Saudi Dakota? (Updated)

The US economy may be stagnant, but North Dakotans haven't noticed.  Recession?  What recession?

The “Economic Miracle State” continues to lead the nation with the lowest state unemployment rate at 3% in September, at almost five percentage points below the national average of 7.8%.  There were 11 North Dakota counties with jobless rates below 2.0% in September, and Williams County, which is at the epicenter of the Bakken oil boom, continues to boast the lowest county jobless rate in the country at just 0.7%.  The exponential growth in North Dakota oil production has fueled exponential growth in the state’s oil and gas jobs, which have more than tripled over the last three years.  Overall employment throughout the entire state increased 5.6% over the twelve month period through September; four times the tepid 1.4% pace of job growth nationally during that period.

It ain't no miracle.  It's a deliberate decision to allow free market forces to work and create wealth by accessing the state's natural raw materials, namely petroleum.

What’s especially impressive is the incredible exponential increase in North Dakota’s oil production over such a short period of time.  The state’s oil production has doubled in just the last 16 months, from 364,160 bpd in May of last year to 728,494 in September of this year.  Oil coming out of the state’s Bakken Formation is behind the huge increase, as that oil field in western North Dakota now supplies 91% of the state’s oil, up from only 78% of the state’s oil two years ago.  Bakken oil output has doubled in just the last 15 months, from 320,435 bpd last June to 662,428 bpd in September (see bottom chart above).  At the current pace of production increases, North Dakota’s oil production will surpass one million bpd by the end of next year.  And it’s the exponential increases in shale oil production in the Bakken region of North Dakota and the Eagle Ford Shale region of Texas that have the United States on a trajectory to become the world’s largest oil producer in the next eight years.

Considering North Dakota's economic boom due to "frackin' the Bakken", and that the US has more petroleum in the Green River Formation than all the world's known oil reserves, the federal government must be eager to allow more drilling and exploration on federal lands, right?

Not so much.

The Interior Department on Friday issued a final plan to close 1.6 million acres of federal land in the West originally slated for oil shale development.

The proposed plan would fence off a majority of the initial blueprint laid out in the final days of the George W. Bush administration. It faces a 30-day protest period and a 60-day process to ensure it is consistent with local and state policies. After that, the department would render a decision for implementation.

As I wrote before, "it's not as though, in this roaring economy, we need all that inexpensive energy or high-paying jobs".

The US is over $16,000,000,000,000 in debt and counting.  The federal government added over $120,000,000,000 to that debt in October 2012 alone and is on track to add another $1,320,000,000,000 to the debt by the end of fiscal year 2013.  Raising taxes will likely cause the economy to slow even more.  Even if the federal government were to cut spending drastically (good luck with that), we would need enormous economic growth to begin paying down our monstrous debt.

In other words, we need the kind of growth North Dakotans have enjoyed for years.

UPDATE (19NOV2012): The following charts demonstrate how hydraulic fracturing (fracking) has increased total US reserves of petroleum and natural gas by making previously unavailable reserves available.  Further technological advances will make the Green River Formation available.

From the Energy Information Administration

So Much For Peak Oil

Back when Mel Gibson was cool

Despite all the Malthusian doom prophesies, human beings keep disproving (disappointing?) the prophets and innovating new ways to adapt to their changing circumstances.  The latest and most popular Cassandras (with apologies to Cassandra of Troy, whose prophesies were true) are "environmentalists", and among their many dooms day predictions is "Peak Oil".  The idea is that if we continue to rely on petroleum and other fossil fuels, we'll soon exhaust those raw materials and end up in a real life version of Mad Max.

Unfortunately for Gaia's worshipers, but fortunately for us, there's more ptroleum in Colorado alone, than we've ever used.

Drillers in Utah and Colorado are poking into a massive shale deposit trying to find a way to unlock oil reserves that are so vast they would swamp OPEC.

A recent report by the U.S. Government Accountability Office estimated that if half of the oil bound up in the rock of the Green River Formation could be recovered it would be "equal to the entire world's proven oil reserves."

Both the GAO and private industry estimate the amount of oil recoverable to be 3 trillion barrels.
"In the past 100 years — in all of human history -- we have consumed 1 trillion barrels of oil. There are several times that much here," said Roger Day, vice president for operations for American Shale Oil (AMSO).

Why haven't we tapped into this incredible resource?  Cost.

Exploration well 40 miles northwest of Rifle, CO

This tantalizing bonanza, however, remains just out of reach, at least for now. The cost of extracting the Green River oil at the moment would be higher than what it could be sold for.

The reason for the cost is a technical problem.

The hydrocarbons in Green River shale are more intimately bound up with the rock, so that fracking cannot release them. The shale has to be heated to 5,000 degrees Farenheit before it will give up its oil.

Producers have been trying to accomplish that in one of two ways: Either they bring the shale to the surface and then cook it , or they sink a deep shaft and place an electric heater at the base, a process called in-situ. AMSO has been testing in-situ with mixed success.

And that's why Thomas Robert Malthus and his philosophycal descendants constantly prove to be wrong.  They underestimate human ingenuity and the effects of economics (which is ironic, since Malthus was an economist).  High prices provide an incentive for people to devise solutions to a problem.  That's what engineers do.  They apply scientific principles to solving practical problems.  Once the problems is solved, engineers refine the methods used to solve the problem, and the solution becomes less expensive.

What drives all this problem solving?  The profit motive.

And that explains why "environmentalists" constantly underestimate this process. 

"Environmentalists" are almost universaly Socialist.  They don't understand the profit motive, or how it makes people's lives better.  If they did, they'd be Capitalists.