Montana Towns Struggle With Oil Boom Cost as Dollars Flee by Jennifer Oldham, October 10, 2013, Bloomberg Business
The prairie community straddles the state line with North Dakota and needs a new water tank, improvements to its sewage treatment plant and curbs and gutters. The price tag: $14.4 million — five times the city’s $2.7 million budget. “A town of 1,100 people just doesn’t run down to the bank and write a check for that kind of money,” said Mayor Bryan Cummins. “Our town has eight times the traffic traveling through it as it did five years ago.” Fairview is one of a half-dozen bucolic farming towns in eastern Montana transformed over the past 18 months into bedroom communities for workers toiling in the Bakken oil patch. Unlike North Dakota cities that reap tax money from oil production to help keep pace with double-digit growth, Montana municipalities get next to nothing. The towns’ new reality illustrates the tradeoffs that come with the energy boom and how the drilling that showered riches on its neighbor poses challenges in Montana.
Jails are filled to capacity, prompting officials to consider freeing less-violent offenders. Planners worry overflowing sewers will force them to ration building permits. School administrators say they may need to turn gymnasiums and hallways into classrooms to serve an expanding student body. “We’re looking at 32 possible developments with up to 1,700 students,” said Sidney Public Schools Superintendent Daniel Farr. “That would double my current student enrollment, resulting in the need to build a new school system at a range of $24 to $35 million.” A fraction of the drilling in the Bakken is taking place in Montana, which saw its last oil boom lose steam in 2006. Production on wells in Montana isn’t fully taxed for 18 months, leaving towns to wait two years for money to upgrade infrastructure. When taxes do kick in, the state receives 52 percent, with about 47 percent divided between counties and school districts. Cities get one-tenth of 1 percent.
“I’m very concerned that waiting another year and a half is going to put these communities in a tougher spot,” said state Representative Austin Knudsen, a Republican from Culbertson. “You really have no choice but to go to your ratepayers and ask them to pay more. That’s the situation we’re in and I’m afraid it’s going to get worse.”
“Last quarter we got $6,000 back from oil revenue,” said Mayor Gordon Oelkers, who owns a service station in town. “That has to change. This is where the impact is and this is where the funding should be.”
Yet inflated prices for gasoline, groceries and housing because of the Bakken boom are taxing residents on fixed incomes. … “We’re starting to see an exodus of the fixed-income elderly,” said Steffen. “Either they’re leaving the area or moving into care facilities, which is a huge hit to Medicare.” Local businesses are unable to find workers. … “We’re finding it harder and harder to fill those positions,” which used to be taken by locals, he said. “We can’t compete with oil wages and there’s no housing.” … “We’ve identified $55 to $60 million in real needs with a $13 million budget and no oil or gas revenue stream,” said Sidney Mayor Bret Smelser.
The county, one of the fastest growing in the nation by percentage of population, doesn’t have money to spare as its struggles to maintain 1,200 miles of roads battered by unrelenting truck traffic, he added. “We can’t keep up with maintaining our roads, they just fall apart,” Gorder said. “We’ve spent $30 million in the last five years on road projects. It seems like we’re always behind.” [Emphasis added]
In Remote Field, North Dakota Suffers First Big Oil Spill by Selam Gebrekidan, October 10, 2013, Reuters
A Tesoro Logistics LP pipeline has spilled more than 20,000 barrels of crude oil into a rural North Dakota field, the biggest leak in the state since it became a major U.S. producer. The pipeline was carrying crude oil from the Bakken shale play, which has boosted North Dakota’s state production to the second-biggest in the country. The affected part of the line has been shut down, Tesoro said. … This is the biggest oil spill in North Dakota since 1 million barrels of salt water brine, a by-product of oil production, leaked from a well site in 2006, according to the state Department of Health. Another pipeline leak in 1989 also released large volumes of oil to the environment. Tesoro said the U.S. Environmental Protection Agency and the Pipeline and Hazardous Materials Safety Administration (PHMSA) were at the site monitoring its response. The regional EPA office could not be reached because of the government shutdown. [Emphasis added]
ND Pipeline Breaks, Spews 20,600 Barrels of Oil by James MacPherson, Associated Press, October 10, 2013
More than 20,000 barrels of crude oil have spewed out of a Tesoro Corp. oil pipeline in a wheat field in northwestern North Dakota, the state Health Department said Thursday. State environmental geologist Kris Roberts said the 20,600-barrel spill, among the largest recorded in the state, was discovered on Sept. 29 by a farmer harvesting wheat about nine miles north of Tioga. “The farmer was harvesting his wheat and started smelling oil,” Roberts said. “It went from there.” The release of oil has been stopped, the spill contained and no water sources have been contaminated, Roberts said. The spill is spread out over 7.3 acres, or about the size of seven football fields, Roberts said, noting an oil pipeline breach in the late 1980s in the northeast corner of the state was larger. Tesoro Logistics, a subsidiary of the San Antonio, Texas-based company that owns and operates parts of Tesoro’s oil infrastructure, said in a statement that the affected portion of the pipeline has been shut down. “There have been no injuries or known impacts to water, wildlife or the surrounding environment as a result of this incident,” the statement read. … The hole in the pipeline was a quarter-inch in diameter, said Eric Haugstad, Tesoro’s director of contingency planning and emergency response. Tesoro officials were investigating what caused the hole in the 20-year-old, 6-inch-diameter steel underground pipeline line that runs about 35 miles from Tioga to a rail facility outside of Columbus, near the Canadian border. Roberts said the hole may have been caused by corrosion. Roberts said the farmer who discovered the leak had harvested most of his wheat prior to the spill. The wheat is being tested for contamination at a local grain elevator, he said. [Emphasis added]
Over 865,200 Gallons of Fracked Oil Spill in ND, Public In Dark For Days Due to Government Shutdown by Steve Horn, October 10, 2013, desmogblog.com
North Dakota Petroleum Council’s response to the largest fracked oil spill in U.S. history and one of the biggest onshore spills in U.S. history? Ho-hum. “You know, this is an industrial business and sometimes things happen and the companies are certainly responsible to take care of these things when they happen,” Petroleum Council President Ron Ness told KQCD.