Extraction Economy

A research report commissioned from Headwaters Economics by the Bill Lane Center for the American West, "Benefiting from Unconventional Oil" assesses how states like North Dakota are dealing with the rush to extract valuable energy resources. Some of the report's key findings: 

• Sky-high global energy prices and "unconventional" techniques like hydraulic fracturing ("fracking") and horizontal drilling have brought a frenzy of drilling to once-dormant oil patches in western North Dakota and eastern Wyoming.
• Although industrial and community impacts from development of these unconventional plays are greater and more continuous than conventional oil fields, state revenue policies are not designed to provide help to impacted areas.
• Production from unconventional wells plummets after the first year, so to maximize production, more wells have to be drilled and old ones re-fracked, creating a "treadmill" of heightened activity stretching over many years. 

"North Dakota appears to be learning on the job," says the report, "But a more consistent approach in all states that are facing future unconventional plays will need to replace the current, often ad-hoc assistance to impacted communities.".

The report, compiled by the Montana-based research institute Headwaters Economics  -- is available for download here:

Benefiting from Unconventional Oil: State Fiscal Policy is Unprepared for the Heightened Community Impacts of Unconventional Oil Plays

The report comprises part of a larger study of energy development in the rural west, including an interactive documentary video produced by the Bill Lane Center for the American West.

BACK TO REPORT: ENERGY DEVELOPMENT IN THE RURAL WEST » 

Last modified Tue, 24 Apr, 2012 at 17:03

Last modified Mon, 25 Jul, 2011 at 16:18

By Jon Christensen

We live in a global West. Even the most remote rural areas of the American West are plugged into the global economy. This has long been true. And it is even more so today. The connections between the local and the global run from the simple and straightforward to the complicated. In the current issue of High Country News, reporter Jonathan Thompson traces some of the connections that constitute this “Global West” through production and trade of natural resources, particularly energy and minerals. 

While Thompson reported on this story for High Country News in Douglas, Wyoming, and other parts of the West, researchers here at the Bill Lane Center's Rural West Initiative closely examined trends in direct foreign investment and the effect of global demand on the energy sector, which is booming in the West. Robert Jackman, a Stanford graduate student in public policy, wrote a sidebar for Thompson's story exploring three future scenarios for global energy demand and its impact on the West. Graduate students in computer science working here at the Bill Lane Center created an interactive online map of current foreign investment in energy and mining operations in the West to accompany the reports.

Jackman’s article for High Country News was based on his in-depth report -- the first in our Rural West Initiative Working Paper series -- is available here:

Fossil Fuels, Foreign Trade, and Foreign Investment in the American West

Jackman provides a sobering assessment of foreign influence in this crucial sector of the economy of the American West. He found that foreign direct investment in fossil fuel production occurs at a much lower rate than foreign direct investment in the American economy in general. Most of that investment comes from companies based in Europe, Canada, and Australia — and not from Asia — continuing a historical pattern. 

The biggest foreign influence on fossil fuel production comes from rising worldwide consumption of fossil fuels, and that is largely driven by growth in Asian economies. However, the main driver of demand for fossil fuels from the American West continues to overwhelmingly come from domestic consumption in the United States. 

The American West is indeed a “carbon colony.” But it is our carbon colony. 

READ MORE AT REPORT: ENERGY IN THE GLOBAL WEST » 

Last modified Thu, 18 Aug, 2011 at 13:11