Big Sky Cairn

Well maybe not my backyard precisely, but the US Geological Survey released its report on the Bakken-shale formation today stating they estimate there is 3-4.3 billion barrels of recoverable oil in the area. Compare that to the previous estimate of 151 million barrels a little over 10 years ago. This discovery makes the Bakken the richest oil patch in the lower 48 states.

For those not from the Richland county area, which I assume is most everyone, the Bakken is a huge formation about 2 miles down which was first tapped around 2000 near Sidney and runs in roughly a right triangle from Minot south to Dickenson then diagonal northwest through Sidney to the Canadian border. People have known for a quite while that there was some oil in the formation, but no one knew how to get to it until recently.

So far according to USGS, 65 million barrels of oil have been extracted from Elm Coulee (the Richland county formation) in the past 7 years, they think there is another 410 million barrels in that part of the Bakken. This means at the current pace of drilling, Richland County has another 40 years of oil. Further north, Roosevelt, Phillips and Sheridan Counties are sitting on about 850 million barrels.

Put together, this means the State of Montana has the potential to reap a windfall on production taxes. Personally, I was sympathetic to Roy Brown’s idea of using natural resources to create a trust to fund the education shortfall. But the biggest thing for me, as an Eastern Montanan, is I do not want to see the tax dollars created from oil revenue syphoned off to Helena and Western Montana like they were last legislative session. Compared to the revenue put into state coffers, Eastern Montana got the short end of the stick on transportation funding, school funding and almost everything else related to state spending.

I have not mentioned how any new developments will be impacted by the Governor’s positions (or I suppose more accurately, his appointees) on climate change. New oil exploration, especially in the Bakken where there is a lack of natural gas plants, means increased CO2 emissions. But that will have to be a new post entirely.

If there is one thing that you can depend on, it is Democrats from Missoula and Helena fighting to keep energy development from taking place — and then fighting to bring more than their fair share of tax revenues from the oil, gas, or coal that does actually get developed.

A significantly disproportionate share of energy revenues should stay in Eastern Montana, and in a perfect world, none would go to the district of any legislator who tries to stop oil, coal, and gas resources from being developed.

You’ll notice that the state bureaucrats in Helena love spending eastern Montana revenues in western Montana — but they totally oppose any oil or gas development in their part of the state.