North Dakota Oil Is “Burning Up The Roads”

by BWK ~ August 6, 2008

As I’ve driven across Canada and down into North Dakota, I’ve been seeing energy everywhere.

The farms are well tended, and the agricultural productivity is awe inspiring. There are wind farms up, and going up, on many a hillside. Power lines crisscross the landscape. There are dams and impoundments on many of the rivers. And the trains of the Canadian Pacific Railway are rolling in both directions, hauling grain, ag products, coal, phosphate and so much else.

North Dakota Oil Rush

In Saskatchewan and North Dakota, the big story is the Bakken Shale formation. I’ve seen over a dozen working rigs and dozens of brand-new oil wells. The pump jacks are still in the break-in period. Heck, the paint on some of them is still drying.

[Stories like this are also popping up.]

It’s a mixture of old and new. There are old farm buildings, and all of the traditional agricultural effort of the region. Right next to the buildings, you might see a new oil well. And in the distance, there might be a wind farm going up.

The highways are crowded with working trucks. Trucks are hauling pipe and equipment to well sites. The motels are crowded with oil field workers. In some small towns, real estate prices and rents are actually rising. People around here have seen nothing like it in many years.

Or if the trucks are not hauling drilling equipment, they are hauling agricultural products. Or there is farm equipment driving down the roads from one area to another. It’s all just plain busy.

At the customs station at Noonan, N.D., the U.S. agent told me that the traffic in energy-related commerce is just burning up the roads in both directions. There are simply not enough skilled workers. Some companies are poaching staff from others.

At the same time, I can almost feel the slowdown that is afflicting the North American energy sector. Costs for everything have risen too far, too fast. Now the whole sector is starting to feel the pinch.

Couple the rising costs with a serious difficulty in obtaining financing. The banks have cut back on lending, even to the best of energy projects. It’s not for lack of investment merit of the energy projects. It’s because the banks are struggling with their own solvency.

So the mess in the financial sector has infected the rest of the economy. Just when the U.S. and Canada need to be investing in energy projects, the financial system is letting us down.

It reminds me of what I heard from an old rancher a long time ago: “Out here in the prairies, we farmers work hard and raise the cows. Back East on Wall Street, they milk us farmers.”

I’ll be out in the field for the next few days, looking at other points of energy and geological interest. All of this travel helps my perspective in coming up with better advice for you, dear reader.

Until we meet again…

Byron W. King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Additional Resources:
Major U.S. Oil Supplier, Nigeria In Trouble
Where Is Oil Headed?
How Much Is The Price Of Gas Affecting You?
US Offshore Drilling…and Politics
The Great U.S. Energy Transformation…
Rising Energy Costs and the U.S. Economy
Russian Oil Exploration — And Why The US Will Be Playing Catch-up
Are “Speculators” Causing the Oil Price Rise?
Warning from My Energy Insider…
Oil Defies a Correction…
The Oil “Melt-Up” and Why the U.S. Economy Won’t Run On Windmills Alone…
The 2nd Fed… Carbon Permits