The North Dakota Oil Fracking Boom Creates Clash of Money and Devastation

This story was produced with support from the Economic Hardship Reporting Project.

NEW TOWN N.D. --When the black gold rush began, no one on the Fort Berthold Indian Reservation expected it to take down Main Street.

A modest strip of one- and two-story buildings framed by undulating plains, Main Street doubled as the reservation’s community hub, in the tradition of small towns. Neighbors caught up at the Jack and Jill grocery, elders strolled to the library, children rode their bikes on the streets.

No one imagined tanker trucks barreling up and down Main Street, back-to-back like freight trains, seven days and nights a week.  No one predicted construction zones that grind traffic to a halt as far as the eye can see, the deafening clatter of semis, the dust kicked up by 10,000 vehicles pulverizing the two-lane road every day or the smell and taste of diesel. No one anticipated the accidents, two or more a week on Main Street and all over the rutted reservation roads, costing lives and shattering families.

In fact, Fort Berthold, home of the Mandan, Hidatsa and Arikara Nation, or Three Affiliated Tribes, did not reckon on a lot when North Dakota invited the energy industry to Drill Baby Drill. No one knew that energy companies in search of housing for their workers would buy private property and evict some of the reservation’s poorest residents from their homes. No one planned on police and fire calls multiplying. No one guessed that on a reservation of nearly one million acres, all the deer would disappear.

In the heart of the refuge of recession America, this little-known tribe is grappling mightily with the consequences of striking oil.

“It’s horrible,” said Becky Deschamp, a 41-year-old lifelong Fort Berthold resident.

Deschamp offered that verdict while packing her trailer, not by choice. In November, an oil company bought the run-down Prairie Winds Trailer Park two blocks off Main Street where she and her husband and two children have lived for seven years.  With land and housing nearly impossible to find, the park’s 45 families—more than 180 adults and children in all— were given two extensions before the final Aug. 31 deadline to leave.

Just six weeks before the deadline, when the tribe cleared and prepared a lot three miles outside of New Town, the evictees still had no idea where they would go. But they were luckier than some. Last year, a nearby trailer park was sold and its residents given 30 days to move. The tribe offered them a field about 10 miles away, but soon after they moved there, the lot buckled under sewer and water demands.  When the ground began to sink, families had to relocate again, even farther away from town.

“The tribe didn’t count on these disruptions,” Deschamp said, surveying the boarded trailers and junked cars left behind by neighbors. “I know I didn’t.”

What the tribe counted on when the boom hit two years ago was money.  It never had any to spare and the recession made things worse.  About 40 percent of the tribal workforce was unemployed and people were leaving the land where the Mandan, Hidatsa and Arikara have lived for more than a millennium. For a nation with only about 4,500 of its 13,000 enrolled members living on the rez, the wretched economy threatened the community’s very survival. Then Fort Berthold turned into a black gold mine.  

The reservation’s swath of prairie and pasturelands sits over the Bakken, the biggest sea of oil discovered in the United States in 40 years. Until a few years ago, the Bakken, which also stretches across parts of South Dakota, Montana and Saskatchewan, was too deep to mine. Horizontal drilling and hydraulic fracturing, or fracking, which involves blasting chemical-laced water and sand deep underground to break apart shale and release gas, has given oil companies the means to have their way with the Bakken. And so they have.

Several states have banned fracking as too environmentally taxing. Other states have limited the practice. Not North Dakota.

With few regulations and little protest, oil production is proceeding at a dizzy pace. Last year, North Dakota became the third largest oil producing state in the nation, bumping California. This year it replaced Alaska for the number two spot after Texas. The oil patch is now producing more than 600,000 barrels of oil a day.  Thanks to oil taxes and related revenue, North Dakota is expecting its surplus to top $2 billion within the year. This in a state with only 641,480 people pre-boom.

New Town, with about 1,500 residents pre-boom, now boasts North Dakota’s fastest growing economy.  But while it is on Fort Berthold, it is considered part of Mountrail County, not part of the tribal nation.

Still, the tribe is raking in cash. The Fort Berthold reservation received more than  $117 million in royalties in 2011, according to the Bureau of Indian Affairs. Individual tribal members who own mineral rights on their private land, or allotments, receive anywhere from hundreds to tens of thousands of dollars a month. That’s about two-thirds of the tribe’s total royalties.

Unemployment, now between six and seven percent, keeps dropping. Businesses are thriving. The Four Bears Casino is adding 160 rooms to its 97-room hotel and plans to offer ferryboat gambling on Lake Sakakawea, the Missouri River reservoir that runs through the reservation.

People who used to come to the tribal offices asking for help no longer do. “We appreciate the money that’s coming in and helping to improve incomes and the socioeconomic status of our members,” said Dennis Fox, the tribe’s CEO.  

But, Fox added, despite all the oil money coming in from royalties and taxes, Three Affiliated Tribes is spending all of its new income—and then some --dealing with the oil production’s impacts.

In an interview at tribal headquarters, Fox offered a “but” for every positive impact of the oil rush. The tribe’s budget for special projects is now double its average yearly operating budget of between $40 and $50 million, he said. But the tribe estimates that it will cost more than $100 million just to repair the reservation’s road system.

“It’s a matter of playing catch up,” he said. “We’re trying to beef up all of our infrastructure. Nobody anticipated the great influx of workers and the impact on the roads and housing and everything else.”

The tribal chairman, Tex Hall, regularly treks to Washington, D.C. to plead for road relief.  “I already receive almost daily calls telling me of serious accidents involving our members,” he told a Congressional appropriations subcommittee in April.  

“In fact, we now have so many accidents on my reservation that my staff does not even both to call me unless the injuries are life-threatening. The situation has now gotten to be that bad.”

All over the Bakken lands of Western North Dakota, known as the oil patch, towns are going through many of the same challenges. Highways are getting pounded to dust, police, fire and social service departments are scrambling and housing is beyond hard to find.

In a way, history is repeating itself.  Cities and towns across the country have gone through similar upheavals for the sake of energy production and jobs, including the small towns of southwest West Virginia and eastern Kentucky during the heyday of coal.  That part of central Appalachia is still struggling to pick up after booms went bust.  

Of course, North Dakota invited the oil companies. But the oil patch is like the high school wallflower who announces a backyard kegger on Facebook, only to find the entire student body has shown up. Before it gave oil drilling a go, North Dakota was the nation’s least-visited state. The once-overlooked, now overwhelmed oil patch never dreamed it would become the center of the biggest, messiest migration to one state since the California Gold Rush.  

That it was unprepared for the deluge is painfully obvious. The oil patch looks like the aftermath of a natural disaster. There are long lines everywhere, from gas stations to taco trucks, store shelves look ransacked and forget about getting a hotel room within a hundred miles. Man camps, the makeshift encampments for oil workers, crop up overnight in fields where cows graze. So many newcomers crash at the Wal-Mart parking lot in Williston – at least 100 vehicles from all over the country every night – that it’s almost becoming a neighborhood.  

And traffic in the patch is like traffic nowhere else, not even in the nation’s biggest cities. It can take 90 jaw-clenching minutes to drive 30 miles. Pity the passenger car driver surrounded on every side by tankers, flatbeds and cement mixers. Everywhere you go, people are beleaguered and out of sorts.

Fort Berthold is suffering all the woes of the Bakken boomtowns, and many more.

The tribe is a federally recognized sovereign nation, which makes its challenges more complicated. North Dakota is creating a fund for road repairs and upgrades in the oil patch, for example, but, Fox said, the tribal nation is not eligible for the money.

Its biggest day-to-day problem is policing the reservation. Under Federal law, imposed by a 1978 Supreme Court ruling that has bedeviled Indian Country, tribal nations have no criminal jurisdiction over non-Indians.

So while police calls on Fort Berthold have more than doubled, many of the calls involve newcomers who are not tribal members and who tribal police lack the power to arrest.

Crime is up all over the oil patch.  Police blotters in communities where a stolen bike was once noteworthy now list robberies, assaults, prostitution, drug trafficking and organized crime, not to mention many traffic accidents.

For a Fort Berthold tribal officer, answering a call can be a day’s work. The tribal force of 11 tribal officers patrols over 1,000 miles of road. Since the reservation includes about 150 miles of state highways and 660 miles of county roads, a tribal officer can call a sheriff’s department if an incident is on county land—the reservation includes parts of six counties—or they can call state police if the incident falls in their jurisdiction. Or they can call on federal officers, from the Army Corps of Engineers, Bureau of Indian Affairs, Dept. of Homeland Security, if non-tribal members commit crimes that fall under those entities’ jurisdictions.  

It was an inefficient and sometimes ineffective system before the oil boom.  Now, with law enforcement agencies all over the Bakken lands overburdened, there are not enough officers to handle every incident. The tribe is working with local and state law enforcement agencies and the Bureau of Indian Affairs to revamp its policing and develop a strategy to empower its force, such as cross-deputizing tribal police with sheriff’s departments.

What residents of Ft. Berthold say they miss most is their peace. Peace and quiet has always been Western North Dakota’s primary currency, the main answer hardy souls could pitch to those who might ask why anyone would live Way Out There. These days, long-time residents often complain that they no longer feel safe. They read stories in the papers, see warnings of registered sex offenders on community bulletin boards, bump into newcomers who don’t make eye contact.

It’s a culture shock on a reservation with five tight-knit villages, each with just hundreds of residents. People grow up here knowing which neighbor gets home when by the sound of their cars—the hum of a 4x4, say, or the putt-putt of an old Jeep.

Now, they hear rumors.  “It’s kind of scary,” said Loren Fox, as he sold $6 Indian tacos under a white tent by his family’s trailer in the rural community of Mandaree.

He kept his daughters, two and four years old, tucked by his side.

“Before there was no problem,” said the 41-year-old Fort Berthold native.  “But you hear stories—people coming around talking to kids and stuff.”

Loren Fox is torn between believing that oil is the best thing to happen to Fort Berthold and the worst. His cut from royalties he shares with a half dozen relatives for seven wells drilled on their land comes to about $2,000 a month. His wife receives between $400 and $900 a month for mineral rights her family holds on their ancestral land.

But Fox has lost three family members to car accidents with trucks in the last three years. He lost two nephews, 28- and 25 years old, within four months of each other, he said.  In June, he lost a 40-year-old cousin to a crash with a semi.

He also laments the loss of wildlife.  The tribe is canceling deer season this year for the first time.  

“All the traffic,” Loren Fox said, “has scared the deer away, I guess.”

His guess is as good as anyone’s: no one is quite sure why the deer have disappeared. Of all the talk of all the problems in the oil patch, one barely hears a whisper about the possible environmental consequences of the fevered development.

Environmental advocates have been sounding the alarm on fracking for its potential to contaminate ground water, the amount of energy  it uses (hundreds of millions of gallons of water per well) and its possible disruption to the earth. It has been linked to earthquakes in Oklahoma, Texas and Great Britain.

Cities and towns in the oil patch have had a problem getting a handle on all the accidental oil and wastewater spills that occur. The Three Affiliated Tribes are also trying to stem the deliberate dumping of chemical-laden wastewater along roads or in remote areas of the rez.

Tribal police were getting so many calls from people spotting trucks dumping toxic fluids-- several each week, Dennis Fox said-- that in August 2011 it imposed fines of up to $1 million for a third deliberate offense.

Then there are the gas fires.

All over the Bakken lands, startling fires rise above the hayfields, spewing natural gas into the atmosphere. The fires, or flares, are a byproduct of oil production. When fracked gas is released, so is natural gas, but since natural gas is going begging on the worldwide market, and building the infrastructure to capture the gas would be expensive, companies just burn it. The fires spew over two million tons of carbon dioxide into the air each year, the equivalent of nearly 400,000 cars.

The World Bank, which has been campaigning for 10 years to get nations such as Russia, Nigeria, Iran and Iraq to stop flaring, now ranks the United States as the fifth worst offender thanks to North Dakota’s oil boom.

Neither North Dakota nor the Mandan Hidatsa Arikara Nation have rules limiting flaring. But the tribe does plan to capture the wasted natural gas. In July, it received the final permit approval to build a crude oil refinery, the first to be built in the continental United States in over 40 years.  The tribe also plans to build a pipeline to move oil – and gas—to the refinery.

What tribal leaders do not want are more regulations. The Obama administration has proposed requiring that oil companies disclose the chemicals they use in fracking, a move tribal leaders say would slow down oil production.

Tribal leaders are determined to make the most out of this oil boom, which they see as the ticket to independence from the federal government. They remember all too well how the tribe missed out on the last oil craze.

In the 1980s, when North Dakota experienced a smaller, more conventional oil boom, the tribe was virtually shut out. Oil companies skipped the reservation because the federal government, which administers Indian lands, required that oil companies go through dozens of steps, taking many months, before granting  permits. Outside the reservation, companies received permits within weeks.

To make sure they would not miss out this time, the tribe made two moves. It struck a deal with North Dakota to lower the taxes companies would pay the state and the tribe for leases on tribal land and it lobbied the Bureau of Indian Affairs to set up “one-stop shops” to streamline the permitting process.

Tribal leaders say they are looking out for their own interests, tired of history repeating itself.

Fort Berthold children learn early, in school and at home, that United States policies have betrayed the tribe again and again.  The U.S. government broke the Fort Laramie Treaty of 1851, which set the reservation’s borders, to seize millions of acres of reservation land to establish Montana and expand railroad lines.

Then, in the late 1940s, the federal government decided to damn the Missouri River to create hydroelectric power and Lake Sakakawea. The project flooded river bottomlands that the tribe had so assiduously cultivated and that provided its major source of income. Over one-fourth of the reservation’s total land base was inundated by water. By 1954, nearly 80 percent of the tribe had relocated and almost all of its crop and grazing land, 94 percent, was lost.

The reservation now comprises just under a million acres. Only about half of that is tribal land, either owned by the tribe or tribal members whose families received allotments under an 1887 federal act that sought to privatize Indian lands. The rest of the land is either privately owned, largely by those whose ancestors settled in the Plains when the federal government gave away “unclaimed” Indian lands to homesteaders (beginning with the first Homeststead Act, in 1862) or public land, as in national park land.

Tribal members lucky enough to have mineral rights on their allotments are reaping the oil rush’s bounty. But even some of those members feel cheated. After the first leases were signed, energy companies began to “flip,” or sublease, their leases, at huge profits, with the federal government’s approval but without the allotees’ permission. Since then, tribal landowners have organized their own associations to maximize their interests.

But not everyone is collecting royalty checks. A little over half of the tribal enrolled membership now receives oil checks. The rest: nothing. The new reality is creating a divide in the Mandan, Hidatsa and Arikara tribe between the haves and have-nots.

No one blames the have-nots for resenting the unmitigated upheaval they’re enduring while the haves buy new cars and take vacations. Allotees receiving oil checks have formed a development corporation to invest their money in ways that will benefit all tribal members. Tribal leaders say that at some point in the future, they plan to develop a fund to “share the wealth” with all tribal members.

Becky Deschamp, from the Prairie Winds Trailer Park, is one of the have-nots. Her mistrust of government, honed from both distant and recent history, now extends to the tribal government.  She is thrilled that the tribe found a place to house the evicted Prairie Winds families but wonders why it took so long.

These days she avoid Main Street unless absolutely necessary. Driving home still means running a gauntlet of road construction on Route 23, dubbed “suicide road.” But she’s philosophical about it: At least she still gets to overlook the meditative waters of Lake Sakakawea. If the sewer and water systems hold up, she said, “I may never leave my home again.”