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Tappin’ the Bakken

For the eighth year the Sidney Herald’s “Tappin’ the Bakken” is the most informative and longest running oil section in the MonDak area.

Fall 2012 edition Photos by Louisa Barber

The 16th semiannual issue Sunday, Oct. 28, 2012 Special Supplement to the 310 2nd Ave. NE, Sidney, Montana 433-2403 •


Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

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Tappin’ the Bakken fall 2012


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The rig count in Montana is about 10 more than at this time in 2011. Williston, ND (701) 774-3637

North Dakota facts

The following facts are provided by the North Dakota Petroleum Council’s Oil Can! campaign: • In March 2012, an average of 575,490 barrels of oil per day (bopd) was produced. • The state’s average production in 2011 was 418,356 bopd, totaling 153 million barrels for the year. This is a 35 percent increase over 2010 and a 233 percent increase since 2007. • North Dakota is the second largest oil-producing state in the country. • Today there are 7,699 wells capable of producing oil and gas in North Dakota. The average well produced approximately 72 bopd in 2011. • In 2011, 155 billion cubic feet of natural gas was produced and 97 billion cubic feet was processed in North Dakota.

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Although not near as maniacal as North Dakota, oil-related activity in Montana appears to be on a steady rise, or as the Board of Oil and Gas Conservation administrator describes it, “oh peachy.” The rig count is up about 10 more than at this time last year. Most of the drilling activity centers in northern Richland County and eastern Roosevelt County. According to the Baker Hughes investor relations firm, Richland had the most rigs (13), with most of them located near Lambert, north and north and west of Fairview on Oct. 5. Drilling permits are at the highest number they’ve been since 2005, 331 as of Oct. 9. The state has already surpassed last year’s total of 269. Richland still has the most permits with Roosevelt and Sheridan counties also in the mix. Richland County by far produces the most oil, or about 1.5 million barrels a month, out of 2 million total produced in Montana. “Nobody’s lost interest,” administrator Tom Richmond said. “Things are picking up.” Drilling in northern Richland and eastern Roosevelt counties is attributed to infill wells, he said, in which operators drill between existing wells to recover any oil that may have been left behind. Montana may see more drilling, he suspects, once North Dakota goes into its next phase of experimenting with more efficient ways to drill, namely drilling multiple wells on a single pad. One company reportedly plans to drill 12 wells from one location, resulting in a lower rig count and less surface disturbance. “I imagine we’ll see more of that in Montana but it’s starting first in North Dakota,” Richmond said.

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Kalispell natives enjoy making new life in sidney By Louisa BarBer Sidney Herald

Joe and Kim Kauffman spent their entire lives in Kalispell. They were high school sweethearts who married after high school and began a life together. Twenty years later, they find themselves in a similar situation, though this time with four children, Josiah, Amber, Hannah and Teagan, and several hundred miles away in a Sidney duplex. “Business is busy. We’re doing good,” Joe said on a recent afternoon in Sidney. “There’s a big need here for someone who isn’t just focused on the oil business, oil boom.” The couple’s company, Big Sky Surveying, specializes in surveying housing subdivisions and conducting private boundary work. For a little while the company went on hiatus after the economy collapsed in

western Montana. Joe travelled to the MonDak region in September 2010, looking for work and opportunities. He stayed for two months in a camper until his family joined; they were lucky to find a place to rent. Or maybe not. Maybe finding a place to live here was “by the grace of God,” Kim said. “We’ve just been blessed that way.” Three times they’ve moved so far, and every time a lease is up, they immediately start looking for leads. “I don’t think we expected to move as much around town as we have and paid the price for rent,” Kim said. But the couple says they’re grateful; they’ve been able to sell their home in a struggling market (100 foreclosures a month at one point in Flathead County), nor have they had to live in an RV park, and they’ve been able to keep their

family together. “I was more than willing to move with Joe,” Kim said. “If we had to move, I was going with him. I didn’t want to stay behind…If we were told to move and this is where we were called, then I’m not going to argue with that.” Her family is deeply seeded in the Christian faith, believing they are following a plan for their lives. The Kauffmans have found a home in Faith Alliance Church in Sidney where “we’ve met a lot of good people here.” And while they’re settling into their new community, Joe found work with a surveying firm specializing in the oil industry. Eventually, he saw a need for private subdivision work in Richland County and started his business again in January. Business is lively with 10 to 15 projects going on at

any one time, comparable to the housing boom in Kalispell. “Hopefully it doesn’t crash,” Joe said. “Hopefully, it stays that way, especially for the community.” The Kauffmans say they have no plans to leave, though Kalispell will always be home; they just want to be part of Sidney’s growth. “People are very friendly. We’ve made a lot of friends, and we feel welcomed,” Kim said. While her children attend Liberty Christian School and take Tae Kwon Do lessons at Sidney Tendo, Kim ran for Mrs. Montana last year, representing Sidney, and came out first runner-up. “We don’t feel like outsiders,” Joe said. “I think the community’s welcomed in a lot of people. They’re not giving the cold shoulder because they’re from out of town.”

The Kauffman family is happy in Sidney. In the meantime, Big Sky Surveying is growing with the potential to expand. Joe may hire a couple more employees in the spring or summer if work demands it. The

couple maintains they’ve been blessed abundantly and life is busy. “We’re stable again,” Joe said. “That feels good.”

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


ePa study continues; initial results expected end of year By Louisa BarBer SIDNEY HERALD

Preliminary results from the Environmental Protection Agency on the effects to drinking water from the controversial hydraulic fracturing process are expected to be released at year’s end. The final results won’t be available until 2014. The process, known as fracking, uses a combination of water, sand and chemicals which are forced down the oil or gas well at extremely high pressures into cracks in the formation allowing the product to escape. The technique has been around for several decades and is what has fueled development in North Dakota at a record pace. It has, however, made headlines recently in various shale plays, bringing to light concern that it may contaminate ground water. Most recently, Wyoming has been at the center of the discussion, namely the town of Pavillion, whose residents in 2008 complained about smells and tastes of their groundwater. In March 2009, the Environmental Protection Agency began its investigation, sampling 38 wells. It sampled 21 more again in January 2010, while installing two monitoring wells. Results

at the end of the year showed elevated pH levels, potassium and chloride, synthetic organic compounds, including glycols and alcohols, methane and other petroleum-related detections. Still, there was backlash from oil industry companies that argued among other things, that there is naturally occurring gases in the formation. EPA retested wells, and in December 2011 released a draft report which included that “ground water in the aquifer contains compounds likely associated with gas production practices, including hydraulic fracturing.” “Given the area’s complex geology and the proximity of drinking water wells to ground water contamination, EPA is concerned about the movement of contaminants within the aquifer and the safety of drinking water wells over time.” A report issued this month by the EPA concluded that although some natural migration of gas is above a gas field like Pavillion, data suggests that enhanced migration of gas has occurred to ground water at depths used for domestic water supply and to domestic wells. The EPA also acknowledged hydraulic fracturing for coal-bed methane recovery is often shallow and occurs directly into (underground source drinking wa-


Scenes from Bainville activity with earth movers leveling ground for a new fracking site, utilitizing railroad cars and trucks. The site is west of a convenience store, east of an old oil well site and water reservoir, but south of U.S. Highway 2. ter). It is also far shallower than fracking taking place in the Bakken. Ground water contamination with constituents such as those found at Pavillion is typically infeasible or too expensive to remediate or restore. “Collection of baseline data prior to

hydraulic fracturing is necessary to reduce investigative costs and to verify or refute impacts to ground water,” the report reads. The investigation supports recom-

see Fracking, pAGE 7

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Quarterly County Distribution for Montana 1st Quarter FY 2012 County Big Horn Blaine Carbon Carter Chouteau Custer Daniels Dawson Fallon Fergus Garfield Glacier Golden Valley Hill Liberty McCone Musselshell Park Petroleum Phillips Pondera Powder River Prairie Richland Roosevelt Rosebud Sheridan Stillwater Sweet Grass Teton Toole Valley Wibaux Yellowstone Board of Oil and Gas Oil, Gas & Coal Natural Resource Account TOTALS

Collections Distributions $655,304 $295,215 $964,595 $563,224 $944,696 $456,005 $53,163 $26,661 $106,864 $62,129 $6,640 $4,617 $5,579 $2,835 $914,727 $437,148 $13,317,715 $5,564,141 $2,182 $1,510 $13,344 $6,133 $819,925 $482,362 $28,330 $16,536 $405,601 $261,653 $433,298 $251,053 $0 $0 $311,929 $151,722 $0 $0 $17,980 $8,637 $935,315 $505,259 $227,323 $123,345 $939,237 $571,995 $125,208 $50,559 $23,837,118 $11,315,480 $1,821,368 $832,548 $576,695 $226,814 $2,489,373 $1,194,650 $27,100 $14,501 $3,588 $2,197 $94,362 $43,501 $839,844 $483,834 $239,648 $123,252 $1,719,510 $845,311 $25,948 $12,128 $503,187 $0

$948,920 $0 $54,355,616 $24,936,955

Information provided by Richland County Treasurer

2nd Quarter FY 2012

3rd Quarter FY 2012




$623,745 $1,032,850 $1,067,297 $55,621 $83,499 $190 $9,955 $1,133,087 $14,791,958 $2,195 $9,451 $969,957 $29,977 $428,887 $552,205 $5,155 $317,979 $0 $58,762 $967,879 $240,892 $1,178,546 $134,893 $28,264,275 $2,753,259 $606,762 $2,919,108 $29,309 $3,849 $119,956 $936,868 $398,313 $2,010,397 $33,768 $583,390

$280,997 $603,081 $515,184 $27,894 $48,546 $132 $5,058 $541,502 $6,180,080 $1,518 $4,344 $570,626 $17,498 $276,675 $319,948 $2,573 $154,665 $0 $28,229 $522,849 $130,706 $717,734 $54,470 $13,417,052 $1,258,515 $238,640 $1,400,880 $15,683 $2,357 $55,300 $539,730 $204,852 $988,311 $15,783 $0





4th Quarter FY 2012


$571,993 $257,683 $675,345 $394,334 $873,423 $421,601 $3,343 $1,676 $79,847 $46,423 $11,987 $8,334 $12,932 $6,571 $1,009,735 $482,553 $12,639,911 $5,280,955 $1,630 $1,128 $47,559 $21,858 $798,353 $469,671 $28,172 $16,444 $414,201 $267,201 $598,794 $346,941 $21,068 $10,517 $422,211 $205,363 $0 $0 $28,589 $13,734 $933,992 $504,543 $273,523 $148,414 $1,002,052 $610,250 $130,482 $52,689 $23,781,186 $11,288,935 $2,845,155 $1,300,520 $529,023 $208,065 $2,708,524 $1,299,821 $23,395 $12,519 $3,530 $2,162 $101,312 $46,705 $868,275 $500,213 $394,694 $202,991 $1,682,078 $826,909 $26,560 $12,414 $509,134 $0 $961,560

Collections Distributions $472,350 $212,794 $899,129 $525,001 $1,074,143 $518,488 $97,353 $48,822 $71,228 $41,412 $2,857 $1,986 $2,553 $1,297 $991,242 $473,715 $12,678,973 $5,297,275 $2,349 $1,625 $31,118 $14,302 $908,421 $534,424 $12,324 $7,193 $337,472 $217,703 $580,087 $336,102 $4,396 $2,195 $469,783 $228,502 $0 $0 $39,530 $18,990 $849,652 $458,982 $229,064 $124,290 $962,225 $585,995 $113,893 $54,066 $24,168,554 $11,472,805 $3,697,593 $1,690,169 $568,862 $223,733 $2,746,021 $1,317,815 $24,884 $13,315 $6,855 $4,198 $120,750 $55,666 $977,144 $562,933 $331,295 $170,385 $1,808,723 $889,168 $12,349 $5,772 $530,550 $0


$55,013,568 $25,270,137

$1,002,048 $0 $56,825,769 $26,111,122

Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


Fracking: Industry Water Cycle in Hydraulic Fracturing waits for decision From page 5

mendations by the U.S. Department of Energy Panel on the need for collection of baseline data, greater transparency on chemical ingredients in fracking fluids, and greater emphasis on well construction and integrity requirements and testing. Implementation of these recommendations would decrease the likelihood of impact to ground water and increase public confidence in the technology, the report concluded. How the study will affect operations in other shale plays, like the Bakken, remains unknown, but the fracking process itself remains in the public eye. Industry leaders in the Williston Basin have long held the belief that fracking doesn’t cause any harm to groundwater because it takes place far below groundwater levels. But until EPA’s overall study conclusions on fracking in various plays in the U.S. are released in two years, it’s impossible to determine what may happen to energy development. Bakken production depends on hydraulic fracturing. Without it, oil and gas activity would virtually cease to exist.

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald


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Tappin’ the Bakken fall 2012

SuNDAY, Oct. 28, 2012


study says Texas’ eagle Ford outperforms Bakken By Louisa BarBer SIDNEY HERALD

The “almighty” Bakken Formation covering Montana, North Dakota, South Dakota and into Canada may not be so mighty after all. The Eagle Ford Shale, a new formation in south Texas that stretches 50 miles wide and 400 miles long, spanning 30 counties, is giving the Bakken a run for its money, according to a study released in July by IHS, a research and consulting firm. Study results show Eagle Ford’s best wells exceed those in the Bakken. The most frequent well result for the Eagle Ford is about 300-600 barrel a day for a peak month production average, compared to about half that amount in the Bakken. Even the Bakken’s best performing wells of 1,000 barrels a day were overshadowed by Eagle Ford central area’s best. “Our analysis at IHS indicates that Eagle Ford drilling results to date appear to be superior to those of the Bakken,” said An-

drew Byrne, director of equity research at IHS and author of the study. “Although the well counts aren’t nearly as high at this point in development of the Eagle Ford, the peak of the well-distribution curve compares favorably with the Bakken.” Each formation is considered tight-oil shale, but the Eagle Ford, discovered in 2008, has taken the oil and gas industry by storm. Well over 200 oil and gas rigs – 280 on Oct. 5 – are in operation, and drilling permits are through the roof with 3,220 through September. The Railroad Commission of Texas, the state agency that regulates the industry, estimates it’ll issue almost 4,300 permits by year’s end. Over the last year, production has more than doubled. Last year, the formation produced 118,075 barrels per day; this year through July, it was producing 282,721 barrels, and it’s likely to continue to increase. The Eagle Ford produces from depths between 4,000 and 14,000

see eagLe, pAgE 10

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Tappin’ the Bakken fall 2012

Sidney Herald

larene GrOndaHl | Sidney Herald

A rig on the northeast side of Williston, N.D.

eagle: Shale region produced nearly $20 billion from page 9

lOuiSa BarBer | Sidney Herald

An drilling rig in Richland County.

feet. In 2011, according to an economic impact statement by the University of Texas at San Antonio, the Eagle Ford Shale region produced nearly $20 billion in total economic revenues and employed 38,000 full-time workers.

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Richland County oil and gas revenue comparisons Fiscal Year 2005-2006

Quarter 2005

Total 2006-2007


1 2 3 4

1 2 3 4

$48,159,165 $52,582,180 $56,014,548 $48,565,918 $205,321,811

$16,600,568 $19,618,325 $22,271,286 $18,925,596 $77,415,775

$25,889,308 $28,604,000 $30,035,690 $26,238,649 $110,767,647

$22,269,857 $23,978,180 $25,978,858 $22,327,268 $94,554,163

$7,902,611 $9,312,660 $10,579,532 $8,984,220 $36,779,023

$3,631,250 $4,279,167 $4,861,295 $4,128,249 $16,899,961

1 2 3 4

$50,196,265 $58,529,455 $62,909,112 $74,131,464 $245,766,296

$19,944,495 $23,159,499 $26,551,704 $31,512,083 $101,167,781

$27,092,740 $32,135,779 $34,206,734 $40,133,249 $133,568,502

$23,103,525 $26,393,676 $28,702,378 $33,998,215 $112,197,794

$9,467,418 $10,987,382 $12,604,188 $14,958,732 $48,017,720

$4,350,279 $5,048,702 $5,791,624 $6,873,538 $22,064,143

1 2 3 4

$83,895,426 $106,200,438 $96,500,034 $44,814,568 $331,410,466

$34,180,335 $40,834,000 $44,932,553 $18,589,308 $138,536,196

$45,166,426 $57,286,806 $51,997,854 $23,982,318 $178,433,404

$38,728,999 $48,913,632 $44,502,181 $20,832,250 $152,977,062

$16,225,404 $19,383,931 $21,329,479 $8,824,339 $65,763,153

$7,455,573 $9,800,895 $8,906,916 $4,054,784 $30,218,168

1 2 3 4

$32,361,772 $42,253,260 $45,954,851 $52,225,534 $172,795,417

$13,472,942 $18,992,172 $20,723,320 $22,798,486 $75,986,920

$17,305,188 $22,809,243 $24,810,898 $28,134,680 $93,060,009

$15,056,584 $19,444,018 $21,143,953 $24,090,855 $79,735,410

$6,395,600 $9,015,580 $9,837,360 $10,822,510 $36,071,050

$2,938,778 $4,142,659 $4,520,267 $4,972,943 $16,574,647

1 2 3 4

$54,596,665 $50,468,660 $49,811,109 $52,249,473 $207,125,907

$23,703,734 $22,181,042 $22,007,129 $22,889,152 $90,781,057

$29,330,866 $27,187,049 $26,832,217 $28,196,694 $111,546,826

$25,265,798 $23,281,611 $22,978,892 $24,052,778 $95,579,079

$11,252,155 $10,529,340 $10,446,791 $10,865,469 $43,093,755

$5,170,365 $4,838,232 $4,800,301 $4,992,683 $19,801,581

1 2 3 4

$54,355,616 $63,456,255 $55,013,569 $56,845,769 $229,671,209

$23,837,118 $28,264,275 $23,781,186 $26,111,122 $24,168,554 $101,993,701

$29,418,661 $29,441,535 $29,743,431 $30,734,647 $119,338,274

$24,936,955 $29,141,415 $25,270,138 $26,111,122 $105,459,630

$11,315,480 $13,417,052 $11,288,935 $11,472,805 $47,494,272

$5,199,463 $6,165,135 $5,187,266 $5,271,754 $21,823,618


$51,886,634 $51,886,634

$23,259,833 $23,259,833

$27,928,830 $27,928,830

$23,843,998 $23,843,998

$11,041,446 $11,041,446

$5,073,545 $5,073,545







Total 2007-2008


Total 2008-2009


Total 2009-2010


Total 2010-2011


Total 2011-2012


Total 2012-2013

2012 Total GRAND TOTAL

Information provided by Richland County Treasurer

Total Revenue Richland Co. Money retained To Richland To RC County Collected Contributions by state To all counties County Gov. $35,966,557 $9,448,140 $19,254,625 $16,711,932 $4,354,548 $2,000,915 $39,884,873 $11,647,001 $21,476,521 $18,408,352 $5,441,917 $2,500,561 $50,429,199 $15,414,443 $27,252,528 $23,176,671 $7,201,625 $3,309,147 $55,236,648 $16,590,752 $29,545,521 $25,691,127 $7,751,196 $3,561,675 $181,517,277 $53,100,336 $97,529,195 $83,988,082 $24,749,286 $11,372,298

Tappin’ the Bakken fall 2012



SuNDAY, Oct. 28, 2012

Baucus: saluting our oil heritage by planning for the future By Max Baucus u.S. SENAtOR

We must reduce our dependency on foreign oil – not only to keep Montanans’ hard earned dollars right here in Montana – but to keep our country safe. For too long we have sent dollars to countries that do not share our values or respect our way of life. Oil and gas development in Montana truly is in our national interest. We’re providing the energy and jobs at a time when our nation needs us most. Local governments shouldn’t be shouldering the burdens of that development alone. That’s why I’m pressing every relevant federal agency to take a hard look at how they can pitch in. Back in January, I issued a “Call to Action in the Bakken.” It started with a letter to the White

House. I told the President what’s happening in the Bakken. And I told him we need to ramp up federal resources to get our communities what they need. I told him, “We need all hands on deck to boost energy jobs in Montana.” At the local level, we set up a one-stop-shop to help folks cut through the red tape and find the right resources to match their needs. We asked economic development expert, Tony Preite with MSU-Northern, to head up this effort. Another cornerstone of my “Call to Action in the Bakken” is making sure Montanans get the training they need to land good-paying energy jobs. Studies show there are around 18,000 open jobs in the Bakken. Right now, many energy companies operating in Montana hire workers trained out-

of-state. I thought: we can do better. So, back in May, we launched the Eastern Baucus Montana Energy Workforce Development Initiative. The idea is simple: • First: Train Montana workers to land energy jobs. • Second: connect energy companies with our Montana-trained workers. • Third: follow through to make sure Montanans get jobs and energy companies get workers trained for their needs. I’m proud to say we’re moving full steam ahead thanks to the partnership of the Montana University System, eastern

Montana community colleges and Montana tribal colleges. During a recent economic development forum in Miles City, I challenged every energy company operating in Montana to hire as many Montana-trained workers as possible. My goal is to make sure as many of those 18,000 jobs in the Bakken are filled with Montanans trained right here in the state. Our Call to Action in the Bakken is evidence that working together produces results. Since I’ve sounded the alarm we’ve: • Brought $1 million in grants and $3 million in loans to rebuild Culbertson’s wastewater treatment facility which is crumbling under pressure from the energy boom. • Made clean drinking water available in the

western Bakken by connecting Poplar’s water treatment plant. • Introduced a bill in Congress to speed up clean drinking water projects across eastern Montana in communities affected by the energy boom. • We’ve helped local law enforcement identify federal grant programs to help them handle increased calls. • Secured a regional planning grant to allow 16 energy-impacted counties in eastern Montana a new avenue for addressing the infrastructure needs they all have in common because of the energy boom. Right now we’re making good progress on: • Expanding cell service in eastern Montana; • Working with the Montana Department of Transportation to ad-

dress traffic • Pressing Amtrak to increase capacity for passengers working in the Bakken The Bakken Formation is part of the solution toward ending our reliance on foreign oil. I believe building the Keystone XL pipeline is also an important part of the puzzle. There is absolutely no reason we cannot start putting Montanans to work on the Keystone XL pipeline right away. We’ve done more than three years of analysis, and now it’s time to move forward on the jobs and the energy security our nation deserves. I’ll keep looking for every opportunity to move Keystone forward. I’d like to hear your ideas on Montana’s role in moving our energy economy forward – feel free to drop me a line or call anytime.

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111. 111 East East Broadway Broadway P.O. Box 1206 1206 Williston, ND ND 58802-1206 58802-1206 •• 701-572-2200 701-572-2200 Williston, Bismarck, ND • 701-223-6585 400. East Broadway, Suite 600 Bismarck, ND 58501 • 701-223-6585



Williston Contacts

Williston Contacts Garth H. Sjue * Christopher D. Luehr Garth H. Sjue * Christopher D. Luehr Kirsten M. Sjue * Kent Reierson Kirsten M. Sjue * Kent Reierson Wyoming Offices: Fred C. Rathert * J. Vondrachek II Fred C. Rathert * DanielLisa M. Dynneson Casper, WY • 307-265-2279

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Schweitzer: Oil, gas industry undergoing strongest revitalization in decades By Brian Schweitzer GOvernOr

By working together, Montana had another banner year. We, again, have one of the highest ending fund balances in the history of the state with over $453 million in the bank. The State Land Board generated record revenues through oil, gas and coal, and leasing on our state lands for the benefit of our schools. To boot, our state economy continues to outperform the nation with lower unemployment, a 2.3 percent increase in manufacturing jobs, and Montana led the nation in the amount of new college graduates. Now let’s talk Montana’s oil and gas industry, which is undergoing its strongest revitalization in decades. Historical increases in production and leasing of our oil

and gas resources have been occurring on both private and state lands. In addition, by advocating for needed infrastructure projects, like the Keystone XL Pipeline and Bakken Marketlink, Montana will be at the forefront of domestic production and eliminating our dependency on foreign oil. The Bakken fields, and the technology employed there, will enable oil and gas development decades into the future. The Bakken formation was first tapped in eastern Montana in 1951. Due to the geologic structure of the formation, conventional extraction methods at the time did not provide enough return on investment for full scale development. It wasn’t until horizontal drilling and fracturing technology was employed in Montana’s Elm Coulee


Oil Field that the massive potential of the Bakken became clear. Continental Resources’ Harold Hamm played a major role in the early development of the Bakken in Montana. “The business-friendly environment [in Montana], that’s why we mapped and started here,” said Hamm at the Montana Ambassadors Conference in Billings this spring. Once the potential of the resources in Elm Coulee had been unlocked, other developers flocked to the region. Elm Coulee leases in Richland County were rapidly leased up, and Montana saw the largest increase in oil production in decades. The highest producing onshore field found in the lower 48 states in over 50 years was producing and the Bakken was born. While wells in the Elm Coulee Field in Montana

were some of the first big producers, and the field has been under full production for years, North

Dakota holds the lion’s share of the Bakken formation. Geologists found the

sweet spot east of Williston, N.D., where the reservoir is thicker and under

See Schweitzer, paGe 16

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Schweitzer: Montana is home to only oil tax holiday in Bakken from page 14

greater natural pressure than in Montana. Industry drills first where it expects a well to have the highest production early on. North Dakota wells deliver a faster return on the $7-10 million investment. Other wells in Montana maintain strong production levels, but due to the geology of the Bakken, they do not produce in the short-term. Montana’s tax and regulatory policies, however, tend to attract development in spite of geology. In praising Montana’s business climate, Rob Rosa of Brigham Energy said, “They have a good operating environment. It takes an oil and gas company to determine what’s economically feasible, and they have to figure out the right technology to use. Throughout the basin, they’re completing wells differently.” Montana is currently home to the only oil and gas tax holiday in the Bakken play. Extraction taxes are only 0.5 percent in the first 18 months

of production, giving producers a great opportunity to recoup their initial investment. Montana’s postholiday rate is also the most Schweitzer competitive in the region, a full 40 percent below that of North Dakota over the average life of a well. Operators in Montana also enjoy a hospitable business and regulatory environment. A permit application in Montana takes about 60 days, which is under the 75 days allowed by law, while a permit in North Dakota takes, on average, the legal limit of 365 days. My administration recently defeated an overreaching Environmental Protection Agency rule and preserved the state’s business-friendly regulatory environment. Montana allows a producer 60 days of drilling and production before the Montana Department of Envi-

ronmental Quality requires an air quality permit; whereas the EPA wanted this permit to be issued before any drilling even began. The current policy allows developers to know what to expect from a well and what the permit needs to address, greatly expediting overall permitting. The production trend in the Bakken has shifted since 2007 due to increased exploration. The flurry of industry competition has created quite a boom, but this is a massive resource with a long term outlook. Multiple industry experts believe this play will last over 20 years, maybe even 40. As the sweet spot of the formation begins to play out, more rigs will move westward into Montana fields. Already this movement is evident, and the state’s rig count is expected to quadruple from 2009 levels. Leasing in Montana is reaching its highest peak since 2005-2006. Total oil and gas leasing on state trust lands for 2009

through September 2012: Total tracts leased – 3,435 Total Acres Leased – 1,350,132 Total lease bonus revenue received – $39,284,714 In 2011 the State Land Board broke all records in the last 30 years of state trust land oil and gas leasing for a single year. These included: Most tracts leased – 1568 tracts Most acres leased – 592,558 acres Most lease bonus revenue received – $22,161,674 I have been a strong advocate for the Keystone XL Pipeline which will allow us to seize an opportunity to move Bakken oil via pipeline to the largest refinery hub in the world. When TransCanada announced plans to build the Keystone XL through our state, my office began negotiations to allow Bakken crude into the pipeline via an onramp in Baker. The result is the $140 million Bakken Marketlink project, which will move up to 100,000 barrels per day, enabling producers to

receive full market value. My administration has pushed for the development of this abundant resource in a responsible manner. We have overseen more oil and gas production during the past seven years than the past two administrations combined. We have strongly advocated not only for Montana’s oil and gas resources but for all of Montana’s abundant energy resources. Montana’s resources in the Bakken and across the Treasure State are just that – treasures. As my journey as your governor nears an end, it’s important that we maintain strong leadership in Montana if we are to move ourselves into the future. We need untiring advocates with the vision to spur and maintain responsible development of our resources. I am proud of what we have been able to accomplish together. Thank you for the opportunity to be your governor and help move Montana forward. If you’re ever in Helena – stop by. My door is always open.




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Rehberg: Oil industry under attack by radical groups By Denny RehBeRg u.S. REpRESENtAtIvE

Energy production is a traditional cornerstone of Montana’s economy. Its value is measured in the generations of hard-working Montanans raised on the good-paying jobs the industry provides, as well as the main street businesses that sprung up in support of the energy industry. Energy production helped build Montana’s public schools, roadways, and infrastructure, and the industry deserves heartfelt thanks and recognition. Unfortunately, the industry is under attack from radical environmental groups that are determined to reduce America’s energy production and raise prices for Montana families. Frivolous lawsuits and government over-regulation obstruct the path to energy independence for our country and hurts our economy. In Congress, I have been one of the leading voices for a common-sense “All-of-the-Above” energy approach. For example, H.R. 909, “A Roadmap for America’s Energy Future” calls for a balanced domestic energy portfolio that utilizes traditional energy as well as alternative and renewable energy sources, while investing in

the development of new and safe energy sources for our future. I also strongly oppose “Cap and Trade” policies that would needlessly send our energy costs through the roof. I know many of you in Rehberg eastern Montana are employed in some fashion thanks to the new fracking technologies that helped develop the reserves in the Bakken Oil Field. And, like you, I’m concerned that an out-of-control Environmental Protection Agency (EPA), with marching orders from an anti-energy White House, has turned its attention to the Bakken in such a manner as to seriously curtail production. Put bluntly, they’re coming to take your jobs. I’m fighting to stop them. Everyone wants a safe work place and a clean environment, but the EPA’s agenda seems driven by radical environmental groups that have a regular audience with the White House, and who are major contributors to the campaigns of President Obama and his supporters. The President and his allies are not only pressuring the oil industry of Montana and North Dakota, they also

‘Unfortunately, the industry is under attack from radical environmental groups that are determined to reduce America’s energy production and raise prices for Montana families.’ Denny Rehberg u.S. representative

seek to unfairly wield their influence over the Canadian Oil Sands by halting the development of the Keystone XL pipeline. It’s clear the pipeline would provide thousands of badly needed jobs for our country, and provide a safe transportation conduit for Canadian and American oil to American refiners in the south. This includes Montana oil from the Bakken. Yet the President ignored the science and the unemployment figures and rejected the pipeline for purely political reasons. The League of Conservation Voters is an ardent opponent of Keystone XL, and has donated hundreds of thousands of dollars to like-minded candidates in this election cycle. I fought for the approval of Keystone

in Congress, was successful in forcing the President to announce a decision, and continue to work in Congress for the project’s completion because it’s an important part of a common-sense “All-of-the-Above” energy policy that America’s families and small businesses need. To be sure, oil work is hard work – long, tough days in the oil patch, and it’s a credit to the industry’s employees who accept the challenge for the reward of providing for their family’s needs. Keep up the good work! I salute the oil industry in Montana for its steady hand in shaping our state, and will continue to be a strong advocate for American energy development.

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Fiscal Year 2011-2012 Oil & Gas Payment (SB 329)

Preliminary Budget Figures School Name Sidney Elementary $4,689,555 Savage Elementary $499,404 Brorson Elementary $78,968 Fairview Elementary $1,110,399 Rau Elementary $407,361 Lambert Elementary $474,418 Sidney High School $3,057,293 Savage High School $519,681 Fairview High School $1,035,582 Lambert High School $505,121 Richland County Schools Total Culbertson Elementary Richey Elementary Baker K-12 Schools Plevna K-12 Schools Westby K-12 Schools Bainville K-12 Schools Area Schools Total

Preliminary Figures 130% $6,096,421.50 $649,225.20 $102,658.23 $1,443,518.51 $529,568.65 $616,742.97 $3,974,480.78 $675,584.74 $1,346,256.52 $656,657.14

1st, 2nd & 3rd quarter AMOUNT DISTRIBUTED $1,309,586.81 $52,911.10 $102,658.23 $1,113,238.07 $470,807.40 $656,657.14 $3,974,480.78 $675,584.74 $860,675.86 $656,657.14 $9,873,257.27

1st, 2nd & 3rd quarter AMOUNT OVER $0.00 $0.00 $338,108.87 $0.00 $0.00 $2,221,149.05 $85,018.38 $404,646.68 $0.00 $2,181,234.71 $5,230,157.69





$411,390 $3,148,678.33 $896,228.84 $803,855.31 $1,126,604.33

$534,807.56 $4,093,281.83 $1,165,097.49 $1,045,011.91 $1,464,585.64

$227,738.55 $4,093,281.83 $1,165,097.49 $939,070.60 $911,256.16 $6,008,148.54

$0.00 $1,931,853.45 $59,087.28 $0.00 $0.00 $1,990,940.73

Amount to area schools Total to be returned to the state

$15,881,405.81 $7,221,098.42

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Tappin the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

tester: Building pipeline will help eastern Montana reach its full potential Montana to expand and bring more jobs to our state. That’s why I support and have voted to approve the Keystone XL Pipeline three times. Responsibly building the pipeline will Tester help eastern Montana reach its full economic potential. The pipeline’s on-ramp at Baker will deliver up to 100,000 barrels of Bakken oil per day to market. Today,

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Bakken oil is getting less than market value because of shipping constraints – Keystone XL will help fix that. Built with respect for private property rights and to the highest safety standards, the pipeline will safeguard our most treasured places and increase our energy independence. But Keystone isn’t the only pipeline that will help eastern Montana’s economy. I also support construction of the Bakken Crude Express Pipeline that will run 1,300 miles to Cushing, Okla. The pipeline will increase the value of Bakken oil by expanding shipping capacity by an additional 200,000 barrels of oil per day. Montanans are ready to get to work building these pipelines. You are welltrained, highly skilled and efficient. That’s why I’ll keep pushing TransCanada and other companies to begin training workers right here in Montana – so we are ready to begin construction once we get the green light. Growing energy production is also increasing the need for better infrastructure and transportation in eastern Montana’s century-old communities. That’s why I’ve pushed Amtrak to increase capacity on the Empire Builder and will continue to partner with the

In the Williston Basin


‘Folks in and around Sidney know the oil business – and know what it means for our future.’ Jon Tester u.S. senator region’s mayors and county commissioners as they work to improve roads and public safety to support oil and gas development. And it’s why I’m working to roll-back regulations to make affordable housing more available in Richland County. Responsible energy development will play a key role in strengthening Montana’s and America’s economy. Folks in and around Sidney know the oil business – and know what it means for our future. You are an important part of boosting our economy. As always, I’m interested in hearing from you. Don’t hesitate to call my office anytime at 866-554-4403. Until then, be well, take care, and thanks again for being a valuable part of Montana’s economy.

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Thank you to all Montanans and everyone who contributes to eastern Montana’s growing economy. Thanks to your hard work, responsible energy development will continue to power Montana’s economy and improve the quality of life for Montana families. Responsible energy development increases our energy security and creates jobs. It spurs small businesses, new technologies and new opportunities. The Keystone XL Pipeline will be a big part of Montana’s energy future. It will allow oil production in eastern

Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


rapid growth puts Bainville school in depths of Bakken despair It’s a straight 30-mile shot west from the Bakken epicenter of Williston, N.D., to the small northeastern Montana town of Bainville. Stop there for a few minutes and it may not seem like much is taking place. But spend an hour or so watching and one notices just how much is happening. The town is on the verge of bursting at its seams, and there’s no better way to see that than within the walls of the one-building Bainville School. “The impact in Bainville is from all over,” Superintendent of Schools Renee Rasmussen said. The school, with around 60 students not too long ago, today has an enrollment of 154. At the end of the last school year, attendance was at 120 students; summer saw enrollment increase an additional 30, growing the student population by a quarter in a few short months. The increase has certain startling, sometimes “weird” consequences that school administrators are forced to address. “When you are used to 10 or 12 or 13 kids in the classroom and that’s what you order books for, all of a sudden you’re either thinking about ordering a whole new set of textbooks, which is

literally thousands of dollars, or you got to find your old textbooks at 80 to 100 bucks a pop and buy another five or six,” Rasmussen said. “I’ve been doing that in almost every class this year.”


Bainville is no different than any other schools in the MonDak region. Its problems can be traced back to the housing crisis. But unlike larger cities and towns which may already have the capability to expand infrastructure, Bainville is so small it doesn’t have the infrastructure to support massive amounts of growth. The infrastructure to support quick and sizable growth may have reduced the number of problems school administrators face. Bainville hired five teachers during the summer along with paraprofessionals and assistant cooks and custodians, all of whom administrators know are critical to running the school. The pool of substitute teachers is “dried up” because they had to hire last year’s subs as full-time teachers; they already had a place to live. Every time Bainville School hires a teacher, administrators must find a place for them to live. So far they’ve been able to scrape by using modular housing hooked up to sewer and water


Classrooms in Bainville keep getting more full. outlets donated by generous townspeople who value their youth’s education; the school has never had to pay the several thousands of dollars for the hookup fees, though they worry that will not last. The school currently has

one teacher staying with a local family until housing becomes available; two other male staffers are sharing a trailer next to the school. Administrators had

see BainviLLe, pAgE 22

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Sunday, Oct. 28, 2012

Tappin’ the Bakken fall 2012

Sidney Herald

Bainville: School’s in need of cooks, custodians, substitute teachers from page 21

to purchase another trailer over the summer – an unexpected expense. Housing has become so crucial that during interviews for teaching positions, when it came time to discuss housing and living expenses, the dire situation often inhibited the process from moving forward. “It definitely made recruiting quality teachers difficult,” Bainville Principal Rhiannon Beery said.

CritiCal issues

Substitute teachers are needed just as “badly” as substitute cooks and custodians. The school currently retains six substitute teachers, though they can only work set days and times. This situation leaves many Fridays, often game days, bare. Rasmussen jokes it’s become so critical she’s having to beg community members to work at the school. It’s not easy when the starting wage for non-certified positions is at $12.30 an hour without benefits, a far cry from the $20-an-hour positions and more offered in the nearby oil field. Bus drivers are a much-desired commodity at this time as administrators are faced with adding additional routes. Under state law, students are allowed to ride the bus for up to an hour. Bainville school has reached

lOuiSa BarBer | Sidney Herald

Bainville is feeling impacts from the oil industry. its current occupational capacity; proposed housing developments and a new farce sand off-loading facility that is on the way pushes the limits. Administrators will need to find someone else to drive a school bus, which means finding someone with a CDL, a challenge in itself. Rasmussen says the school also has trouble finding drivers to take students to games. And there’s still the problem of rotating buses out every four or five

years because of the wear and tear from gravel roads. Each bus costs the school about $100,000. Depending on the grade, Bainville is never far away from needing another teacher. In first grade, it’s eight students; third grade almost 15 students. That’s still not all. “We also see a lot of transient families, and sometimes that means because of moving they’re behind in school, and

so our special ed population is growing, and so that’s left us with a need for more aides,” Rasmussen said, “which by the way are more people that have to have houses.” This year is the start of what is expected to be some pretty hefty money coming from oil and gas revenue. The first of several oil wells in the Bainville School District is finally nearing the end of the 18 months production tax holiday. The extra revenue will help tremendously with future projects at the school, including a second-floor remodeling project large enough to create three or four classrooms (an estimated $500,000 to $550,000 project). The school doesn’t have the money upfront, so administrators hope to apply for impact-monies designated under Senate Bill 329 or borrow the necessary funds. Bainville, following in the footsteps of other schools like Sidney and Fairview, also needs a larger kitchen, a project that is now in the idea stage. “It’s not that this isn’t good. It’s not that Bainville’s not welcoming to this, the area, because it means this community will survive…but what it’s done, in our opinion, is made a need for that oil money…and we’re not real happy that

see Developments, page 23

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


development: Projects estimated to more than double size of Bainville’s population From page 22

the state has taken part of it,” Rasmussen said.

Funding bill

The 2011 Montana Legislature adopted Senate Bill 329, which capped school districts’ budgets at 130 percent, so Bainville likely won’t see all of the tax revenue generated from fresh oil wells. But now there’s a new bill proposal that eastern Montana lawmakers will fight to pass. Among its key points is the ability for flexible spending as well as the ability to retain money in partnering districts until the budget is filled. Rasmussen is weary of the bill, however. She’s concerned that it still does nothing to address saving money for the future, something she credits Lambert School District for doing until it was punished and its revenue stripped away.

Of the $13 million taken from oil and gas schools and placed in the state general fund (it was intended for statewide school districts), half came from Lambert. “We can’t save that kind of oil money that would give us the ability to save much or do much,” Rasmussen said. “That worries us.” The superintendent has been around long enough to know the bill won’t survive in its current form. “I think the bill tries to be all to everybody, and in the end it’ll be like the rest of the school funding, which will get extremely complicated which is one of everybody’s complaints now,” she said.

new developments

The town of Bainville is dealing with the same dilemmas as its counterparts in eastern Montana: housing, infrastructure, roads, etc.

The town recently held a public informational meeting about a couple development projects that will more than double its population. Just north of Bainville, Canadian company MacBain Properties is proposing a 20-acre housing subdivision for single-person and family housing that will eventually house 350 people. That’s already more than the town’s population of 283. In its plans, MacBain officials plan to build a new lagoon system large enough for their site and to accommodate Bainville’s future growth. It’s a welcomed gesture, says Mayor Dennis Portra, whose new lagoon system was overwhelmed within two years of use. His town, he said, would have had difficulties coming up with funds to start over. “It’s very difficult to imagine where the funding would be,” Portra said, adding he hopes the

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state will come through with funds to help the situation. During the public meeting in late September, residents also heard plans from ProCore Logistics, a frac sand distribution company that plans to build an off-loading facility just west of Bainville, and utilizing the train tracks, which already sees 50 trains or so move through daily. Residents worry about crossings being blocked for the sake of emergency responders. Officials begged to differ, while pledging to work side by side with residents. The final reconciliation remains to be seen.

impacting them, they’ve had additional deputies make more frequent appearances. The county is trying to get one or two more to live in Bainville, though, of course, there isn’t any housing. By and large, Bainville’s most significant impact is lack of water and sewer infrastructure. The town has turned developers and potential residents away, Portra said, because there just isn’t enough room. “The growth here has been terrific,” he said. “We all need to try to find solutions and not find roadblocks because that’s the only thing we can do here.”

other impacts

trudging along

Crime is on the rise, though not to the extent other cities and towns have seen. Culbertson, Bainville and Froid each pay for one Roosevelt County deputy’s salary, but since the boom began

There’s nothing to do but move forward and deal with impacts as they occur as well as try to prepare for what may lay ahead. Back at Bainville School, that’s exactly

what administrators are doing: looking at ways to manage more students; change and enact policies and procedures that may not have been in place before (like having relatives and guardians check in at the office); and planning for several outcomes not knowing which will come to fruition. “It’s a really tricky balancing act,” Rasmussen said. “How do we plan, what things can I do in the short-term that will help us manage the longer term? The best we can do is to plan for many contingencies, and to plan for both growth and non-growth as well as look forward to a time when the boom is over, and we just settle down and do our best to be good stewards of the money we use while at the same time planning for the eventualities that may come.”


Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

enhanced oil recovery research aims to extend Bakken’s life By Louisa BarBer Sidney Herald

Scientists at the University of North Dakota’s Energy & Environmental Research Center (EERC) are studying how to implement Enhanced Oil Recovery in the Bakken. If scientists reach their goals, oil recovery could improve by 50 percent or more. Experts say that much as two-thirds of the country’s conventional oil remains untapped due to inadequate technology. In conventional reservoirs, extracting oil goes through a primary recovery process that extracts between 12 and 18 percent of the oil trapped between the rocks. “That’s really just pumping the formation,” says EERC associate director John Harju. The secondary phase involves pumping water through the rocks to sweep trapped oil to producing wells, recovering another 12-18 percent of the oil. Enhanced Oil Recovery (EOR) targets the oil left behind, in the Bakken – an esti-

mated 400 billion barrels. “The challenge that we have in this Bakken is that it’s unconventional,” Harju said. “We’re only extracting somewhere between 3 and 10 percent of oil in place through primary recovery.” Part of the problem stems from the formation itself. The rocks tend to be oil wet, and so injected water (conventional secondary recovery), because it doesn’t mix well with oil, essentially runs off the rocks, not sweeping the oil through the formation as designed. “We don’t believe it’ll be highly effective,” Harju said. “In essence what would happen, in our belief, is that oil would be forced into pore throats and make it more difficult to extract.” The most commonly used agent in EOR to replace water is CO2, or carbon dioxide, because it mixes readily with oil. Scientists at the research center are experimenting mixing the gas with the oil, changing its properties to basically see

Experts say that as much as two-thirds of the country’s unconventional oil remains untapped due to inadequate technology. how well the oil can be made to flow from the pores. “So the work that we’re performing is very focused on

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developing a detailed understanding of all of the critical properties; testing the rock with CO2 under high pressure conditions, coupling that with an understanding of the geomechanical properties of the rocks, to understand how the CO2 modified oil flows through the rocks, and pulling it all together into reservoir simulations that allow us to better predict the effects of CO2 injected into the reservoir. We need to develop technically and economically viable implementation concepts regarding the downhole architecture.” At present, scientists have begun laboratory-focused tests on rock and oil samples taken from the Bakken. They’re observing what happens to CO2 when it’s heated and combined with oil, changing the complexity of the rocks and determining any side effects from using CO2. The goal is to be able to conduct field tests within two years. “Certainly what we’ve seen in conventional reser-

voirs is 20-30 years of extended productivity,” Harju said. Although commercial EOR projects are being conducted in many states, the Williston Basin has only two activelyproducing fields using EOR technology: the Weyburn and Midale fields in southern Saskatchewan. Another nearby project (Powder River Basin) with CO2 injection planned for early next year is located in southeast Montana’s Bell Creek Field where the EERC has partnered with Denbury Resources; all of these fields however, are being conducted in conventional formations. Other fields in Texas, Colorado and Wyoming have technology in place and are producing using CO2. “But those are conventional reservoirs,” Harju said, adding, “I think it’s safe to say that we’re hopeful that similar production enhancements are what we’d like to see with CO2 in the Bakken, but we don’t yet know that.”

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Tappin’ the Bakken fall 2012



SuNDAY, Oct. 28, 2012

Bozeman business stakes claim in MonDak building boom By Louisa BarBer SIDNEY HERALD

Over the past few years, Richland County locals have become familiar with western Montana businesses making the long journey eastward in search of business opportunities. Several Bozeman companies are working

in the Bakken, including the 123-year-old, familyowned Kenyon Noble Lumber & Hardware, a building materials supplier for construction companies and developers whose drivers have begun making frequent

trips to the oil boom region to deliver products. “We’ve actually taken a pretty measured service approach,” says vice president Ashley Ogle. “Obviously, in Williston, there’s a great need for a lot of things, a lot of essentials, just because of the rapid growth, but I think building materials is difficult to get in a timely manner and get products that they want to build a quality home or business.” Kenyon Noble has been in the region for about a year; filled-to-the-brim semi-trucks make two to six runs a week delivering product to customers. The company doesn’t have a storefront, but Ogle says management strives to treat customers just like those in their Bozeman, Livingston and Belgrade facilities. Nonetheless, Kenyon Noble staff are consider-

Kenyon Noble carries Montana’s largest stock of building materials, including projects for siding, roofing, flooring, windows and doors. ing a permanent location. “We’ve definitely taken a look at it, and there are some challenges that I think any business looking to go into that area face,” Ogle said. “We’re taking a conservative approach to crunching numbers and seeing if it’s possible to run an operation like we run in

the Bozeman area. For right now, through this year, we will remain just running trucks.” Kenyon Noble carries Montana’s largest stock of building materials, including projects for siding, roofing, flooring, windows and doors. Company officials, while declining to say

how much business contributes to its overall business portfolio, maintain it’s “been a positive impact for our business.” Ogle said the company has enjoyed doing business in the MonDak region, mostly because of locals. “We found the people there to be very enjoy-

able, and so far it’s been a good experience for us all the way around,” she said. “I’m so impressed with the people in North Dakota and eastern Montana because they always are so enjoyable and so courteous.”

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Mineral, landowners – understanding the differences in leasing By Louisa BarBer Sidney Herald

of the issues the association addresses.

Hundreds of millions, if not billions of dollars flow through eastern Montana, and thousands of people are getting in on the action. Maybe they work for a drilling company or maybe they service oil field business. But there is always the old fashioned way: own mineral rights. Depending on how many share ownership, owning the rights to minerals is a good way to make money quickly. Dennis Trudell, president of the Northeast Montana Land and Mineral Owners Association, has spent 30 years in the organization, learning the process, working with local and out-of-state residents, and dealing with issues that arise between mineral owners and landowners. He recently shared with the Sidney Herald an overview of how ownership is determined, how leasing works and a few

Determining ownership

Walk into the courthouses in Richland, Roosevelt, Sheridan, Fallon or Dawson counties, and you’ll likely find land men pouring through hundreds of pages of county documents, representing companies that are looking to lease minerals. They normally concentrate on a piece of land to discover whose leases might be up or will come up shortly, so a broker can contact them to see if they’re interested in an offer. “The first step is to identify the area that has the lease that’s up and they have to find all the mineral owners, contact each one and try to make a deal on a lease,” Trudell said, “and every individual’s share is their own.” Determining ownership of mineral rights goes back more than 100 years when land in the MonDak was given away for free by the federal government

to encourage homesteading. If those original families retained their mineral rights, royalties remain in the family. “Most of the trudell time the minerals do stay in the family,” Trudell said. Sometimes, however, they may have sold their mineral rights somewhere along the way. “There’s a lot of instances where people who have got into trouble financially would sell their mineral rights in order to get some money to pay the taxes, for example.” Those who have purchased land in the last 20-30 years typically don’t receive the minerals along with it. And the owners are likely scattered across the country. Mineral owners can sell their rights with the land or separately – typically separate. And these days their rights go

for a pretty penny. “It’s only investors or oil companies that want to buy mineral rights, and normally the price is way more than what a normal person would be willing to pay,” Trudell said. Whatever the amount is for the lease rate, the seller receives the money right away. Generally speaking, oil companies will pay a going rate of $500 per acre or more. A hundred acres equals $50,000 up front at $500. But of course, it can be more than that, and local residents quickly become wealthy. A thousand acres at a going rate of $500 each, is a half million already. “There’s been a lot of money generated in Richland County with leasing,” Trudell said. Leases can go for around $1,000 per acre the closer the land is to North Dakota, which is considered part of the “sweet spot.”

Figuring equations

The math can get pretty ugly,

‘there’s been a lot of money generated in richland County with leasing.’ Dennis trudell land and Mineral Owners association but when it comes down to it, determining owners’ shares starts with the spacing of an oil well, which is typically one or two sections at 640 acres a section for horizontal drilling. There could be 640 acres or 1280 acres. Owners receive royalties based upon the number of acres they own in the spacing. In general, the lease gives the mineral owner 3/16 or 18.75 percent of the profit generated from the oil well. For example, if a spacing unit is 640 acres, and a mineral

see Leasing, page 27

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


leasing: Problems occur when mineral owners, landowners don’t communicate from page 26

owner owns all of it, they’ll receive 18.75 percent of the value of the oil. “This doesn’t happen very often,” Trudell said. More frequently owners have a half, a quarter or less of the spacing. While oil companies receive an 18-month tax holiday, mineral owners begin paying taxes on their revenue immediately upon production at about 14 or 15 percent.

It starts wIth a lease

Everything to do with producing an oil well comes back to the lease agreement between the mineral owner and the oil company. The surface landowner, if different, has no say in the agreement. “It all goes back to how the lease is written,” Trudell said, “and so the lease is governing what the oil companies will be able to do.” Leases are drawn up by oil companies, so unless the mineral owner inserts terms to ensure they and the surface

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owner have a say, the surface agreement is “a little bit up in the air.” “Montana does not have specific laws that govern the amount of money you get for surface damages,” Trudell said. “That’s up to the individual and the oil company to negotiate that surface damage.” The surface owners who often voice their irritation for not having much say in the drilling on their land, may actually be justified because leasing takes precedence over surface. Most of the time, mineral owners don’t know the landowner since they could be living several states away; that’s where problems lie. It’s a good idea for those who do lease to talk with the surface owners about compensation for damage to their land. “Putting something in the lease that would give them more direction on what is going to be paid, that’s the best scenario,” Trudell said. However, it rarely works that way.

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Damage, annual fees

Because the landowner will lose productive crop land in favor of a well site, the landowner receives compensation, though minuscule compared to the mineral owner. “Most oil companies have a price they’re willing to pay, but there are a few that don’t want to pay that price,” Trudell said. The company will make an offer on what they’ll pay for initial damage as the surface owner negotiates a price they believe is fair, until the two reach an agreement. Damages for a basic well site of five acres can go for $2,000 per acre, up front, to cover damage to the land. The surface owner also receives a yearly fee in lieu of the land that was taken out of production. The fee runs at about $500 per acre, compensation they’ll receive for the next 30 or 40 years while the oil well is active. “That’s why it’s an issue,” Trudell said, “as it does disrupt

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the operation, and there are certain things with the dust and traffic and the odors. You put up with all the impact, and that’s what you get out of it is the yearly fee, so a lot of times they’re not real eager to have those kinds of things on their land if they don’t have mineral interests.”

take away

Some 50 years ago, when the price of oil was cheap at $5 per barrel, there weren’t as many ramifications as there

are today. Oil companies are generating lots more oil now, too, because of technology’s evolution. If it wasn’t for mineral owners allowing oil companies to drill for the oil, there wouldn’t be any activity, no thriving economy except for agriculture and no boom, just like the rest of the country. Mineral interest has power over surface. “You can’t stop it,” Trudell said.

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

some groups, individuals make reaching out a ministry

oiL preacher

You may have heard him on the radio, a brief, 90-second sermon about Jesus Christ along with some encouraging words. He’s Ron Evitt, but he’s known more as the “Preacher in the

here. everyday life. God’s everywhere. we just need to call on him.’ ron evitt Preacher in the Patch Patch…oil patch, that is.” Born and raised on the oil fields of North Dakota, Evitt learned about the oil industry early on; he doesn’t know how to do anything else, he says. He was also raised in a church, but he’d never heard of an oil field preacher, but had thought about reaching out to these men who often have a reputation for being rough. He said, “God has to decide who delivers the message, and I just felt God wanted me to reach out to my own people. I just felt it inside my heart.” After failed attempts to draw

people to his oil field Bible studies, Evitt put his calling on it. But after feeling a continuous tug, Evitt said he felt led to reach people through the radio. So he approached executives who allowed him 90 seconds. Today, his broadcasts are aired through 36 radio stations reaching as far as Wyoming and Canada.

oiL worker

He’s nothing special, he’ll tell you, “just a common oil field man.” He does, however, work as a petroleum engineer by day. He’s often recognized by voice when he travels to oil well locations. He doesn’t tell anyone who he is, but eventually conversations begin and so does his ministry. So why does he do it? “Everybody needs God, and until they learn that, you’re gonna live a life of depression and sadness,” he said, noting that his plan is to continue working in the oil field until his final day, while continuing to do three things: keep praying, keep preaching

Ron Evitt is better know as “Preacher in the Patch.” and keep plugging away. “A lot of oil field guys don’t go to church, and the church isn’t meeting them where they’re at,” Evitt said. “We need help right out here. Everyday life. God’s everywhere. We just need to call on him.”

FeLLowship church

One of Richland County’s proactive churches to reach out to newcomers and oil field workers is Sidney’s Fellowship Church. By providing showers, a

see reLiGion, Page 29


There are food banks, the local Salvation Army and secondhand shops, all of which are busy meeting new demands from the population influx. And last year, local community churches took turns serving hot meals through the winter, offering a place for free food and fellowship. There’s also the education side and the McKinny-Vento Homeless Assistance Act, under which Williston School District administrators take advantage of federal funds to offer resources and assistance to homeless youth. Then there is ministry specifically geared toward oil field workers.

‘we need help right out


By Louisa BarBer Sidney Herald

Tappin’ the Bakken fall 2012



SuNDAY, Oct. 28, 2012

religion: Sidney church offers free showers, emergency warming shelter, food pantry from page 28

mobile food bank, and oil field training, the congregation places priority in reaching out to “have good relationships with our neighbors,” Fellowship Pastor Jordan Hall said. Fellowship offers free showers for those in need; the service has become so popular, the church averages 20 to 30 showers a day, with the majority of users being those who don’t have running water or who can’t afford to pay for a shower. Also free of charge is a food trailer with a shower unit. “It is designed to take onto oil field locations to give showers where there’s no running water, and also will allow showers be taken at the church location when no one is present to let them in,” Hall said. Throughout each week, Fellowship Church, which serves as a cold-weather “Emergency Warming Shelter” for camper/RV residents who lose power, and gives food away from its food bank to 30-40 individuals or families. The food bank is part of the Montana Food Bank and a federal food program. “We can deliver food to the home-bound or those without transportation,” Hall said. Starting in November, Fellowship’s mobile food pantry will take food to rural areas throughout the Williston

Basin; the church accepts meat donations all year and other donations periodically. There is no charge for the service. In addition, church members will distribute uncooked Thanksgiving dinners this year. Recently, the church began a program called the Bakken Oilfield Chaplaincy, which trains members of different church denominations to minister to oil field workers on behalf of their local church. Trained in suicide prevention, crisis management and substance abuse referral, the program provides resources for those who are new to Richland County.

Kindness to neighbors

Hall says his church follows Exodus 22:1, a verse that urges not to “mistreat the alien or the sojourner because we were once aliens and sojourners ourselves.” “Most coming to the oil field are trying to work hard to provide for their families, and it’s not easy coming to this rough environment,” he said. “We want to help them and to bless them. We get taken advantage of once in a while, but that’s not on us. That’s on them. We receive the same blessing for helping those claiming to need the help.”


The trailer will be used to bring food to people in need who reside in neighboring communities. Fellowship’s mission statement is “Connecting People in Healthy Relationships with God and One Another,” and it serves as the foundation for its outreach to connect with neigh-

bors. “Jesus preached, but He also fed people,” Hall said. “Like Christ, we’re intent on doing both.”

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

oil benefits not raining down on everyone in region By Fran Milsop Sidney Herald

Contrary to popular belief, not everyone residing within the Bakken Formation and its surrounding regions is making a fortune from newly discovered oil and gas reserves or industry related business ventures. In fact, many residents have had to tighten their belts. Instead of being able to celebrate their lucky fortune, they are attempting to figure out new ways of conserving their resources because their wages have not changed – or changed only slightly – while the cost of gas, housing and food continue to climb. Some of the residents who have felt the negative impact of all of this success are the less-experienced teachers employed by the Sidney public school system who have seen their wages depleted by the disproportionate amounts they have to spend on their biggest

ticket item: housing. Daniel Farr, Sidney superintendent of schools, says there are approximately six employees within the school system who have expressed a need for housing because of the lack of availability of reasonable housing. Teachers who gladly accepted positions for approximately $31,500 three years ago because they wanted to remain in the field of study they were in when they went to college, are now living paycheck to paycheck, inventing new ways to keep their cash flow flowing, or simply giving up their dream as the sum has been more than offset by the increased cost of living in the area. While growth and expansion do make for exciting times, they also create greater amounts of stress, and this has been one of the fallouts within the school district as the outlook for the future suggests things will probably get worse in this arena before they

get better. Schools within the Sidney School District are potentially facing an estimated 62 percent increase in enrollment in grades K-12 . “Within the next year, the school system will be looking at having to replace approximately 10-15 teachers due to growth and retirement,” Farr said. “Of the 93 certified staff, 37 percent have 25 years vested and over 20 percent have 30 or more years. And then there is the issue of the ‘revolving door’ as students come into the system, stay for a while – sometimes less than five days – and then leave. The multiple moves – which are causing what I call an ‘academic abyss,’ that we have to deal with as we attempt to develop special programs, summer reading and other special classes to help those children who are academically behind our students has placed enormous stress on our teaching staff.”

Fran MilSOp | Sidney Herald

see school, page 31

Larry Woolard, custodian at West Side Elementary School, is looking forward to living in one of the school district’s modular homes that will be available in November.

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


School: District to add modular housing from page 30

New coping skills are the order of the day in the oil patch, especially for teachers, students, custodians, service workers, government workers and the environment itself as it is transformed by the demands and complexities that have resulted from the unexpected windfall of the Bakken Formation . “Economically, we have had to ask the question, ‘How do we move forward, especially when renovation is so expensive and the competition with wages is so difficult to match?’ ” Farr said. “We can’t point fingers, we have to work collectively to keep the community and our children strong. They are the gift we send into the future.” Helping teachers cope with their biggest ticket item – housing – seemed like the most proactive idea, especially as unfurnished, one-bedroom apartments in the Sidney School District ballooned to $1,500 to $2,000 a month. The solution: modular apartment units. Initially, there will be six modular houses placed in a designated area not far from West Side Elementary in Sidney. Some will be able to accommodate an entire family of four, while others will be able to house a single-parent, or possibly two individuals who are willing to be roommates.

“I love Montana,” Larry Woolard, custodian at West Side Elementary School, said, “and I came here because of family, peace of mind and the people here are nice. And now that I will be able to move into one of the modular homes, it reduces a lot of the stress, though I won’t be giving up my second job any time soon. The quality of life outweighs everything else, and the opportunities, which is what being able to move into this new house is all about.” Woolard decided to move from Casper, Wyo., to the Sidney area after he watched his rent increase from the $450 he was initially paying to $1,000 in just 18 months. But not long after arriving in Sidney, he began experiencing the same dilemma. “I’m a single parent,” Woolard said, “and the wages are not keeping up with anything. I moved here with a company in the oil business, but I wanted to get away from the stress of working 18-hour days and not being able to find people to work. I had to downgrade – tighten my belt – so I could spend more quality time with my son who is 16.” Little-by-little, day-by-day, people are working together in the Sidney community to make the quality of life for individuals in the community who aren’t able to keep up with rising costs better.

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Borejaks energy services making foothold in Bakken By Louisa BarBer Sidney Herald

All day like clock work, drivers of the semi-tractor trailers loaded with saltwater pull up to the Borejaks Energy Services site, hook on, pump off and pull out within a matter of minutes. It’s efficiency at its finest, something that manager Eric Benavides is working to perfect. It seems to be working; Borejaks records some of the fastestoffloading times at its saltwater disposal facility. “Business is good. We have a great location here,” Benavides said during an on-site visit in September, a month after it opened. “That means a lot in the business. All of my locations are off the highways.” The site, located a few miles east of Alexander, N.D., on the way to Watford City, N.D., is the first of four planned Borejaks saltwater disposal sites that the company wants to operate in the Williston Basin by the end of the year in North Dakota, with more to come, expectedly, in Montana sometime next year. Step inside the open 24/7 office building, and it’s noticeably different from others. Reminiscent of a truck stop, the lobby is stocked with snacks and

drinks that go well with a flat screen TV for entertainment while drivers wait to offload the disposable resource. “It’s just what I’ve decided to do,” Benavides said. “It’s not cheap, but it’s worth it.” There’s something else that separates Borejaks’ site from others: technology. Without giving too much away, Borejaks relies on an automated system to unload saltwater from tractor-trailers.

How tHe process works

After drivers pull up alongside the building, Borejaks employees check to ensure the saltwater doesn’t contain any sand or other coarse material. If it doesn’t, the driver hooks the tanks up to the facility and steps inside to log onto a touch-screen computer that’s tied to the North Dakota Industrial Commission system. Drivers log in and enter well information and other details. Then pumping begins, and drivers only wait until it finishes. From start to finish, it takes only a matter of minutes. “I went through great lengths to get the process faster,” Benavides said. “A regular 100-barrel truck can probably get in and out of here in 15 minutes or less from the time they connect to the time they leave.”

see Borejaks, page 34

lOuiSa BarBer | Sidney Herald

Powerfuels driver Mark Pantaleone attaches the hose to the self-automated pumping system.

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Tappin’ the Bakken fall 2012

SuNDAY, Oct. 28, 2012




Sunday, Oct. 28, 2012

Tappin’ the Bakken fall 2012

Sidney Herald

Borejaks: three more locations on way for service-based business from page 32

Aside from technology, Borejaks, a company just a year and a half old, has joined forces with Atlas Resource Partners, a solids processing facility. The two companies share the site. Trucks that have more than just saltwater have the option and are directed to off-load their tanks at Atlas across the lot. The oil field solids sand mud is removed, then dried and taken to a landfill. “That’s pretty unique with us right now,” Benavides

lOuiSa BarBer | Sidney Herald

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said. No matter what, trucks can leave the site empty. Benavides, a Texas native, has only been in the oil business for two years. He traveled to the Williston Basin to see about entrepreneurial opportunities; his background is in development and home-building realty. After meeting business people and conducting plenty of research about the oil production process, Benavides found a way to make money. “I consider myself a guest here,” he said, citing a business philosophy that ensures his employees conduct operations with integrity. “We’re really trying to be a good neighbor first and foremost, employing people that want to be part of something.” With three more locations on the way and a growing reputation as a quality, customer service-based business, Borejaks looks to be on the up and up with the oil service industry. “We’re not here to just buy their vote, if you will,” Benavides said. “We have a good service.”


Word is spreading about the site as drivers seem to favor the new way to conduct business. It was only Power Fuels driver Mark Pantaleone’s second time using Borejaks’ site during the Herald’s visit, but it was nonetheless becoming his favorite spot. “It’s certainly a lot nicer,” he said after logging into the computer system, “once you get used to it.” First-time users are given a step-by-step tutorial by staff, and by the time they return, they know exactly what to do.


Tappin’ the Bakken fall 2012

SuNDAY, Oct. 28, 2012


savage upgrades school facilities with oil funding By Louisa BarBer SIDNEY HERALD

Savage School District administrators saw their student enrollment jumped 20 percent over the summer. That’s 18 students. “It doesn’t seem like a lot when you put it down on paper like that,” said Superintendent of Savage Schools Tyler Arlint, “but for a small school it’s a lot.” In an area where schools are filling with students, Savage’s student-teacher ratio is a desirable 8:1, so some may wonder what administrators have to complain about when classroom sizes are so small.


“It’s not that we have too few teachers, it’s getting teachers here who can live here and pay $1,500 in rent and take up their whole rent. That’s the problem,” Arlint said. And so the main recurring dilemma facing all facets of local communities in the MonDak region rears its ugly head: lack of housing. It remains Savage’s single most challenge in dealing with oil and gas impacts. The school district hired three new teachers this year, two in elementary,

one in high school. The school found housing for each; some staff rent school-owned houses. Administrators are now looking into developing a couple lots already subdivided. Now it’s just a matter of looking into options and factoring costs, like construction; the school will likely choose trailers. Savage is in a unique situation, not unlike similar-sized communities where lack of water and sewer infrastructure is both helpful and hindering. “We just don’t have the infrastructure for people to start building at this point in Savage,” Arlint said, “and that’s a double-edged sword because we welcome growth…We like to see our school vibrant and full of kids, but at the same time, looking at the Sidney situation and then further into Williston, recognizing that with that growth there comes a lot of challenges for the community and the school.” In essence, the unincorporated town’s overwhelmed lagoon system protects Savage from growing too rapidly, but the school remains plagued by the challenge of not being able to get teachers housing. Like other oil and gas schools, Savage deals with a transient population,


A new locker room in Savage. which takes a toll on teachers who test and retest students for placement only to lose them in the same week. Administrators saw it happen during the week before school began when 10 students enrolled and un-enrolled in a period of five days.

Good thinGs

It’s not been all bad, though, Arlint said. Savage has been able to take money allocated from oil and gas to revamp

see savaGe, pAgE 37



Sunday, Oct. 28, 2012

Tappin’ the Bakken fall 2012



Sidney Herald

larene GrOndaHl | Sidney Herald

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012

savage: School district saves money for improvements and add on to its aging building. Prior to Senate Bill 329, the school district placed oil and gas revenue into a fund for its large, $3.4 million construction project that was just completed this summer. The remodeling includes a new building containing a concessions booth, a lobby for community meetings, public restrooms and locker rooms. It also moved the weight room from the basement – jokingly called “the dungeon” – next to the gym. The modern facility is a highly pronounced improvement and a far cry from the moisturerich odors, low ceilings and leaky pipes that students risked bumping their heads into while they worked out; the old weight room resembles a medieval torture chamber. Other improvements include a geothermal heating and cooling system through the school with the added ability to expand if necessary, and energy-saving lighting.


Had Savage not saved funds, administrators wouldn’t have been able to upgrade their school. In its first year, SB 329 took $700,000 from Savage and placed it in the state’s general fund. “It cuts our monies we receive from oil and gas basically in half right off the

‘it cuts our monies we receive from oil and gas basically in half right off the top.’ tyler arlint Savage superintendent of schools top,” Arlint said. It also stripped away the school’s entitlement to guaranteed funds allocated by the state per student. “So in effect, they didn’t provide us with the money that was guaranteed but made us pay out of the oil and gas that we received to pay for money that was already guaranteed to us,” he said. The superintendent says he’s glad to see new bills allow oil and gas schools to retain more of the funds. “Senate Bill 329 hurt schools, and we want to see new legislation put in place that allows us to use the oil and gas money to negate the impact that the schools are receiving,” he said. “Schools are always trying to find money and to use it in the best way to serve the students, and so we’re very, very lucky to be receiving any type of money at this time, especialThe entrance to the new addition at Savage school. ly being in this area for oil and gas.”


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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Bakken rocking enrollment, jobs for Montana tech graduates By Leo A. HeAtH MOntana tecH

Oil drilling in the Bakken and Elm Coulee is a long way from most Montana cities, but its impact has reverberated statewide, and certainly here in Butte at Montana Tech. While our experience is just one of the ripple effects of the increased Bakken activity, it has proven to be a good one for a growing number of young Montana men and women. It was about 2002 that Montana Tech began to see a spike in interest in its petroleum engineering program. Drilling activity in the Elm Coulee was a spark for it. In 2002, the department had an enrollment of 130 students. By 2005, we were seeing increases of 10-15 percent per year. In 2011 Montana Tech had grown to be eighth in size out of 19 U.S. undergraduate petroleum engineering schools. And this fall, we’re at an alltime high enrollment of 350 students seeking degrees in petroleum engineering. That increased awareness of opportunities in the oil and gas industry is something we can attribute to the heightened oil and gas activity, especially in the Bakken and Williston

Basin. Primarily, our undergraduates come from the northern Rocky Mountain states and Canada, but more than 40 percent are from here in Montana. Even with the growth Montana Tech has seen, today it still has close to a 100 percent job placement rate for petroleum engineering graduates. We get about 40 companies from the oil and gas industry that come here each year to recruit. We hear from them that they see many of our grads as the kind of people who like to be involved in field operations. Many companies like that, and we have a couple of companies that do all their recruiting here. It says something about the young people we are fortunate to attract. They’ve grown up outdoors. They come, a lot of them, from a background of doing hard work outside. They have an appreciation of the land, and they are comfortable around machinery. And they know if they do the work here, they can find a good job somewhere. Right now, the average annual starting salary for our graduates is close to $85,000 a year, and most of the larger companies pay cash bonuses from $10,000 to $25,000 to help students get

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moved and situated. That’s pretty good for someone in their early 20s and just out of college. The reality is that many of those jobs are based at national and regional company offices that tend to be in larger cities like Denver and Houston. So while we may not add a lot of people to the workforce here, we have been able to create great opportunities for a lot of young people born and raised here. The challenge we see going forward will be to sustain and grow the Montana opportunity. There are three cycles for an oil field: primary, secondary and tertiary. Primary is when the oil flows from natural pressures. We know that even the best fields yield only 20-25 percent of their oil in that cycle. The secondary is when you inject water to sweep the oil off the rock. That costs more, so the price of oil needs to be high enough for it to be economical. You might get another 25 percent with that effort. The tertiary cycle is when you inject something else to get the oil flowing: steam or carbon dioxide or a surfactant. The tertiary cycle is very expensive, but I think that is what the future opportunity looks like in Montana. The state has areas not only over toward

the Williston Basin but in central and north-central Montana, where there are fields that were depleted in the primary and secondary phases, and there never has been enough economic incentive to do more. The potential is there, though, with today’s higher oil prices, for companies to go back and rejuvenate these older fields, because they can get a return on it. That’s where we hope to help. This is our back yard. With funding through the Montana Board of Oil and Gas, and support from the major operators, we are engaged in a three-year study over at Elm Coulee to determine that tertiary opportunity. We’re looking not just at the engineering aspects of it but also whether it’s economically feasible. If it is, we would expect it to last much longer than the primary cycle. All the findings will be shared publicly. Ideally, we hope it is a catalyst for another spike in activity -- for more jobs, more production, more revenues and taxes for the state of Montana. Leo A. Heath has almost 40 years of experience in the oil and gas industry. He currently heads the Department of Petroleum Engineering at Montana Tech at the University of Montana in Butte.

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SuNDAY, Oct. 28, 2012


overlooking alexander chaos stands god’s commands By Louisa BarBer SIDNEY HERALD

Now that’s something you don’t see every day. A drive through Alexander, N.D., in September offered a perplexing sight. There, towering above all the construction, next to a steady stream of oil field traffic, stands a billboard with the Ten Commandments. No one can miss it. For almost a decade that billboard has stood a symbol of one man’s deep belief in his country’s religious foundation. That man was Tim Dwyer, an Alexander, N.D., resident, a family man, a devout Christian.

LegaL BattLe

Ten years ago, the country was engrossed in a national debate: the placement of the Ten Commandments on state property, namely in front of capitol buildings. Tim Dwyer Jr. recalls his father being particularly irked by the Alabama controversy that ended with the removal of a Ten Commandments monument from the Alabama Judicial Building; the incident eventually led to the ousting of Alabama’s Supreme Court Chief Justice Roy Moore in 2003 for his refusal

to remove the monument. “I guess this was a little bit of Dad’s answer to that,” Dwyer said. “He kind of always wanted to do something. That kind of made him want to do it more.” He asked his father why he wanted to do it, and the response was simply: “Because it’s necessary.” So the man, described as a private, humble person by his daughter Jane Morgan, set out on a fundraising mission; he talked to churches, to family, friends and neighbors about contributions to erect a Ten Commandments billboard where it could be easily visible. Some willingly donated, while others hesitated. The debate, though sometimes fierce, was supported by the city council; one council member argued that if a person can have a sign for beer, they can have a sign with the Ten Commandments. “It sure doesn’t hurt people to see it, that’s all,” Dwyer said, “and they should be able to see it without someone coming along saying you can’t.” Dwyer, who lives on the south side of Alexander, asked his father, a northside resident, why he wasn’t putting the sign on the north end. “People on the south need it more than the north side,” he joked. It was a statement Dwyer finds


The Ten Commandments are in plain sight next to N.D. Highway 85 in Alexander, N.D. humorous to this day. The sign, about a $6,000 project, was assembled in January 2005 on Dwyer’s father’s property next to North Dakota Highway 85, which passes through the center of the small town. Today it overlook the town’s altered landscape. At the time, however, Alexander was just a sleepy rural town.

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of Williston Basin’s busiest highways. Some 13,000 trucks roll through in a 24hour period, bringing with them some major repercussions that its residents are forced to address. “It’s very hectic,” Alexander Mayor Jerry Hatter said, whose town has grown from fewer than 200 people four years ago to about 1,200. That’s a major problem for infrastructure. This year, the city tore up the highway to replace a

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

alexander: Plenty of traffic now in north dakota town from page 39

1940s water main. “It had been in the plans for the past five years, and we finally coordinated with the DOT and got it done this year,” he said. Still, the largest issue remains at the sewer lagoon. “We’re over capacity in our lagoon,” Hatter said. It’s so bad, the town was forced to shut down any sort of building projects, especially when its town hall was receiving 10 calls a day from developers wanting to build apartments, duplexes, four-plexes and hotels. Man camps are not allowed inside city limits because Alexander officials are encouraging only permanent housing. But even that’s impossible until the lagoon issue is resolved. The mayor, a 1994 Sidney High School graduate, says the town will depend on federal funds and impact grants, as well as contributions from developers. “They’re more or less going to pay for it with impact fees,” he said. Alexander fell victim to driv-

ers passing through throwing garbage onto streets, as well as problems with semi-trucks parking on streets and in the school parking lot. “The town looked like hell,” Hatter said. But without permanent law enforcement, Alexander took matters into their own hands. Truck parking is banned and so are RVs. “We weren’t turning people away but when an RV comes into town, and they park it somewhere and let sewage and [expletive] go on the ground, we called it quits,” he said. Alexander plans to partner with Arnegard, N.D., to pay for a law enforcement officer to enforce ordinances. It’s all part of the change residents have become accustomed to. “The older people, I mean, they definitely don’t like it,” Hatter said. “Once we got everything shut down for a few months until we got a handle on it, it’s gotten better. We actually feel we got a handle on things now.”

lOuiSa BarBer | Sidney Herald

Crews replaced the aging water main underneath Alexander’s main route over the summer.

Standing tall

A trust fund in Tim Dwyer Sr.’s name has about $3,000 in it earmarked for the billboard’s maintenance. Eventually, his

family plans to install a light for nighttime illumination. Drivers will see it 24 hours a day. “It’s kind of cool because he was a community man, and

it was a thing for his community,” daughter Barbara Rice said. “It’s neat how the Lord works because of how many people come through now. It’s been seen by a lot of vehicles.”

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hoeven’s bill addresses fracking regulations By Louisa BarBer SIDNEY HERALD

Those familiar with hydraulic fracturing probably already know basic arguments on each side. One side is concerned about groundwater contamination, while the other wants less federal oversight and more state control. The latter argument may have gotten a little closer since North Dakota Republican Sen. John Hoeven’s Empower States Act was introduced in September. The bill would put states in charge of regulating the controversial oil extraction method, something industry leaders have long argued in favor. The bill is cosponsored by Sen. Lisa Murkowski, R-Alaska, a ranking member of the Senate’s Energy and Natural Resources Committee. The pair made the announcement during a two-day tour of the Bakken near Williston, N.D. “The Empower States Act makes clear that America is safer and more secure when it has affordable energy supplies from domestic resources and that domestically produced oil and gas provides good jobs and economic opportunity for our people,” Hoeven said.

“The legislation also recognizes that states have a long record of effectively regulating oil and gas development, including hydraulic fracturing, with good environmental stewardship.” The bill follows closely behind legislation introduced earlier in the year by Sen. Jim Inhofe, R-Okla., known as the FRESH Act; in it, the bill clarifies giving states primary jurisdiction over regulation, permitting and developing guidance of fracking technology. “This legislation clearly defines the states’ expertise in regulating hydraulic fracturing,” said Barry Russell, president and CEO of the Independent Petroleum Association of America. “After all, state governments have carefully and successfully regulated hydraulic fracturing for decades.” Under Hoeven’s bill, states have the right to regulate and manage fracking with the ability to respond first to any violations. The belief is that state authorities and experts know their own land and its formations better than the federal government, namely the Environmental Protection Agency. The states, Hoeven said, have a vested interest in protecting their environments.

The Empower States Act requires that prior to a federal department or agency drafts any new regulations relating to oil and gas development, it must hold a hearing and consult with the state, tribe and local state agency within the region that would be impacted by the new regulation. To prevent job loss or harmful effects on consumers or the economy, the agency must also develop a “Statement of Energy and Economic Impact” that identifies any adverse effects on energy supply, reliability, price, and the potential for job and revenue losses to the individual states’ general and education funds. In addition, the agency must show a state or tribe does not have an existing alternative and that the new regulation is needed to prevent immediate harm to human health or the environment. The measure seeks to prevent any arbitrary decisions by the EPA and allows the state to develop regulations that work in its unique circumstances.

rehBerg, TesTer

There’s no telling how the bill will do next year with elections around the corner.

The Herald requested a statement from the office of each candidate running for the open U.S. Senate seat on whether they would support the bill. Each responded as follows: • “Denny thinks the regulation of fracturing should be left to the states. They have been regulating this process since the 1940s, and are in the best position to do so. Eastern Montana is creating jobs at a record pace, and the last thing we need are more Washington bureaucrats throwing a wrench in the gears of economic development. Look no further than the denial of thousands of Keystone XL pipeline jobs as a cautionary tale about what happens when Washington gets involved.” – Jed Link, spokesman for Rep. Denny Rehberg • “Jon will continue supporting responsible measures that increase our energy security and strengthen Montana’s economy. He’ll take a close look at any bill that taps into Montana’s natural resources while protecting our most treasured places. That’s why he’s voted three times to build the Keystone XL Pipeline.” – Andrea Helling, spokeswoman for Sen. Jon Tester

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DeQ enforcement Division makes few friends in oil, gas region By Louisa BarBer SIDNEY HERALD

Depending on which side you’re on, the Montana Department of Environmental Quality is either a friend or an enemy, often the latter. “In my job, I make no one happy,” says Larry Alheim, an environmental enforcement specialist. In eastern Montana, you won’t hear too many compliments about the state agency. Many in the private sector, especially in oil and gas country, say the DEQ places too many controls on businesses, preventing the area from thriving like neighboring North Dakota. Then there are other members of the public, residents, who believe the state does too little. Private operations, particularly illegal subdivisions, are running rampant and DEQ is allegedly doing little to address it. State officials, however, say that’s not true. John Arrigo, Enforcement Division administrator, says his staff of eight have received 60 complaints so far this year for illegal trailer parks in eastern Montana, and “we are inspecting those sites to get additional information to see if in fact they are violations.”

The DEQ Enforcement Division’s mission is to facilitate timely, consistent and appropriate enforcement of the laws and regulations administered by the agency. For fiscal year 2012 (July 2011-June 2012), the DEQ recorded 938 complaints, up from 708 in 2011. So far in FY 2013, there have been 79 complaints. Of those complaints from last year, 324 were water related, followed by waste, air quality, spills and mines. Asbestos, used oil and solid waste, hazardous waste, water quality, storm water, spills, animal feeding operations, mining with respect to noise, underground storage tanks (gas stations), public water supply and subdivisions

are among the top complaints. The most common complaints relating to air quality are dusty roads and dust from construction and gravel pit sites. “It’s a very simple solution,” Alheim told a group of contractors recently in Sidney during a workshop, “Our rules state you have to take reasonable precautions to control dust.” It’s not that there can’t be any dust whatsoever, but if it sweeps across an interstate or blows into residences, then there’s a problem.

Alheim, who specializes in air quality and asbestos enforcement, says he averages 300 complaints a year, and a third of the complaints come from citizens who are feuding with a neighbor. “I don’t like my neighbor, he’s making me mad, I’m not going to go talk to him because I don’t like him, I’m going to file a complaint because I know he’s doing something wrong, and I’m going to stick DEQ on him,” Alheim said,

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Sidney Herald


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enforcement: DEQ officials become more active in oil communities from pAge 43

describing the type of situation. Then the DEQ makes an inspection and finds nothing wrong, upsetting the complainant.

Air mAnAgement

The Air Resources Management Bureau regulates approximately 1,070 registered oil and gas well facilities in Montana. The majority of the facilities are located in Richland County and eastern Montana. Since the oil and gas registration program’s inception in 2007, the program’s taken four enforcement actions against the oil and gas industry; one violation was against a company that had shut off the flares used to control emissions from the facilities, while the other three were against companies that failed to comply with state regulations after a state-sponsored outreach. According to state regulations, companies must register each oil and gas well facility that emits more than 25 tons of pollutants a year. “Flares are actually a good thing because they’re controlling the emissions,” program supervisor Dave Aguirre said. “It’s definitely a discussion

point in environmental regulation, but out here in these remote locations, this is really the most feasible way to control the emissions.” Aguirre said the bureau’s workload of regulating oil and gas well facilities “took us by storm as the development took the communities by storm,” as companies learned the new registration program rules and the requirements to ensure flares are functioning properly to control emissions.


The division and DEQ in general have become more active in oil and gas country where spin-off developments from oil activity have skyrocketed. The DEQ ear-marked a position specifically addressing oil and gas issues: Steve Kilbreath, oil and gas coordinator, who acts as a liaison between oil and gasimpacted communities and the state. He is, for example, working with the city of Sidney on the sewer lagoon compliance issue. Unregulated, illegal subdivisions are popping up everywhere. There are so many that local officials, like the county sanitarians, don’t have the ability to keep up with violation letters. Arrigo agreed that by and large the

most frequent complaint from eastern Montana is subdivision developers or landowners starting construction before submitting a subdivision application and obtaining approval and in compliance with state regulations. “We’re trying to keep track of them,” he said. “We just don’t have the resources to do that. We also don’t want to chase them off the land. They’ll park somewhere else.” After making a forceful move last year to address illegal opencut mining operations in eastern Montana and having seen cooperation since then, Arrigo said the department is now “trying to get a handle on the subdivision issues.” In any case, DEQ officials tell the Sidney Herald that their staff is overwhelmed with caseloads and pressure

from the federal government (Environmental Protection Agency) requiring more regulations that it must follow. During a three-day, DEQ-sponsored workshop by the Small Business Environmental Assistance Program the first week of October, DEQ officials repeatedly told the Herald that it doesn’t purposely seek to stymie economic prosperity or issue violation letters; staff only want to enforce the law. “There are people who want us to show enforcement, and there are some people that do not want to see us,” Arrigo said. “The majority of companies want to do the right thing and some that do not.”

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

Sidney Herald

Teen, family look to strike it rich By Louisa BarBer Sidney Herald

Alex Reid had just graduated from high school when he packed his belongings and set out west in search of a job. He wants to attend college, but he needs to save money first. He wouldn’t have been able to do that back in Delaware. “Where I come from, a job is a flotation device,” the 18-year-old said, standing outside the fifth-wheeler home he shares with his father, Gary, and brother, Sam. The job climate’s a little different back home. Young people like himself fight for minimum wage jobs. Reid said he applied to several businesses and received one job offer for 20 hours. Now, he’s making more than twice as much. About four months ago, Gary Reid read an article on a national news website about the oil activity and the man camps; he suggested Alex try it. “I thought it was crazy, but it could work out,” he said. So the

family packed the essentials, stored the rest, sold the house, bought a trailer and headed to Bismarck, N.D., then Dickinson, N.D. It wasn’t what Alex expected; a job wasn’t as easy to get as he thought. Employers told him he needed a CDL and a couple years of experience. The family thought they’d move to Williston, N.D. They met a man, however, who suggested instead they move to Sidney instead; still lots of work but less frantic and “nicer.” “He was right,” Reid said. Within two days, he found work with his father at Argi-Industries. “They were like, ‘Can you start Monday?’ ” The two went to work immediately. Fast forward three months, Reid works as a “floater” plumber who assists various departments, performing whatever tasks are required, from assembling irrigation equipment, to helping electricians and well diggers. “I like it. It’s very nice. I like the work environment. It’s very person-

able,” he said. He’s making twice as much as he would be back east, plus plenty of overtime opportunities, and he tells friends back home what he sees, including the friendliness by locals. “Everybody waves to you and says hi even if they don’t know you. It’s always a good feeling,” he said. Interestingly, the teen says he knows longtime residents aren’t too comfortable with newcomers, but he assures he’s different. In fact, he wants to make Sidney his new home and “be proud of it just like the people who have lived here all their lives.” “I hope they know not everyone who comes here will work to only get what they can out of here and then leave this place,” he said. “I just like Sidney as a town and thank you people for being such gracious hosts.” Reid plans to stay in Sidney until early summer. Then he plans to attend school in Texas, earn a degree in the petroleum industry and then really “rake

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Delaware native Alex Reid is enjoying his new life in eastern Montana. it in” after he returns. Meanwhile, his father plans to stick around for a few years while his brother, a junior at Sidney High School, finishes school. Now it’s all about saving money. Well, that and surviving a Northern Plains

winter in a camper. “Does it get much colder than the last couple weeks?” Reid asked. After hearing the answer: “Then no. I’m not,” he said, laughing. “Ready or not, though, it’s gonna come, and hopefully I’m still gonna be here.”

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


Water demand in oil field compared to others By EnErgy & EnvironmEntal rEsEarch cEntEr uNIvERSItY Of NORtH DAkOtA

Water is the most critical limiting resource throughout the world. Sustainable economic growth requires a reliable supply of water for energy, agriculture and a growing population. Water is necessary for urban development, power production, growing and processing high-value crops, oil and gas development and processing, and industrial manufacturing. Satisfying all of these competing needs requires a better understanding of water resources and new approaches to water management. Energy, agriculture, industry, and municipalities all urgently need a scientifically valid basis upon which to make management and regulatory de-

cisions related to water use and quality. The Energy & Environmental Research Center (EERC) is developing a partnership called the Northern Great Plains Water Consortium between the U.S. Department of Energy (DOE) and key energyproducing entities in the northern Great Plains to address issues related to water availability, reducing freshwater use, and minimizing the impacts of facility and industry operations on water quality.

thinking outsidE Box

As the United States continues to pursue economic development and the population increases, demand for ever-increasing amounts of energy to support that growth will require water. In areas where water resources are limited or become

scarce because of overallocation and/or drought, competing interests for water could limit energy development and production. With the vibrant oil, gas and utility interests in the region, potential water reuse synergies among energy-related industries should be explored. For example, thermoelectric power generation is second only to agriculture as the largest domestic user of water, accounting for approximately 40 percent of all freshwater withdrawals in the United States, as illustrated in the figure above. A portion of that cooling water effluent could be used in other industries, perhaps even prior to cooling, to capitalize on the waste heat. Significant volumes of water are also used in the drilling and completion of oil and gas wells.

Wastewater from other industries could be used to supply water needed for drilling operations, and options may exist to

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Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012



Sidney Herald

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


Opinion: Poor leadership holds back Montana’s energy potential By Sen. ed Walker

One characteristic that has always branded Montana is a sense of rugged independence. Sadly, in recent years we’ve watched that self-reliance slip, both throughout the state and across the country. This November, voters will have the opportunity to shape the path ahead. We must set a course that rejuvenates our economy and puts choices back in the hands of individuals rather than bureaucrats in Washington. Across the country, dogged unemployment has remained above 8 percent for 43 consecutive months, the longest stretch on record. Hardworking Americans need a change. Over the course of this election, two distinct philosophies have emerged about how to achieve meaningful growth. One

of those is a belief that greater government involvement and more topdown, federal control can resuscitate the economy – a prescription of more of the same. So far three rounds of taxpayer-funded stimulus have failed to produce the job creation necessary to reverse the losses the economy has suffered, and they have saddled the country with enormous debt. Last month unemployment actually increased in 26 states, and today our $11 trillion national debt represents 70 percent of US GPD. As the economy struggles, federal agencies have regulated, stalled, and even killed important energy projects that would create jobs, relax prices, and reduce US dependence on foreign suppliers. Earlier this year the President delayed consideration of the Keystone XL Pipeline after

more than three years of review. Heavy, punitive taxes on oil and gas producers have become a standard talking point for the President and his allies. Across the country EPA regulations continue to shut down coal plants like the Corette generator in Billings. How can we expect the same tired policies to yield different results? Domestic energy producers are ready to put Montanans back to work. Washington should be pulling out the roadblocks in the way of their success, not adding more. These polices are holding back Montanan’s potential – holding back opportunities for job creation, prosperity, and economic growth. We have more coal than any other state, and would benefit mightily if we could produce more of it. On our Southern border, Wyoming is already doing

it and has an enormous budget surplus, higher per capita income, and stronger education funding to show for it. Montana can be an energy leader in oil and gas production. To our East, North Dakota has already unleashed their oil and gas potential and is experiencing similar results as Wyoming. But it’s not happening in Montana. At least not to the extent that it can be, or to the extent that it is for our neighbors. The experiences in Wyoming and North Dakota are happening despite of, not because of, federal policies. Montana is being held back, in part, because of the adverse climate that has been created by this current administration. What makes us different from our neighbors is that those states have elected leaders who have made energy develop-

ment a top priority. The difference is that radical out-of-state environmentalists have found a sympathetic ear with some of our leaders who’ve bought into this obstructionist agenda. Both incumbent Sen. Jon Tester and his challenger Congressman Denny Rehberg have echoed the usual talking points – a support for job creators, “all-the-above” energy portfolios, and more-prudent government spending. Yet their records couldn’t be further apart. In Washington, Tester has often sided with the establishment, supporting expanded government and supporting calls to levy heavy new taxes on American energy producers – despite the painful toll these taxes would take on Montana energy producers, costing us jobs. Tester has also followed

the President’s lead on additional oversight by agencies like the EPA. For instance, Tester voted in favor of new EPA regulations that have led directly to the mothballing of the Corette coal-fired power plant in Billings, killing jobs and hurting the Yellowstone County economy. This November, Montana will choose a path forward. We can stick to the same course– one on which government only reaches out to get an even tighter grip on how businesses operates and Washington picks which resources we can use. Or we can opt for a new strategy, one that returns us to a system where businesses can succeed, individuals have options, and our energy supplies are free to develop safely. Sen. Ed Walker represents Senate District 29 in Yellowstone County.

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Sunday, Oct. 28, 2012

Tappin’ the Bakken fall 2012

Sidney Herald 16 T S

DeQ cracks down on opencut violators in Montana ! (



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By Louisa BarBer Sidney Herald

Staff at the Montana Department of Environmental Quality’s Opencut Mining Program just can’t get permitting done quick enough to meet demands from the oil fields. In July, mining permits hit a high of 39 permits to mine gravel and scoria pits, the highest since December 2011’s 34 permits. “We’re extremely busy,” says program supervisor Chris Cronin. “We’ve got lots of work to do, probably 70 or more percent of applications in eastern Montana.” A map of Richland County that traces the active gravel pits shows several pits conglomerated together in what appears to be hot spots for the precious resources. There appears to be no end in sight for its demand.

Managing Mining

The Opencut Mining Program is focused solely on ensuring that the site is reclaimed after the pit’s life has been extinguished. Prior to 1971, operators didn’t need a permit to mine and were allowed to walk away from a pit once they were finished. That left huge, gaping holes scattered around the state.

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The Opencut Mining Act of 1971, how! ( ever, changed previous practices. The ! ! ( ( ! ( ! ( ! ( law made sure gravel and scoria were 16 T S ! ( ( ! ( ! mined, yet the land was reclaimed to be ! ( a productive, post-mining land used for ! ( ! (! ( Fairview ( ! (! ! ( ( ! ( ! grazing and crops. First-time opera! ( ( ! ! (! ( (! ! ( tors, now, are only allowed to mine up ! ( ! ( to 10,000 cubic yards without a permit, ! ( ! ( ( ! ! ( (! ! ( a measure put in place originally so ! ( ! ( ! ( ! ( landowners could rebuild and maintain ! ( ! ( ! ( ! ( ( ! ! ( ! ! ( ( ! ( ! (! ( private roads. ((! ! ( ! Sidney ! ( Once an operator reaches 10,000 cubic ! ( ! ( ! ( ! ( yards total, they forever more need ! ( 200 ! ( ! T S ! ( ( 23 T ! a permit, even if removing less than (! ( S ! ! ( (! ( ! ( ! ( ! ( 10,000 cubic yards of gravel or sco! ( ria. Mining in excess of the regulated ! ( amount can result in enforcement ac! ( ! ( ! ( ! ( ! ( tion. Operators are also required to file ! ( ! (! ( ! ( paperwork to obtain Opencut Mining ! ( ! ( ! ( ! ! ( ( 16 T S Permits, a step in the process that has ! (254 ! ( ! ( created contentions between the DEQ and private companies. Since the latest oil boom began, ! ( ! ( complaints have been on the rise. “We ! ( out that, wow, you really need to get competing operators accusing others seldom got complaints from eastern ! ( a permit,”!(Cronin said. “We try to be the permitting process Montana and now we are,” said J.J. Con- of!( not following ! ( ! ( proactive in 2011 and there seems to be while !(other complaints came from the ner, unit coordinator. Last year, compublic concerned about companies tear- an increase in the number of people plaints to the DEQ were at their highest 1 inch = 40,000 feet Legend Industrial andtoEnergy aware of the law and who want get aMin ing up roads0 or20,000 kicking ever from eastern Montana. There were 40,000 dust around. ! Opencut Mining Progr ( Active Permitted Sites Feet permit.” The result? The department pursued Date: 10/2/2012 several “fairly large disturbances” that the state came upon. DEQ sent violation enforcement actions. “DEQ did several enforcement actions letters requesting these operators get see DeQ, page 52 for 2011 and that helped get the word a permit. Most complaints came from

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Tappin’ the Bakken fall 2012

SuNDAY, Oct. 28, 2012



Tappin’ the Bakken fall 2012

Sunday, Oct. 28, 2012

DEQ: contractors propose changes in state law From pagE 50


The DEQ’s permitting process has long been a source of frustration for operators which private companies say is too long, too cumbersome and subjects the company to excessive scrutiny. The department, some allege, purposely tries to find faults in permit applications to stall progress. Private businesses point to the number of so-called “deficiency letters” issued by the DEQ, which point out what’s wrong with the permit application. Several within the gravel industry complain that the department only says what’s wrong but won’t answer questions or provide suggestions. The Montana Contractors Association has long been at odds with the state because its members want shorter processing times, while environmental groups want the process prolonged. “There have been a lot of issues,” executive director Cary Hergreberg said. “It’s been right up to our eyeballs in most of the issues.” The association is looking to propose changes to state law next year because its membership continues to air the same frustrations with the permitting process. Hergreberg did agree, however, the

process has become “much better” over the last few years. “One way to create less work for themselves is to be less nitpicky,” he said, adding that the association doesn’t condone companies that mine without permits. The association, he said, informed the department of several operations that were out of compliance and urged officials to issue citations. “The whole intent of the Opencut Mining Act is to assure the public these sites get reclaimed after the gravel is removed and processed, and that’s what we’re going to ask the DEQ to do both policy-wise and in the upcoming Legislature; focus on the priority which is assuring the public that these sites will be reclaimed.”

DEQ rEsponsE

DEQ officials, however, argue the process has become easier. The documents were revamped a year and a half ago, downsizing the amount of paperwork. “We were giving three to five deficiencies. Now we’re giving one to two on average,” Conner said, despite a new influx of operators who have never been part of the mining process. “They’re finding it more difficult, but they’re not taking the time to read the stuff on our website…We’ve done as much as we can, but what we’re

Sidney Herald

seeing as a whole is an influx of new operators from North Dakota, Colorado, Washington, Alaska, and some do well, but ma and pa operations are having more difficulties because counties are now struggling to get the permits here, they’re trying to jump on the wagon and get the permits.” The operators would do better to fill out pre-application meeting requests, a process in which the DEQ visits the site with an operator and acts more as a gravel site consultant. Officials with DEQ want operators to fill out pre-application forms to save time. These can be found on its website. It takes two to six months on average to get a permit in Montana, about half get it in three months or less. “We’re trying to give as much help as we can. I think it’s just that we’re seeing a huge boom in gravel, and we’re hearing the few people that aren’t putting the effort in complaining,” Conner said.


Because of the gravel and scoria surge, DEQ says it’s feeling the pinch, and now makes trips once a month to eastern Montana rather every six weeks. “We realized we’ve got to be going more often,” Cronin said. The opencut program has seven staff that deal with permitting for the entire state; seven staff to handle more than 30 permits a month, up from the handful just a few years ago. But staff

isn’t what’s needed, DEQ officials say, to streamline the process and to ease frustration on each side (private sector wanting faster timelines while DEQ wanting to keep up with new regulations from the federal government and state law): It’s technology. Securing funding to purchase tablets for use in the field improves efficiency, rather than filling out the paperwork the old fashioned way. The DEQ also wants to switch to an “e-permitting” program so the operator can work the application on the computer with an automated system that catches mistakes; the idea is to help with consistency and reduce minor errors, something that’s been a thorn for operators. The department also wants to implement a GIS web-based mapping system open to the public that shows where current pits are located and the associated information. It helps both department officials and operators know where the sites are located and keep tabs on the reclamation process. “Mapping is very important so we know where on the face of the earth we said you could work,” Cronin said. The system is set to go into operation at the end of the year. “What we’re trying to do is allow people to access the information that we already have,” he added. “If they can do it themselves, it helps our staff so they can focus on getting applications done. It’s much more efficient for us.”

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Tappin’ the Bakken fall 2012


SuNDAY, Oct. 28, 2012


number of oil well permits nears record in Montana By Bill Vander Weele SIDNEY HERALD

During a meeting in Sidney Oct. 9, Montana Petroleum Association executive director Dave Galt said the state enjoys close to an all-time high number of oil well permits. Galt said during the year, there have been 330 oil permits, but only one gas permit. “It’s just about level with Montana’s 2006 high with oil wells.” The meeting featured elected officials in the region including commissioners and mayors. Oil industry officials also were in attendance. Galt feels oil activity will remain consistent in Montana. He noted the current number of rigs of 22 is about the same as in 2004, 2005 and 2006. “I don’t see a huge spike.” He added, “Fallon County’s been a significant, consistent producer. It’s picking up again in Richland and also in Roosevelt and Sheridan counties. That’s where it’s going.” Another area to watch is Belle Creek. Although there’s been some activity west of eastern Montana counties, Galt feels that the majority of success will remain in far eastern Montana. “Wells as they head west are less prolific,” Galt said. “Well drillers tend to be in known fields where people have been before, but we do have exploratory work across the state.” Glendive Mayor Jerry Jimison said he heard at a League of Cities and Towns meeting that 750 wells

were drilled and only two of those wells were dry. “The question is are they economical,” Galt replied. “Going west, it may not be. Those wells I don’t think have the same prolific nature.” Figures provided show that the average employee compensation for an oil industry worker is 175 percent of the Montana average wage of $32,500. The average refining industry wages is more than $100,000 per worker. The industry accounts for about 7 percent of all business owner’s income in the state and 8 percent of all property owner’s income in the state. The industry’s fiscal impact in Montana is $230 million in production taxes, $75 million in production royalties and $78 million in property taxes. The Montana Petroleum Association reports the direct economic impact is 7,500 jobs and $9 billion. The association features 205 members from the industry including transportation, refiners, service companies and producers. Tuesday’s meeting began with Sidney Mayor Bret Smelser providing a welcome. He stated that Sidney is “open for business” and that the city welcomes and embraces the oil industry. Galt discussed regulations Montana has to monitor fracking. He said the state allows the disclosure of all chemicals and ingredients used in the process. “If someone says we don’t disclose in Montana, we do a lot more than other states,” Galt said. Issues that the association will keep a close eye during the 2013 legislation session will include tax

valuation for large facilities and natural gas contracts, water rights and sage grouse restrictions. Jimison said the League of Cities and Towns discussed options of how impacted areas could receive funding from the state. The ideas included receiving 10 percent of the state’s share of oil severance funds, 25 percent of federal royalties from the state of Montana, excess money from the oil and gas board and allowing cities/towns to charge extra fees on hotel rooms.

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SuNDAY, Oct. 28, 2012



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Sunday, Oct. 28, 2012

Tappin’ the Bakken fall 2012

Sidney Herald

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