Bismarck-Mandan Chamber president: Why North Dakota needs the Dakota Access Pipeline
BISMARCK—The Dakota Access Pipeline will strengthen our state economy and budget.
In a commodity-based economy, we rely on an efficient, low-cost transportation network to stay competitive. Producers, whether energy or agriculture, can only fetch the market price less the cost to transport product to market. The greater their net proceeds, the greater their income, the greater investment and marginal production added, and the better our entire economy performs.
In North Dakota, that is a battle reaching as far back as statehood when booming wheat production battled expensive shipping rates set by the railroads.
Of course, our farm economy has changed since November 1889. Our agriculture production is more diversified, reaches more markets and can to some extent be processed here. Though transportation basis costs continue, they do so with a lesser intensity today.
The Dakota Access Pipeline solves a similar scenario in oil and gas production, the newest part of North Dakota's economy.
When the boom reached its max of 1.2 million barrels of oil per day, transportation was among the most difficult challenges facing our state. It was and still is expensive for the industry. Demand for shipping capacity created the "Bakken Discount" in which North Dakota oil earned as much as $12 less per barrel than others of similar quality.
But Dakota Access offers to reduce transportation costs by as much as $6 per barrel, adding the same amount to the price fetched at the wellhead. That results in as much as an extra 60 cents of new tax revenue paid on each of the 470,000 barrels that will flow down the pipeline daily and equates to $282,000 per day and $103 million per year.
These new revenues will continue the state's investment in infrastructure, schools and higher education and tax relief.
Yet, Dakota Access will provide benefits throughout the state economy. That same $6 per barrel cost reduction offers royalty owners an additional $496,000 per day and $181 million per year. It will make more areas of the Bakken economical to drill and recruit more capital investment, thereby creating long-lasting production jobs and potentially attracting new drilling rigs and the 100-200 jobs per rig.
These dollars circulate throughout our economy, reaching our local engineers, construction companies, restaurants, retail and much more.
Dakota Access is about North Dakota becoming a competitive oil producer to the benefit of all our industries and people for decades to come. It was encouraging to see the contingent of 30 leaders, including U.S. Rep. Kevin Cramer, Standing Rock Sioux Chairman David Archambault and Army Corps personnel, walk the pipeline route together. Their cooperation is vital to our improving the infrastructure and economy in North Dakota.
Meske is president of the Bismarck-Mandan Chamber of Commerce.