Geologists have known for many years about the oil and natural gas reserves held in the Great Plains and Upper Midwest, but without a cost-effective way to get it out of the ground, those resources lay dormant as America grew increasingly dependent on foreign oil imports.

But within the past decade, technological advances in fracking and horizontal drilling have flipped that dynamic on its head. If the Great Plains energy boom continues unabated, the region is poised to become a national and even worldwide player in energy production.

Several energy and economic development experts met in Rapid City last week for the ninth annual New Horizons Oil & Gas Conference at the Black Hills Learning Center to discuss the impact of the new technology at the regional and national levels.

The outlook presented — from a pro-commerce and industry perspective — shines a positive light on what the shift toward an energy-based economy can mean to a region that has long been sparsely populated, mostly undeveloped and not a hub for commerce outside ranching and tourism.

To be sure, the energy boom has created plenty of concerns for the region. The population explosion in a region that was more or less ignored 20 years ago has increased the cost of living, brought more crime to the region and has given regional school systems fits as they struggle to keep up with rising enrollments. 

Many people who had been renting homes prior to the oil rush were priced out of their homes as their rents skyrocketed.

Still, it’s impossible to ignore the positives the energy surge in Upper Midwest and Great Plains has generated.

Stronger global voice

The boom has had a significant impact on energy availability that has been felt throughout the nation, said Matt Koch, vice president of the U.S. Chamber of Commerce Institute for 21st Century Energy.

The U.S. has always had more fossil fuel reserves than any other nation, but the new technology has made the reserves in the Midwest more accessible, and can help America become much more self-reliant for its energy needs, he said.

Koch said many people, including those in the energy industry, are still trapped in a 1970s mindset that nothing could be done about the Middle East's stranglehold on the oil industry.

"One of my colleagues likes to say that we have disco-era energy policy in this country," Koch said.

His organization projects that America will have a 60 percent drop in its overseas imports. Though it may not reduce the cost of energy, it should create price stability, since the nation will be less affected by volatility in the Middle East, he said.

Oil production nationwide has increased so much that the United States is now looking into exporting fossil fuels, Koch said. 

"The ability to help other democracies, the ability to help our allies, the ability to go to some countries that were dependent on countries like Iran and say 'you don't have to depend on them anymore since we're producing so much more,'" he said, can bolster our nation's standing in the world economy.

The new energy production comes at a time when demand for energy is increasing throughout the world. Countries such as India are projected to have much larger energy needs in the future and America's energy reserves will be an invaluable asset in the global marketplace. 

Regional growth

About 950,000 barrels of oil per day are produced in the Bakken oil fields of northwestern North Dakota, which had more than 10,000 producing wells, and 185 oil rigs as of February, said Brady Pelton, the deputy director of North Dakota Association of Oil and Gas Producing Counties.

The 185 rigs generate 22,000 temporary drilling jobs, in addition to 13,000 temporary jobs building infrastructure such as roads, pipelines and utilities. Each well also creates at least one permanent job.

Those numbers are expected to increase dramatically over the next several years and create even more job opportunities, Pelton said. And that doesn't count the thousands of spinoff jobs created in industries ranging from housing to retail and restaurants to transportation and other industrial services.

Those numbers will continue to increase as the infrastructure of the region continues to improve, in part thanks to assistance from South Dakota-based contractors, experts said.

The energy that comes from the Powder River Basin in southeast Montana and northeast Wyoming, coal in particular, has also had a tremendous impact on the region, said Heather Wilson, president of the South Dakota School of Mines & Technology.

Wilson was on the U.S. House of Representatives Committee on Energy and Commerce when she was a congresswoman representing New Mexico when the Energy Policy Act of 2005 was passed.

She said the energy availability situation back then was dramatically different than it is now.

"Included in that act were provisions for liquid natural gas ports, not for exporting, but because by this point America was projected to be a net importer of natural gas," she said.

However, the recent technological advances in drilling and fracking have made the United States and the Great Plains region tremendously wealthy and filled with opportunity, she said.

"This is a huge impact on the availability of low-cost energy," Wilson said. "The number one reason a company would locate anywhere is because of access to this energy. That has a tremendous economic impact." 

Rapid City's central location between those two huge areas of energy production, in addition to the Denver-Julesburg producing basins, means it is extremely well-positioned to benefit from the boom, said Ben Snow, president of the Rapid City Economic Development Center.

"I've told my friends up in North Dakota it's as if they have this giant chalice that's running over, and we have a little tin cup on the edge of it and we're saying, 'we'll take that.'" Snow said. "We're happy to benefit."

Snow outlined his planned pitch to attract more energy-related businesses to the area, which includes a high quality of life, location on major roadways, strong housing and retail offerings. But Snow said the Black Hills economy has already benefited in big ways. 

Businesses in the supply-chain sector of the energy industry, such as concrete producers, steel manufacturing and plastics companies, have already set up shop in the Black Hills.

Additionally, a lot of the infrastructure being built in North Dakota is being done by contractors based in South Dakota, which has been crucial to continued development of the oil wells, Pelton said. 

"Thank God we have those contractors coming in because without outside contractors, a lot of our infrastructure projects wouldn't be taking place, he said. "A question I get asked by our state Legislature all the time is 'If you had all the money in the world, could you get these projects done?'"

Thanks in large part to South Dakota, Pelton said he can finally answer yes. 

Contact Scott Feldman at 394-8337 or scott.feldman@rapidcityjournal.com

(6) comments

Dana Lone Hill

And yet the price of gas continues to rise...

10th generation patriot

I think there is a lot of potential upside with the proximity of Rapid City to these three major producing areas. I wish these folks the best of luck attracting new industries to support this activity.

Shorty
Shorty

Here is a sobering thought, suppose we are close enough to reap the benefits of higher costs, higher housing, and housing shortages but just not quite close enough for the higher wages it will take for normal people that are stuck here to pay for it? I really wish people here would quit trying to fool themselves, the only reason why we will see anything from this "boom" is because people here work for nothing. If wages start to go up here, boom is bust, and we still have the higher costs.

Farwalker
Farwalker

maybe shorty you could figure out a way to make a fortune and you can then pay your fair share in taxes and alleviate the unfair sufferings of the little people,,,or not.

a good life is promised to no one. you have to make your own way. this is a chance for all

7th Sun

To see first hand how a community that is similar to Rapid City in size and proximity to the oil fields can reap the benefits of the boom go to Bismarck, ND or Billings, Mt. Spend a few days in either or both communities and it becomes apparent that Rapid City is light years behind in taking advantage of what is going on around us.

Farwalker
Farwalker

A little known fact.
One mile from Nebraska and about ten from Wyoming I worked on a drilling rig that discovered natural gas.
a flow tester came in an we flared the well and burned gas for 24 hours.
The next day I asked the flowtester how much natural gas we had burned, he said enough to keep half of Rapid City warm for a whole winter

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