A natural selection for job growth
The current and projected rise in natural gas production in North Dakota bodes well for small businesses in the state.
That was the message in a report released this week by the Small Business & Entrepreneurship Council, a national advocacy organization based in Virginia.
The report, called "The Benefits of Natural Gas Production and Exports for U.S. Small Businesses," contains information pertaining to 11 energy-producing states and outlines the added energy production as a positive for the North Dakota economy, especially small businesses in the state.
"This study shows the striking impact that this increase in production has had on small and mid-sized businesses in these energy sectors," said SBEC Chief Economist Raymond Keating. "We often hear about big energy and big oil, but these sectors are overwhelmingly populated by these smaller firms and mid-sized businesses."
From 2005 through 2011, natural gas production in the U.S. increased by 27 percent -- which was largely driven by a robust 947 percent jump in shale gas production, aided by new horizontal drilling and hydraulic fracturing techniques, according to the report.
"With the Census Bureau data that we used, we see that from 2005 through 2010, employment in the U.S. declined by 3.7 percent," Keating said. "But jobs grew by about 28 percent during that same time in the oil and gas extraction sector. While job numbers in the small business sector were falling in the nation as a whole during these years, the opposite was true in the oil and gas extraction sector. Among employer firms in this sector with less than 20 workers, we saw an increase of employment by 2.5 percent."
Keating said many firms in the oil and gas extraction and support sectors are small companies with less than 20 employees.
"We really are a small business country and that certainly is the case in the energy sector as well," Keating said. "North Dakota has received tremendous coverage for their move up in becoming the No. 2 oil producer in the U.S., but there's been tremendous natural gas production as well."
The report states that natural gas production in the Peace Garden State grew by nearly 85 percent from 2005 to 2011. The report also calls for the Department of Energy to support continued expanded natural gas exploration and exports.
Out of the 11 states studied -- including Western states Colorado, Wyoming and Utah -- 10 showed an overall gain in job growth. Among states looked at, only Ohio failed to show growth, though Keating said the Buckeye State has "great potential" in the energy production sector.
North Dakota Pipeline Authority spokesman Justin Kringstad said by the end of this year, the state will have the capability to process more than a billion cubic feet of natural gas.
"We have 18 natural gas processing plants currently in the state," Kringstad said. "Our gas processing plant capacity has been able to keep up with production. The biggest challenge we have on natural gas is the localized gas gathering infrastructure. We continue to get better in that area as far as connecting new wells and the speed at which we do that. We're just battling against the sheer size of the resource that we're working to develop in North Dakota. There are some very encouraging things happening."
During the past few months, Kringstad said an average of anywhere from 150 to 180 new natural gas well connections have been established.
An issue that has resonated throughout the current legislative session in the state, natural gas flaring has been a hot-button topic in 2013. According to recent U.S. Geological Survey numbers, as much as 6.7 trillion cubic feet of natural gas could be recoverable in the Williston Basin.
"Back in 2008, we were only connecting 30 or 40 wells per month," he said. "There's so much value in natural gas, everyone is on the same page as far as getting the gas connected quickly. That just makes it that much easier. People like to talk about the 30 percent of our natural gas (in North Dakota) that is flared, but we need to remember that 70 percent is captured and goes to market. We're going to see that go to 90-plus percent in the coming years."
In the report, Keating added it is "critical that policymakers resist regulatory measures that would undercut domestic energy production, including policies that would limit natural gas exports." Keating said the U.S. should continue to look to export liquified natural gas.
For the complete report, visit the SBEC website at www.sbecouncil.org and click "SBE Council Press Releases."