With new oil fields discovered on the border of Montana and North Dakota, big money is flooding into small towns. Visit the epicenter of North America's new oil boom.
The story started out in a Montana newspaper, then grew into a minor legend: An unnamed rancher out in the state's far east, a sparsely populated town along the North Dakota border, received his first royalty check for crude oil pumped out of his pastureland. Oil is the big news in this area, which the locals call MonDak; on both sides of the border, new wells can mean life-changing money for the families who own some of the toughest, driest farm and ranch land in the country.So the story goes that the farmer opened the envelope and looked at the check, the first quarterly installment. He read the amount, read it a second time, then he sent the check back. He must have thought the damn fools had put the decimal point in the wrong place-$1.1 million, an unfathomable fortune, just couldn't be right.The tale circulated this fall in and around Sidney, a town of 5,000 people that anchors a huge swath of eastern Montana's gold and slate-gray hills. Sidney is not part of the Montana where movie stars buy trophy ranches: temperatures swing from minus 40 degrees in the winter to 110 in the summer, and no one would confuse recreation with the battle to squeeze a living out of the land.The town also happens to sit at the epicenter of the biggest inland oil discovery in the United States in 50 years. Two miles below the surface lies a stratum of oil known as the Bakken formation, holding an epic haul of crude-some surveys suggest up to 200 billion barrels, a near-Saudi-sized reserve. And since the end of 2000, when new drilling technology and rising prices combined to unleash the find, Montana and North Dakota have become the underground rock stars of American oil, among the few states recording production increases. With oil prices soaring above $100 a barrel, it's like giant vaults of cash opened beneath the MonDak soil.In late November, despite cutting winds and near-horizontal snow, Sidney and its hinterlands are a hive of activity. Oil-tanker trucks patrol the narrow highways and gravel farm roads day and night. The cafés, casinos, and bars are full of guys wearing coveralls emblazoned with oil-company logos, most prominently those of "Team" Halliburton and that notorious company's rival Schlumberger, the outfit BusinessWeek calls "the stealth oil giant." Ubiquitous "help wanted" signs testify to the most open job market anyone around here can remember-if you can work, you're working in oil. A genuine boom is in full swing.This has all happened relatively quietly, perhaps because MonDak is so remote. But locals will tell you that the Bakken formation has torn the area's social fabric in a big way. Oil spawns more jobs than the thin population can fill, paying wages higher than local businesses can afford to pay their employees. Landowners collect royalties on oil pumped out of their property, rearranging the economic fundamentals of a place where, traditionally, nothing comes easy. It has also created subtle tensions between those making big oil bucks and those not profiting from the boom.John Mercer, a rail of a man with a trim white beard and the jovial bass voice of a small-town radio host, lives and works on the huge homestead his grandfather carved out on the banks of the Yellowstone River back in 1906. He took over the place in the 1970s when his father suffered a heart attack, and expected to stay just a couple of years to stave off a forced sale. He discovered he liked farming, and the challenges of working land that might get only 12 inches of rain in a wet year. His professional life revolved around alfalfa, beef prices, and irrigation, and afforded him time to pursue some modest passions, like hunting and playing country guitar.In the last few years, though, drilling outfits have punched 11 oil wells in the Mercers' pasture. Previous oil booms around Sidney passed them by; they're still making sense of their newfound luck."This has been a lot like winning the lottery," says John, "except [my wife] Kathy and I absolutely never go to a casino for the gambling-only the food and drink. Some say we already are big-time gamblers, because we're farmers playing the commodities market and the weather and the other unknowns, but it hasn't really felt that way."
John Mercer, a farmer turned oil-field owner, with his wife Kathy.
After breakfast at the M&M Café, a Formica-and-vinyl diner where the waitress knows the regulars by name and every significant local event materializes as a colored-paper flyer on the bulletin board by the door, the Mercers and I drive out onto their stunning domain of dryland pastures and irrigated fields. We rattle over iron cattle guards-someone has stuffed a dead coyote into one-and down twisting roads topped with dusty red gravel. Deep inside the property, a new drilling site, where a specialized crew will pound down through two miles of earth to hit the Bakken layer, heaves into view.It was a completely different feel out here three years ago," John says as we cruise past leafless trees and scrub. "When a drilling rig moves in-it's massive. When a rig moves out-massive. A crew moves in- massive. And there's a whole service industry that comes along with an oil operation, with its own demands."\n\n\n
|Most farmers are not prepared for the well-schooled, hard-bargaining representatives they'll face from the oil companies, but they and their heirs will live with the ramifications of that contract for generations to come.|
The Sidney KFC is struggling to fill positions.
"We're down to just a handful of people," he says. "I had to pull the buffet, which is a big thing for KFCs. In the past, we'd wait for the oil jobs to fill up, then hire the people who were still looking for work. Now that's not really possible."This is a variation on a theme I keep hearing: MonDak is flooded with oil jobs, which attract a floating population of well-paid migrants. People commute hundreds of miles to work the oil field, without setting down permanent roots. Meanwhile, the local labor pool gets sucked dry, putting enormous pressure on employers. High school grads can step into $100,000-a-year gigs. The Sidney McDonald's started a retirement program to compete.It's a problem; for some, it's also an opportunity. "Our sales are up, which is the amazing thing," Carda says. "I thought when I took the buffet out, I was basically cutting my own legs off. But no-in the evenings, we're busy. Guys who work 12 hours a day don't have time to cook. It's been a fun ride, in some ways."A fun ride, in some ways. That about sums up how Sidney feels about oil: excitement undercut by doubt. On Central Avenue, not far from the empty Yellowstone Mercantile building, the town's only movie house also stands shuttered and dark, next to a vacant lot left behind when a classic hotel burned to the ground years ago. Central Avenue is often jammed up with oil trucks, but aside from a half-dozen busy bars and a few well-trafficked convenience stores, there are few indicators that business is booming.Meanwhile, some less visible, less traditional businesses hitch themselves to oil and thrive. Four years ago, Wendy Haugen, a 52-year-old Canadian, teamed up with a partner to start a drug-testing business. They each threw in $500. Now their operation, Checkers, rakes in $40,000 a month, primarily because drug testing is mandatory for all oil crews."We go out to the sites, wherever they are, even if they're in Timbuktu," Haugen says. "Testing has completely changed the atmosphere of the oil business. When we first started, we'd go out on a random check and see five or six guys suddenly disappear. Now that might only happen every once in a while."Can you build a city on fried chicken and random drug tests? That might sound flippant, but it gets at the anxiety gnawing at Sidney and other MonDak towns: the sense that no matter how good oil seems, it doesn't create the bonds that make a place work long-term-and that when the end comes, it could be ugly.Dolph Harris sees the transitory lives of this boom's migrating workers and deeper changes-people spend oil wages online instead of downtown, watch DVDs instead going to the movies-and he wonders what legacy those trends will leave. "The only thing they have to build a lifestyle on is money," he says. "They're not engaged in the real community. An oil company buys a whole fleet of new vehicles, but they don't buy from the local guys. They do sell off their own vehicles here, which floods the local market and hurts the local guys. This boom has changed us from what we were to what we are. The question is: What are we going to end up as?"MonDak was one of the last parts of the continental United States settled by white homesteaders, and remains nearly blank on population-density maps. By day, a long drive between its hardscrabble farm towns feels like an expedition into an American version of the savannah. By night, it's more like an Apollo mission. During my hour-long drive from Sidney to its North Dakota counterpart, Williston-the other town benefiting from the MonDak boom-mini-tornados of dusty snow sweep over the surface of the highway. Just over the border, I pull off on a road behind a decomposing farmhouse, two oil wells to my left, one to my right. Whoever owns that parcel may not want to live on it anymore, I think, but I bet they're glad to have it.A few miles down the highway, I come to the confluence of the Missouri and Yellowstone Rivers, a place Lewis and Clark visited in roughly similar climactic conditions; their journals record water freezing in chunks on their oars. Down a dirt road leading away from the riverbank stands Fort Buford, where Sitting Bull surrendered to the U.S. Army. It makes for a scene of desolation: a few drab old buildings scattered in a winter-barren field, fogged in by low-lying clouds.Williston is a city of 12,000 about 20 miles over the Montana border into North Dakota. The city's population peaked in 1960, and has been dropping ever since. Across the state, a low birthrate and enormous proportion of residents over 85-the most in the nation-speak to a mass exodus of youth. And the city is now coping with the same shortage of non-oil-drilling labor that faces Sidney. But the boom might just save Williston-and other slowly dying North Dakota towns-from oblivion. Everything here is in flux. Oil offers a chance to stem the tide.Holand Neubauer is part of that trend. After he gets off his shift with a frac crew, we grab dinner at an all-you-can-eat buffet near his house. Neubauer grew up in North Dakota; his dad worked in the oil fields during an earlier boom. "Growing up, it seemed like everyone we knew was involved in oil in some way," says the 25-year-old. "It was the economy I grew up in. But it died off, and people left town-either to other oil jobs, or going back to school, or just going on a new route in life."\n\n\n
|There's no way we can go out and offer anything remotely like what the oil companies offer. What they've done is, they've decimated the territory.|