North Dakota’s political leaders like taking credit for the state’s robust economic growth and rock-bottom-low unemployment rates. To hear some of them talk, you’d think they planned for the oil boom. Put the oil and gas under the ground and then created the economic conditions, and the industrial know-how, to pull it up above ground at a profit.
Of course, that’s not true. North Dakota won the natural resources lottery.
Our political leaders deserve some credit for what they haven’t done, which is choke oil and gas development to death with clouds of regulation and taxes (though the legislature raising the oil extraction tax earlier this year was a short-sighted move for reasons I could write a whole ‘nother column about).
Simply having the resources in our state doesn’t mean our political leaders have to let us all benefit from those resources. In California, by way of example, is the recently-discovered (or re-discovered if you prefer) Monterey shale formation which promises, according to some reports, to be an even larger oil play thank the Bakken.
But will California’s political leaders ever let the Moneterey be developed, bringing job and commerce to their state? It seems unlikely, given California’s current political leadership, that they’d let a fracking shale oil/gas boom flourish.
Which isn’t to say that the key to a successful natural resource boom is a total lack of oversight or regulation. Those things are important, which brings me to the subject of my post.
When North Dakota regulates, our leaders usually do so with reticence and in a restrained fashion. This week two major regulatory policies related to oil development were announced, and they both make a lot of sense.
First, the state Industrial Commission (made up of Governor Jack Dalrymple, Attorney General Wayne Stenehjem and Ag Commissioner Doug Goehring) announced regulations for the state’s 18,000 miles of gathering and transfer pipelines. Those lines were never regulated before – indeed, the state doesn’t even know where most of them are – and few other states regulate them.
After the Tesoro pipeline oil spill in Tioga, however, it makes sense that North Dakota officials are aware of these lines and exercise some oversight of their use and maintenance.
A ringing endorsement for these new rules comes from the oil industry itself.
“These are comprehensive rules and regulations that will further enhance the safety, monitoring and locating standards of the build out of our pipeline infrastructure. This is good for landowners, good for regulators, and good for the industry,” said NDPC President Ron Ness. “Oil development continues at a record pace. Building out our pipeline infrastructure more quickly is crucial in addressing the major challenges facing the Bakken today, including reducing truck traffic and dust, capturing more natural gas and making our roads safer.”
Far from an acrimonious relationship with industry – such as the one federal agencies often engender with those they regulate – our state tends to promote a harmonious relationship. Which is better for all involved.
The other new regulation, though not yet finalized, was a list of “extraordinary places” in the state where permitting for oil and gas development would require additional scrutiny. These are places of historical, cultural and/or environmental significance, and our leaders (again, the Industrial Commission) want to have the power to make sure we strike a balance between conserving these areas while still allowing reasonable access for development.
Note that development in these areas is not verboten. Merely subject to additional review and public comment.
Some critics of energy development in North Dakota talk of the state being run by oil companies. You’d think, from the way they describe it, that North Dakota’s energy development were a wild west of laissez faire regulation. But that’s not true.
North Dakota regulates prudently, with an eye toward being permissive with development while still promoting conservation and safety. That’s a balance other states could, and should, emulate.
The politicians in North Dakota didn’t invent the oil boom, but they’ve done a good job of not killing it.