Hydraulic Fracturing Brings Economic Boom to North Dakota Counties
November 19
Hydraulic Fracturing Brings Economic Boom to North Dakota Counties




Over the past ten years the hydraulic fracturing industry has revolutionized the economies of several North Dakota counties. Dunn County, McKenzie County, Mountrail County and Williams County, all located in the northwest portion of the state, benefited greatly, with the boom creating new jobs and improving the economies of these counties.

Hydraulic Fracturing is a process that allows for the collection of oil and natural gas by applying pressurized liquid to rock formations. All four counties are located on the Bakken Formation, which is prime territory for fracturing. Oil production on the formation has significantly increased; in 2013, over 80% of the oil production in N.D. came from these four counties.

The growth of fracturing has led to N.D. becoming a major producer of crude oil in the U.S. – in August 2013, the state produced over 900,000 barrels of oil a day, behind only Texas among states. From 2005 to 2011, the number of people employed in the oil and gas sector increased from 6,000 to 35,000, with the majority of these jobs being created along the Bakken Formation. In 2011 alone, N.D. produced $10.6 billion worth of oil.

The growth of fracturing led to increased output in N.D. counties, but one problem that affects the county governments is the distribution of taxes from oil production. The state taxes oil at about a 10% rate, a similar rate to Montana and Wyoming, other western oil producers. However, the share of the taxes that goes to the county governments in N.D. is only 25 percent, while the share of taxes that goes to local governments in Montana is over 45 percent. This means that the counties are missing out on important revenue opportunities generated by the new oil production.

While fracturing in N.D has been an economic boon to some counties, the influx of industry and jobs has led to several headaches for county officials. The local infrastructure has been stretched as the counties go through rapid growth. To help counties cope, North Dakota set aside $1.2 billion in impact funds in 2012​, which they plan to distribute to counties in need of help.

Dunn County, McKenzie County, Mountrail County and Williams County have all experienced rapid change with the growth of hydraulic fracturing. As the industry continues to dominate these counties’ economy, they will have to cope with structural change and adapt to new challenges while reaping the economic rewards.​

Comments

There are no comments for this post.