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This opinion piece presents the opinions of the author. It does not necessarily reflect the views of Rigzone.

Two items crossed our desk last week that drove us to look closer at what is happening in the North Dakota oil shale boom. One was a set of Bakken and Three Forks shale formation production data in the state and the other was the announcement of plans to spend $800 million to improve infrastructure and overcome social issues.

The Bakken oil shale boom ranks as one of the most impressive successes in the history of the American oil and gas business. The shale formation lies within the broadly defined Williston Basin, a long-standing oil and gas producing region that covers parts of North Dakota, South Dakota and Montana, and extends across the border into Canada’s Saskatchewan and Manitoba provinces. The Bakken production is largely concentrated in North Dakota and Montana as well as Saskatchewan. Bakken output growth has grown to over one million barrels of oil per day now from less than two thousand barrels per day in December 2004, when North Dakota was a minor oil producing state ranking only ninth in output. The state now ranks as the number two oil-producing state behind Texas.

The oil and gas boom that has exploded in North Dakota has been the subject of many mainstream media articles because it has produced amazing economic data-points and human interest stories that make for heady news copy. For example, the state has created 75,000 new jobs over the past three years, but still has 25,000 job openings and the lowest state unemployment rate at 3%. North Dakota’s economy is growing at five-times the national average. In 2012, the state ranked 43rd in the number of millionaire households, but last year was up to 29th and continues climbing in the rankings. Workers with no college degrees but willing to work in challenging oilfield positions can earn six-figure incomes. Of course, the cost of living is high as two-bedroom apartments that used to rent for $500 a month now cost $2,500 if available. Affordable housing is one of the major challenges for workers and families. Wages in low-skilled positions such as line workers at McDonald’s are being paid $14 an hour plus a bonus to sign on, while at Walmart they are paying $19.28 per hour for shelf-stockers. Some women can earn up to $2,500 per shift in strip bars, assuming that is their choice of an occupation. With the boom, however, come social problems such as alcoholism, suicide, depression and homelessness, to name a few.

One of the problems for North Dakota has been the cost of dealing with the surging population of oilfield workers and their families and the impact on communities. In response, the state’s Republican legislature has just unveiled an $800 million investment plan to help municipalities. The money will come from North Dakota’s Strategic Investment and Improvement Fund that is partly funded by oil and gas taxes and currently has over $1 billion of funds. The plan calls for $475 million to be paid to the counties and cities impacted by the oil boom. The three oil patch hub cities – Minot, Dickinson and Williston – are to receive $140 million, while $35 million will flow to county schools stressed by the population explosion related to the oil boom. Lastly, $150 million of the funding will be allocated to road projects outside of the oil patch area.

While North Dakota politicians are reacting to the problems and challenges of managing the impact of the oil boom on their state, the production data from the state’s Department of Mineral Resources (DMR) that was sent to us reflected what the sender referred to as “squirrelly.” He was referring to the column of data in Exhibit 12 reflecting net oil production added per well. It shows that while historically volatile, the total appears to have dropped dramatically into the 113 range in the past two years from the levels of 130-170 in prior years. The trend in daily oil production per well is also trending lower in the two most recent years (130 and 134), yet the number of new wells remains high – the 1700-1800 range. An interesting side note about the activity level is the growth in the number of uncompleted wells in recent years. This growth reflects the industry’s drilling proficiency and high rig count versus the time and resources required to hydraulically fracture and complete the wells.

After considering the data sent to us, we decided to examine the data provided by the DMR’s Oil and Gas Division web site. Data is presented for the state’s total oil production along with statistics for just the Bakken formation. The difference between the two production volumes is about 63,000 barrels per day, suggesting how important the Bakken is to the state’s overall output. In fact, the September 12th Director’s Cut, which is an early snapshot of monthly statistics about oil and gas activity in North Dakota, shows that 94% of the state’s output is from the Bakken formation.