BISMARCK–Gov. Jack Dalrymple gave the following keynote address today during the 2nd Annual Bakken Infrastructure Conference in Denver:
“The national news footage would show some poor soul struggling to make his way through a blast of snow, blowing sideways at 50 miles an hour. We would try to put it into perspective by letting these reporters know that our winters really aren’t all that bad, and there are plenty of benefits in North Dakota that far outweigh a few months of cold weather.
“We still see that story from time to time. But these days, news organizations like the Wall Street Journal and the New York Times are calling and coming to North Dakota to find out more about North Dakota’s healthy economy and the nation’s fastest developing oil play.
“This fall I was invited to appear on Jim Cramer’s show called “Mad Money.” I was told to find my way to a pumping site on a big hill north of Killdeer. I didn’t know what to expect way out in the middle of nowhere, but as I reached the top I saw several motor homes and crews of people that looked like they were making a Hollywood movie. They ushered me into a motor home where I met Harold Hamm, T. Boone Pickens, and of course Jim Cramer. Boone Pickens talks a lot about how natural gas is the cure for all ills, but he couldn’t hold a candle to Jim Cramer for talking. Folks, he’s just the same as he is on TV. Words came out of his mouth like water from a fire hose.
“At any rate we did the show and I told his audience to come to North Dakota if they were looking for a good job. I mentioned that we had an 800 number they could call. The next morning I got chewed out by my staff. The phone was ringing in the Governor’s Office and they’re saying, “What 800 number?” Fortunately we found one at the Department of Commerce where they’ve been getting an extra 150 calls a day ever since. I had no idea “Mad Money” had such large audience.
“During the show, Jim Cramer made the assumption that North Dakota’s robust economy is all about oil, and I had to straighten him out on that point.
“I’m always proud to tell people that even with the Bakken discovery, just 25 percent of state revenue collections come from oil and gas.
“The fact is we are seeing significant growth in all of our industries – technology, tourism, agriculture, and even in manufacturing, where most of the country has reported severe declines.
“And while other governors are struggling with job losses and budget shortfalls, we are creating jobs, we’re lowering taxes, we’re building our reserves, and we’re making unprecedented investments in infrastructure.
“Our strategies for job growth and economic development begin with sustaining a positive business climate. That means a focus on low taxes, a friendly regulatory climate, and the most responsive state government anywhere.
“Our progress can be seen from one corner of North Dakota to another – in all of our major cities, in our small towns, and on our farms. No single industry tells the whole story of the great progress we are making.
“That said. There is no question that oil and gas production is a major contributor to North Dakota’s economy today.
“Business is indeed booming in the Bakken Formation like never before.
“The state’s Department of Mineral Resources reports that we are averaging about 175 drilling rigs a month, and we have about 6,000 producing wells. It’s projected that within two years, we’ll have 10,000 producing wells and our monthly drilling count will average between 200 and 250 rigs.
“In an area the size of West Virginia, we are producing about 445,000 barrels of oil per day – about 115,000 more barrels per day than just a year ago. And production has more than doubled since 2008.
“At the same time, North Dakota’s energy industry is drastically increasing its capture and processing of natural gas. In 2006, processing plants in North Dakota could handle 227 million cubic feet of gas per day. By the end of the year, our plant capacity will be 780 million cubic feet per day, and we will be able to process 1 billion cubic feet of gas per day by 2012.
“Within a year, North Dakota could surpass California and Alaska to become the nation’s second-largest oil producing state. Some forecasters predict that North Dakota’s oil production could reach 700,000 barrels a day by 2015.
“North Dakota’s remarkable and rapid expansion in oil and gas production has been a welcomed, but challenging element in our economic growth.
“While jobs and population growth have been a significant benefit to this largely rural part of our state, the extreme wear and tear on roads and the need for housing and water has required considerable cooperation, planning and investment by the state, local governments and private industry.
“North Dakota has committed unprecedented state funding to rebuild and repair not only state highways, but county and township roads, as well as waste water treatment plants and other infrastructure.
“During our Legislative session, I recommended and the Legislature approved an appropriation of nearly $1 billion for infrastructure improvements in North Dakota’s oil and gas producing counties alone.
“We recommended special supplemental funding of 100 percent state funds – $229 million for state highway projects and $142 million for county and township roads – unprecedented state funding for unprecedented needs. These special appropriations are in addition to $450 million in traditional highway funding allocated for oil and gas counties.
“But we also recognized that growing communities and other political subdivisions throughout oil country have many other pressing needs related to public infrastructure and residential development that are not addressed through typical highway and road funds.
“That’s why I also recommended and the Legislature approved another $100 million in impact grants. The state is distributing these grants now to help communities in our oil counties offset the direct impacts from the oil industry’s development. All political subdivisions experiencing adverse impacts from oil development are eligible for this funding.
“Communities throughout oil country are using these funds to enlarge their water treatment plants and to further support residential development by extending water and sewer lines and by building new city streets, curbing and sidewalks.
“Taking care of our seniors and residents who are on a fixed income is an important consideration in addressing the need for housing. In the past five years, more than $5 million in Low Income Housing Tax Credits have been allocated in our oil producing counties to help create hundreds of affordable housing units (394 units). Additional credits will be allocated in 2012.
” With the public sector providing the necessary infrastructure for residential growth, private developers are doing their part – and in a big way.
“In Dickinson alone, more than 2,300 new housing units are in various stages of development, including 700 single family homes, 200 duplexes and 270 apartment units. In Williston, more than 1,750 new housing units are in development, including 218 single family homes, 102 manufactured homes and 537 apartment units. (These housing units include hotels and extended-stay facilities.)
“Through the North Dakota Pipeline Authority we’re also supporting the production, transportation, and utilization of North Dakota oil and other energy resources. The authority participates in pipeline projects through financing, planning, development, acquisition, leasing or other arrangements. The state has facilitated a dramatic expansion in pipeline infrastructure and rail transportation to help get North Dakota oil and gas to market.
“By expanding our pipelines and rail transportation, we will triple our shipping capacity to 758,000 barrels per day by the end of the year. Plans are underway to further expand our total capacity to more than 1 million barrels by late 2012.
“Our pipeline capacity has increased from 230,000 barrels a day to 443,000 barrels. Just last week, Whiting Petroleum Corp. received state approval to build a seven-mile pipeline near Belfield. This project alone is expected to eliminate the daily road traffic of 275 trucks.
“Five years ago, North Dakota didn’t have a single rail terminal from which oil could be loaded and shipped to market. Today, we are exporting oil from rail terminals in Minot, Stampede, Donnybrook, Ross, Stanley, New Town, Zap and Dore, and there’s another nine rail terminal projects in various stages of development. (Belfield, Berthold, Dore, Trenton, Epping, Tioga, Fryburg, Ross and Dickinson.)
“By the end of this year, we will be able to export 315,000 barrels of oil by rail every day; and the rail projects that are underway will more than double that capacity to 706,000 barrels by late 2012. That is real progress, my friends.
“But it’s not just about having a good transportation system to get products to market. It’s also about getting water and other resources to the oil fields. This year, the Legislature approved a $110 million financing package for the newly created Western Area Water Supply Authority. The funding will support the development of a water supply system that will transfer water from the Missouri River to communities and industrial users in western North Dakota.
“With rapid growth in oil production comes all the needs of a growing population, including enhanced public safety enforcement.
“Early this year, we hired additional highway patrol officers and stationed them in western North Dakota to help meet the needs of our growing communities and to enforce our traffic laws.
“I have directed the North Dakota Highway Patrol to send more troopers to work in the oil patch after they complete training in December. During our Special Session, which begins Nov. 7, I expect the Legislature to provide additional funding so that we can further enhance our law enforcement presence in western North Dakota.
“Housing is a problem for us too. We couldn’t find places for our troopers to live so we’re putting trailers in our state parks. We’ve have to be creative like every employer in the region.
“Keeping our roads and oil fields safe; providing housing for our growing communities and meeting the many other challenges that come with rapid development requires all of us – private industry and the public sector – to continue working together.
“We are committed to doing our part. Because of our financial strength, we are able to make the investments necessary to keep up with the incredible pace of development in western North Dakota.
“Looking ahead, it will take even more infrastructure investment than we forecast even a year ago. But every year, the counties and cities in oil country will be receiving more and more revenue from the production tax and will therefore, have the increasing wherewithal to meet these needs.
“New water pipelines will make water available much closer to the user and significantly reduce the need to run trucks up and down our gravel roads.
“New bypass highways around our western cities will relieve congestion in town where local residents experience the greatest inconvenience.
“We’re adding additional passing lanes and turnoffs on Highway 85, and we’re making progress to turn this artery into an undivided, four-lane highway between Watford City and Williston.
“Highway 22 north of Dickinson will be reopened in about a month, after a summer punctuated by landslides that have required us to literally move mountains.
“Folks, we are in there hustling along with everyone else in western North Dakota who is working hard to develop this great resource. We’re doing our very best to keep up. And although I can’t promise we can keep up with you every step of the way, I can promise that we will be faithful and long-term partners in your efforts to develop the Bakken shale. And most of all, I can promise that you will have direct access to our state government at the highest level.
“Thank you for your commitment to North Dakota.”