WILLISTON, N.D. – The Bakken oil boom is now five times larger than the area’s 1980s oil boom, according to a new report by the Federal Reserve Bank of Minneapolis.
Economists released this week an updated analysis of the Bakken oil field in North Dakota and Montana, highlighting oil production, demographic, economic and financial data.
“At the Federal Reserve, we’re interested in making sure that we stay aware of the trends in the Bakken area because it’s a unique location where economic activity is growing at a fast pace,” said Rob Grunewald, an economist and editor of the report.
Among the report’s findings:
• Oil production and economic activities continue to expand rapidly in the Bakken, but the rate of some growth indicators has become more moderate.
• Monthly oil production in the Bakken increased by 3.1 million barrels, or 16 percent, between May and October. The Bakken area accounts for almost 11 percent of all U.S. oil output.
• The number of drilling rigs in North Dakota dropped below 200 in recent months while drilling activity picked up in Montana. The rig count in North Dakota, which recently has been about 180, is expected to exceed 200 again in 2013.
• The unemployment rate in the Bakken is now 1.8 percent, down from 2 percent in April.
Job postings ease up
One area of economic activity that has leveled off since June is the number of online job postings in the North Dakota part of the Bakken.
Grunewald said there continue to be online job postings, but the rate of increase has slowed, indicating to economists that the pace of growth is easing a bit.
“Perhaps it’s letting companies catch their breath,” Grunewald said.
The analysis uses information from the North Dakota Department of Mineral Resources, which projects that oil industry jobs will continue to escalate over the next five years, eventually topping 60,000. The mix of jobs will shift away from drilling and hydraulic fracturing and move toward production and other permanent jobs.
Between March 31 and Sept. 30, 2012, construction and land development loans increased 64 percent, from $107 million to $176 million, in the Bakken area. That compares to a 12 percent increase for the rest of North Dakota and a 2 percent decrease in the rest of Montana.
“That’s a notable jump,” Grunewald said.
Economists expect construction and development to remain strong in the Bakken for 2013, but they’re unsure if it will continue at that pace, he said.
The report found that a county’s growth in sales tax is related to its proximity to the Bakken. The farther a county is away from the Bakken, the slower its average growth in sales taxes.
Grunewald said economists are working on a more detailed analysis about sales tax growth.
Some other findings:
• During 2012, the Bakken area maintained a high pace of growth in average wages, with a 19 percent increase compared with 4 percent in the rest of North Dakota, 1.9 percent growth in Montana and practically no growth nationwide.
• Since 2009, new business establishments have grown by nearly 50 percent in the Bakken, compared to 5 percent growth for the rest of North Dakota and 3 percent growth in the United States.
• Total bank deposits have increased substantially in the Bakken since 2010 compared with the rest of North Dakota. However, the rate of increase for Bakken banks has fallen off its peak during the second and third quarters of 2012.