Crude reality: North Dakota oil boom has Utah envying its surplus green

State officials see federal control as blocking source of revenue, education funding

Published: Sunday, Jan. 12 2014 4:06 p.m. MST

Utah energy adviser Cody Stewart looks over the Salt Lake Valley from the state Capitol in Salt Lake City Wednesday, Jan. 8, 2014.

Jeffrey D. Allred, Deseret News

First in a two-part series

SALT LAKE CITY — At times, Cody Stewart looks out his window at the state Capitol overlooking Salt Lake City and sees the lush prairie grasslands of North Dakota.

It is a lusty, fanciful view for the governor's point man on energy development.

From his vantage point, he sees how North Dakota has the nation's No. 1 economy, the country's top jobless rate and an education system rife with dollars flowing from unhindered access to natural resources such as oil and gas.

A dozen years ago, new technology unlocked the wealth of the Bakken Formation, a 200,000-square-mile layer of shale that occupies western North Dakota, and parts of Montana and Canada.

Back in Utah, the state sits on an "energy gold mine" from the world's largest source of oil sands and is home to a substantial chunk of the Green River Formation, the world's richest deposits of oil shale.

Stewart and a whole movement of conservative Republicans wonder — if Utah had access to its own resources, would the story of its anemic education funding have a different narrative?

They contemplate if Utah could enjoy its own brand of Bakken and reap the rewards that would follow — an amply funded education system — if not for the federal government that stands in the way.

"Federal land ownership is a huge impediment," Stewart said. "There is no other way to put it. There is an artificial cap on energy production that is directly related or the result of federal land ownership."

In North Dakota, each time a well in the oil boom begins producing, it generates on average $24 million in net profit. While in 2001, few outside of North Dakota or the industry had heard of the Bakken oil field, now close to 10,000 wells are producing nearly a million barrels of oil a day. Each passing month seems to bring a new all-time high in production or well completions for the state's oil and gas department.

And for every dollar that industry earns, the state takes 11.5 cents, which produced revenues of more than $2 billion from July 2011 to October 2012. One-third of that was deposited into the state's permanent fund, and that savings account balance is expected to swell to more than $3 billion by 2015.

Little Utah control

As North Dakota continues this unprecedented economic boom, as oil and revenues spurt from thousands of new wells on private and state lands that seemingly spring up overnight, Stewart looks across the vast federal acreage of Utah and sees the "what ifs" and "if onlys."

"One of my greatest frustrations is that I advise the governor on resources we don't control, which puts me in a strange position," Stewart said. "We can't pull a lever, pull back the curtain, make a phone call or do anything to make it happen. We are not in the driver's seat."

In Utah, the man who controls the most land in the state does not sit in the governor's chair at the Utah state Capitol or sleep in the Governor's Mansion.

The man technically in charge of the most acreage in Utah has an office on 200 South, next to The Gateway, on the fifth floor in offices of the Bureau of Land Management — the agency's Utah state director, Juan Palma.

"There is a constant tug of war going on out there because the federal government has so much say about what goes on within the borders of Utah," said Utah Gov. Gary Herbert. "We wish we had more flexibility and say with what is happening in our own backyards."

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