North Dakota's Rising Oil Dominance

Oil production is a relatively new industry for North Dakota and it is booming. But it could be suffering from a few growing pains.

Ever since the discovery of the Parshall Oil Field in 2006, North Dakota has been experiencing an oil boom strong enough to give the state the lowest unemployment rate in the U.S. Now, some are worried that projects like the Keystone XL pipeline could hinder North Dakota’s production.

In an AP story reported this morning, North Dakota may have nothing to worry about. According to the AP story, the proposed, but controversial multibillion-dollar pipelines that would bring a flood of Canadian tar sands oil to the U.S. likely won't hinder North Dakota's soaring crude production. That’s because more than 1 million total barrels of tar sands oil from Canada's Alberta province would move through the pair of pipelines, destined for different U.S. refineries than North Dakota's crude, according to Justin Kringstad, director of the North Dakota Pipeline Authority, and Ron Ness, president of the North Dakota Petroleum Council.

Right now, this could all be a moot point as the Keystone XL pipeline has yet to be approved and even so, would take some time to build. But that could all change soon as rumors indicate President Obama will make a decision on the proposed pipeline soon.

"Here we are awash in oil," said Ness, whose company represents more than 500 companies in western North Dakota's oil patch. "But all these refineries have different crude requirements."

North Dakota only trails behind Texas in state oil production. In the last two years, North Dakota has more than doubled its oil production and could soon be extracting a million barrels a day. Right now, most of that oil is being shipped by rail, due to the lack of pipeline capacity flowing from the state. This transportation method can be disconcerting in light of the number of safety issues involving tanker railcars.

Hopfully, North Dakota will come upon a solution to its logistics problem soon. Even neighboring Minnesota is trying to help out as Gov. Jack Dalrymple and a Minnesota-based energy company began pushing the concept of an "energy corridor" that could move oil, natural gas, electricity and water out of western North Dakota.

It’s clear that North Dakota has some wrinkles to iron out, but it appears that it’s well on its way to becoming an energy giant… for now at least. 

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