Crude Oil Powers Transformation of North Dakota's Economy
We’re still sorting out CNBC’s fifth annual rankings of America’s Top States for Business, with the final figures still weeks away. At this writing, we don’t know yet which state will come out on top. But a number of factors suggest we could see a shakeup in this year’s rankings.
Perennial favoriteTexas— America’s Top State for Business in 2008 and 2010 — could still be a contender, but the Lone Star State is dealing with a potentially crippling budget gap.
Virginia, our Top State in 2007 and 2009, tends to be susceptible to issues in the national economy. Still, the state’s governor has been courting business around the world, so Virginia could be a factor in 2011.
But one state we will be watching —and we really don’t know yet how the rankings will turn out — is a quiet contender.
It’s North Dakota.
The Roughrider State finished a respectable number 12 in 2010. Not bad, but this year it’s aiming higher. And North Dakota has quite a story to tell.
North Dakota’s unemployment rate is hovering around 3.6 percent — by far the lowest in the nation.
And unlike most states which are dealing with budget shortfalls, North Dakota boasts a billion-dollar budget surplus.
The state owes its economic health to oil. While other energy producing states like Texas are dealing with safety concerns and federal restrictions on offshore drilling, landlocked North Dakota has quietly become a major oil producer.
The Bakken shale deposit in western North Dakota is believed to have as much as 4.3 billion barrels of oil, accessible now thanks to advanced drilling techniques. The recent high price of oil helps make it more cost-effective to extract that oil.
With 169 active oil rigs, North Dakota is now the fourth largest oil-producing state in the nation.
“North Dakota is one of the key reasons why in 2009 the United States had the greatest increase in oil and gas production anywhere in the world,” says Jim Burkhard, a managing director at Cambridge Energy Research. “In 2010 that growth trend continued.”
North Dakota pumped 113 million barrels of oil last year, and in the last five years the energy industry helped North Dakota add some 13,000 jobs. The state boasts one of the fastest- growing economies in the nation.
North Dakota still has issues. It lagged the nation severely last year in the categories of Technologyand Innovation as well as Access to Capital.
But if there’s ever a year for a state like North Dakota to shake up the coveted Top Five, this would seem to be it.
We’ll find out in a few short weeks.
(Additional reporting by Anthony Volastro)