Congress: Don’t Blow America’s Energy Boom

States such as North Dakota are struggling to keep pace with the massive surge in energy production—and, so far, Washington hasn’t been much help.

Everywhere you look in this farm-town-turned-industrial sprawl, you see signs of an oil boom that hasn’t waited for anybody. Roads are torn up and jammed. Workers are streaming in but can’t find places to live. Water lines of all kinds, including sewer pipes, are in short supply. And so are pipelines to transport the oil and natural gas that is being continually pumped out of the ground.

“It’s morphed so quickly, that whatever mind-set you have going into it, it keeps turning out to be bigger than you thought,” says Tom Rolfstad, economic-development director for Williston, which the Census Bureau has billed as the fastest-growing small city in the country.

This growth, driven by the oil and natural-gas industry, has catapulted oil production in North Dakota from ninth place to second, behind Texas. Production has increased fivefold since 2007 to almost 900,000 barrels of oil a day, thanks to the one-two combo of hydraulic fracturing and horizontal drilling. These technologies have opened up the vast Bakken shale formation that sits miles below this state and parts of Montana and South Dakota. The state’s natural-gas production is also five times higher than it was six years ago.

All of this fuel brings with it undeniable economic benefits. North Dakota has the lowest unemployment rate in the country at 3 percent (Williston has an almost indiscernible 0.7 percent jobless rate). And other states—including Texas (which is pumping even more than usual), Ohio, and Pennsylvania—are sharing the prosperity from new oil and natural-gas production.

Those states are facing similar struggles, albeit on a much smaller scale. North Dakota is the starkest example of how infrastructure of all kinds is playing catch-up to America’s oil and natural-gas boom. The United States is now the world’s largest natural-gas producer, and by 2020, the International Energy Agency predicts, it will surpass Saudi Arabia to become the leading oil producer.

Workforce lodges (or “man camps” as they’re known in the oil patch) supplied by Target Logistics, the country’s biggest temporary housing company, are found all over western North Dakota. The company is not yet operating in most of the other states seeing an increase in oil and gas production, but that seems poised to change. “It’s starting to happen. We’re waiting for the demand to be there for our product,” said Tom Schneider, chief marketing officer of the Boston-based company.

The Rust Belt states are in the early stages of developing natural gas from the Utica and Marcellus shale formations, and the rush is on to build out as much pipeline as possible. “There has been billions of dollars spent in 2013, and billions of dollars announced in spending for 2014 on the midstream sector of the industry, facilitating not only the Utica but also far western Pennsylvania,” said Don Fischbach, head of the energy practice group at the Ohio-based Calfee, Halter & Griswold law firm, whose clients include companies producing in the state as well as landowners.

Congress is starting to tackle the energy boom’s infrastructure challenges. “Being on the ground in North Dakota made it crystal clear that we need a new architecture of abundance to achieve our energy future—a vision to keep energy prices affordable and create jobs,” said Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee in a statement to National Journal, referring to a trip he made to the state this summer. The committee, he said, is “advancing a number of bills to modernize permit processes, cut red tape, and facilitate the construction of much-needed energy projects.”

The first measure out of the gate, which the House passed earlier this year, would streamline federal permitting for natural-gas pipelines. The legislation had only one Democratic cosponsor—Rep. Jim Matheson of Utah—and it faces formidable odds in the Democratic-controlled Senate. The second bill the committee is pushing would revoke presidential authority over cross-border projects, such as the Keystone XL pipeline. While the legislation doesn’t specifically name the controversial project, it could in theory help Congress bypass the administration in approving it at some point. Like the permitting bill, though, it stands little chance of gaining traction in the partisan environment on Capitol Hill.

So, for now, North Dakota and other states caught up in the boom are doing the best they can. Sen. John Hoeven, R-N.D., pointed out that if Keystone gets built, it would help relieve traffic on his state’s roads, because some of the Bakken oil would go through the pipeline.

“If this pipe gets put into the ground, 500 trucks a day come off that road,” he said, referring to one of the main highways running through the state that is being expanded to four lanes to accommodate all the truck traffic.

Meanwhile, building out Willston’s infrastructure would also benefit the environment. President Obama named “fugitive” methane emissions—a greenhouse gas 25 times more potent than carbon dioxide—as a top concern in his climate-change speech in June. It’s a huge problem here, and it’s one reason Interior Secretary Sally Jewell visited in August.

Oil can be transported via pipeline, railway, or truck. Natural gas, as an invisible fuel, can be shipped only by pipeline, and its production has outpaced existing capacity. As a result, producers are burning off about one-third of the gas they extract, a process that turns methane into CO2. While the practice isn’t as bad as venting straight methane, it still wastes fuel and exacerbates climate change.

 

On her trip here, Jewell said, “Where there is infrastructure, [companies] are mitigating that impact.” It means that helping places like Williston calls for more than easing traffic or building housing. It’s about making sure the country doesn’t pay too high a price for its newfound prosperity. 

This article appears in the October 5, 2013, edition of National Journal Magazine 

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