Since the recent development of hydraulic fracturing drilling technology in 2008, vast deposits of US oil and natural gas trapped in shale formations have become reachable, spiking prices for land and development leases in locations not associated with such booms since the 19th century gold rush. The names of shale formations on the lips of property professionals across the country seem to have turned them into amateur geologists.
Rising chatter in the land business includes names such as Monterey Shale (2,000 square miles running north and south through the center of California), Barnett and Eagle Ford Shale (Texas) Utica Shale (most of New York, Pennsylvania, Ohio, and West Virginia) and the most eye-popping of them all, the Bakken Shale in North Dakota, South Dakota and Montana.
Shale Far Below, Cap Rates Far Above
The rush to extract the Bakken’s natural gas and oil has produced unexpected volumes of energy, as well as a radically shifted market for some North Dakota land. As the area struggles to accommodate the tidal wave of energy workers that has driven unemployment in North Dakota to below 4%, genuinely rare business conditions prevail. A quick look around found a trailer park in far northwestern ND is commanding a 24% cap rate and 100% occupancy, one sign among many that a full-bore boom is underway in the Roughrider State.
“An Industry, Not A Boom”
The cycles of capitalism have been historically clear: after boom follows the bust. But will it here? No, says Tom Rolfstad, executive director of the Williston Economic Development Corporation. During the Bakken Chicago Summit held yesterday. Rolfstad spoke about the oil industry, an industry that has been growing at an amazing clip in North Dakota’s Bakken region.
Thanks to new technology — and fracking — the oil wells in this region of the state are producing more oil than ever. And Williston — a municipality located in the center of the region — is dealing with its own growth because of it. Williston’s population is booming. And the municipality needs everything from apartment units and grocery stores to gas stations and permanent housing. This means there are plenty of opportunity for investors in this region, investors from the Midwest and beyond.
And Rolfstad disagreed that that oil industry in his part of North Dakota is experiencing a boom. A boom, he said, ends quickly. The oil surge in the Bakken, he said, is showing few signs of a quick slowdown. “The oil industry here is going to be around for another 60 years, at least,” he said. “That’s a long time. We’ll be around in 60 years. Will you?”
Upcoming Book Illustrates The Marketplace
The Natural Gas Revolution: At The Pivot Of The World’s Energy Future is a title by Robert Kolb expected to publish this year. The book lays out the history, costs, benefits and likely future of the post-fracking US energy market, with special attention paid to the Bakken and North Dakota.