fedgazette

Oil wells rain dollars on Dickinson

North Dakota State Roundup

Published July 1, 1995  |  July 1995 issue

While six active rigs does not an oil boom make, Dickinson and Stark County are experiencing oil drilling activity they have not seen since the prosperous years of the early '80s.

Spurred by oil discoveries in eastern Montana, in 1993 Conoco began drilling in western North Dakota in what is called the Lodgepole Formation. Since that discovery, other companies have begun drilling in the same area and oil is flowing at an average of 2,500 barrels per day. "That's gigantic by any on-shore measurement," says Lowell Ridgeway, executive director of the North Dakota Petroleum Council. All that activity has moved Stark County, where Dickinson is located, up to the fourth largest oil drilling county in the state.

Vicki Steiner, executive director of the North Dakota Association of Oil and Gas Producing Counties, says because some of that oil is actually under the city of Dickinson, oil companies lease the mineral rights from home owners, who then receive royalties on the oil pumped from under their properties. Steiner says that if 2,000 barrels were pumped daily, it could mean about $80 per month in royalties to the average residential lot owner.

The city of Dickinson is faring even better. The quarterly share of the city's state oil sharing money was $27,000 in March vs. $17,000 for fourth quarter 1994. And as a result of a June auction of mineral rights leases under 11 parcels of city-owned property, Dickinson expects to receive $1 million in royalties over time. An Oklahoma company that paid up to $3,250 per acre for a five-year lease won all the rights. In addition, earlier this year the public library received a check for $53,000 thanks to oil.

Drilling for oil under cities is a first in North Dakota, according to Ridgeway. The current technology of directional drilling allows oil to be extracted at an angle from great distances. Consequently, there is no drilling within Dickinson city limits, but drilling rigs are as close as one mile from the city's boundaries.

Some oil operators are calling the Stark County activity a boom, Ridgeway says. Other industry people say it is the hottest onshore property in the United States at this time. An example of the "boom" atmosphere came in May when the state auctioned $5.5 million of mineral rights leases. "That's a record for the last 15 years," Ridgeway says. "This is the most excitement we've seen in North Dakota since '86."

Dickinson mayor Henry Schank says he doesn't miss the boom years when strains were placed on the city. "In an oil boom nobody really makes money," he says. "A lot of money is thrown around, but doesn't stick in the right places." This time, Schank says, the drilling activity and subsequent benefits will likely be steady. Not more than 10 rigs are expected to operate at any one time, and each rig has about 20 workers. This will be nothing like the tent cities of the early '80s, he says, when there were 240 rigs at the peak of the boom and workers slept in city parks.

Kathy Cobb

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