Part Three: Your Grandchildren's Grandchildren Will Be Subsidizing Billionaire Harold Hamm
In North Dakota, the state seized private property owners water rights to sell discounted water to Continental Resources and other oil companies.
Clarification Reminder of Issue or Topic: The Midwest Carbon Express project in discussion involves carbon waste being pipelined to North Dakota from 31 ethanol plants, across 5 states - 30 will be from outside North Dakota. There are six ethanol plants in North Dakota, however, only one will use the pipeline and financial benefit - Tharaldson Ethanol out of Casselton, ND.
Continued from Part Two… This created a new revenue opportunity for the state and another example of an invisible oil subsidy, specifically to Harold Hamm’s Continental Resources and other oil companies.
The only thing the state and oil companies needed to do was eliminate some private property owners’ rights in Western North Dakota.
In 2013, National Geographic wrote an article on the issue with the Bakken’s water calculations, speculations and realities.
Without water, salt buildup forms and restricts the flow of oil.
Over the life of the well, which authorities presume will be 30 to 40 years, maintenance water needs could add up to 6.6 million to 8.8 million gallons (25 to 33.3 million liters)—or more than three to four times the water required for the initial fracking. (See related story: "Water Demand for Energy to Double by 2035.")
North Dakota Department of Mineral Resources Director Lynn Helms addressed the maintenance water issue in a taped address earlier this fall at the annual meeting of the North Dakota Association of Oil and Gas Producing Counties. "What we're beginning to realize is that these . . . wells will need freshwater for maintenance over their life," Helms was quoted as saying in a report on the presentation in the local newspaper, the Dickinson Press.
Helms declined a request for an interview, but DMR geologist Richard Suggs confirmed that the department's calculations show that each well, over its 30- to 40-year lifespan, might end up consuming even more water for maintenance than for the fracking process originally used to create it.
In 2010, shale oil production became under the media microscope due to the diminishing supplies of fresh water in one of the most arid regions of the United States.
It was discovered that the calculations were wrong and developing a barrel of oil from the Bakken would require at least four barrels of fresh water, while a barrel of conventional oil only required about one barrel of water. Some estimates even went as high as 20-times the amount of water needed.
Either way, the appointed Bakken leadership working with the appointed oil company leaders, were fish out of water because they were off by billions and billions of gallons, and the taxpayers paid for it.
Producing oil and gas from the Bakken formation is projected to use up to 5.5 billion gallons of water annually for as many as two decades, according to the Bismarck Tribune. In Dunn County alone, which already produces 1.1 million barrels of oil a month, the demand for water is expected to increase to one billion gallons a year.
Helms, like other officials overseeing the North Dakota development, is well aware of the new contest between oil and water. But he doesn’t dwell on the risk of the state’s oil and gas express.
According to Circle of Blue:
Earlier this year, the volumes of water needed to frack the Bakken Shale also generated concern among state fisheries and wildlife officials. In February, a supervisor with the North Dakota Game and Fish Department formally opposed a farmer’s plan to sell one-third of the water from the eight-foot-deep Trenton Lake to a Texas energy developer.
“Trenton Lake just doesn’t have the depth and capacity without seriously impacting the lake,” the supervisor, Fred Ryckman, said. “The oil industry can find water elsewhere.”
In February a western North Dakota man faced criminal charges for illegally selling 23 million gallons of water to the oil industry, the Bismarck Tribune reported. William Pavlenko of rural Dunn County, who operates a water depot west of Killdeer, had a permit to sell 26 million gallons of water in 2009. But Pavlenko sold nearly twice as much before state regulators caught on. The State Water Commission uncovered the discrepancy in the fall of 2009, after checking water meters amid reports that other Killdeer Aquifer allocations were running out months before the end of the year.
By the end of the year there will be more than 5,000 oil wells in North Dakota, almost 1,400 of them Bakken Shale wells developed since 2007. Helms predicted in Minot that by the time the unconventional reserve is fully developed, there will be 21,000 wells sunk into the North Dakota landscape, virtually all them drilled into the oil shale.
With well numbers increasing by 70 per month, nearly 1,000 per year, and accelerating, that’s a lot of water.
“Water is going to be a greater and greater issue as we move forward,” said Helms. “At maximum drilling rate we’re going to need 23 million gallons of water a day to hydraulically fracture these wells. And that’s all moving by semi truck.”
It’s not often that North Dakota is the center of national attention. But the cyclone of energy production in the state’s northern and western reaches is hard to ignore. Almost 150 oil and gas drilling rigs are operating in North Dakota this month, nearly tying a state record.
Thousands of oil field trucks jam remote high plains highways that not long ago were so empty people could virtually picnic on the centerlines. More than 7,000 laborers from other states have migrated to North Dakota’s oil and gas fields, according to the state Job Service, and the state unemployment rate has dropped to 3.6 percent—the nation’s lowest.
When North Dakota’s budget cycle ended in June, Budget Director Pam Sharp reported an $800 million surplus. Not too many in North Dakota’s state government are really worrying, yet, about the water supply.
The aqua-apathy by the state has impacted landowners significantly on multiple occasions throughout the entire Bakken Boom.
In Texas, the state experienced a similar issue in 2010, rather than seize the property rights of their landowners, they empowered their landowners to sell water to the oil companies in order to subsidize their income when farming conditions weren’t favorable.
According to the Texas Tribune, a University of Texas study found that in Dimmit County, Texas, nearly one-quarter of total water used in 2011 went to fracking, a share that could rise to one-third if current trends continue. The study also showed that between 2008 and 2011, the amount of water used for fracking doubled statewide, and only one-fifth of that was recycled or brackish water.
In New Mexico, according to the Albuquerque Journal, landowners in the Carlsbad Irrigation District can’t sell water from their primary water source. But if they have what’s classified as a supplemental well, they can get a permit to do so. And that’s the course that many are choosing — somewhat ironically, because there’s not enough water provided by the irrigation district for them to continue farming.
“A lot of folks are doing that,” New Mexico Interstate Stream Commissioner Jim Wilcox told the Journal. “I can’t blame them. The Carlsbad Irrigation District doesn’t have the water the farmers need, and our farmers have to have some income coming in.”
“The oil and gas industry is requiring a lot of water and our concern is the effect it’s having on our aquifer,” he added. “We are concerned about losing water that can’t be recovered. Hopefully, we will get through this drought and everyone will be intact.”
Whiskey is for Drinking and Water’s for Fighting
After several rounds of accounting and chemistry revisions, it became extremely clear the energy companies needed water. A lot of water.
This was an opportunity for property owners to sell the water to the companies and empower their lives and communities.
In 2012, North Dakota’s water wars had gained national attention once again. Reuter’s reported:
The state draws water from the Missouri River and aquifers for its hydraulic fracturing, the process also known as fracking and the key that has unlocked America’s abundant shale deposits. The process is water-intensive and requires more than 2 million gallons of water per well, equal to baths for some 40,000 people.
As in all booms, new players race in to meet the outsized demand. At the heart of this battle is a scrappy government-backed cooperative, conceived to ensure fresh water in an area where its drinkability is compromised.
The co-op has decided to sell 20 percent of its water to frackers to help keep prices low and pay back state loans. That has not gone down well with the Independent Water Providers, a loose confederation of ranchers, farmers and small businesses that for years has supplied fracking water.
Since opening in January, the co-op has tried to limit the power of the confederation with an aggressive legal and lobbying strategy. The Independent Water Providers have fought back, arguing that the co-op shouldn’t be selling fracking water at all. The state legislature stepped in with a law last month designed to quell the tension and nurture competition, but industry observers expect the acrimony to continue.
“When all of us had nothing (before the oil boom), there was nothing to fight about,” said Dan Kalil, a longtime commissioner in Williams County, home to many oil and natural gas wells. “Now, so many friendships have been destroyed because of water and oil.”
In 2016, The Crude Life did an interview with Steve Mortenson, president of the North Dakota Independent Water Providers, who was one of the private water companies getting taken out by the state in the Bakken oil fields.
Farmers and ranchers with access to water and around $200,000 built water depots to sell water to oil companies. And it was paying off big time. The private water sellers generated $25 million to $30 million in 2011, Mortenson said.
The state of North Dakota, however, disagreed with the property rights owners and their right to use the water.
“We could have supported this whole industry, but we were never given the chance,” Williston native and resident Mortenson said. “The state felt they needed to come in and garner some of that revenue.”
And that’s exactly what the state did. Enter the Western Area Water Supply Authority.
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