With the oil fracking boom taking off in North Dakota, both the oil and water industries are relying on one another more than ever. As the field has grown, the North Dakota State Water Commission (ND SWC) has benefitted financially due to a 20 percent tax on oil extraction that the state government put into place in the 1980s to generate revenue for state projects, including water development. In the span of 2001 to 2013, ND SWC’s funds have increased from $10.7 million per biennium to $515 million—a 500 percent increase. And with those funds come big projects.
The oil and gas division of the North Dakota Industrial Commission estimates the development of 40,000–45,000 new oil wells in North Dakota during the next 20 years. Water use for each well in the development stages is estimated at about two million gallons, with each well requiring 10–15 barrels of water per day for brine-dilution purposes. With the life of each well estimated at 45 years, the demand for water for industrial use in western North Dakota will be large. “We can meet some of this demand from groundwater sources,” says Robert Shaver, ND SWC’s water appropriations division director. “However, these sources are limited.”
A Limited Resource
The annual water consumption for oil-field industrial use in North Dakota is estimated at about 22,000 acre-feet, with 326,000 gallons of water per acre-foot. “To put this in perspective, on average, there is about 40,000 acre-feet of water flowing past Bismarck, [North Dakota], in the Missouri River each day,” explains Robert Shaver. “Thus, estimated annual use is about two-tenths of 1 percent of the annual flow in the upper Missouri River where oil development is occurring.”
The most reliable source of water in terms of both quantity and quality for oil field industrial use is Lake Sakakawea, a reservoir in the Missouri River; however, the US Army Corps of Engineers (USACOE) is currently restricting access to this body of water, and as a result, the state is relying on groundwater and other surface-water sources to meet the needs of the oil industry. The restricted access to Lake Sakakawea is the result of the USACOE wanting to charge municipal- and industrial-water users a surplus water storage fee. The USACOE contends that all waters in Lake Sakakawea are stored waters and, therefore, are subject to these surplus-storage user fees. “The state of North Dakota strongly disagrees with this interpretation of stored water,” Shaver says.
Prior to completion of the Garrison Dam in 1953, the Missouri River was a free-flowing river characterized by “natural flow.” According to the North Dakota Constitution of 1889, which was ratified by the Federal government, water in the Missouri River is water of the state for the state to allocate to its citizens for beneficial use. With construction of the dam, water still “naturally” flows in and out, which Shaver hopes will help resolve the issue. “This ‘natural flow’ is not stored water, and as a result, should not be subject to a surplus-storage user fee,” Shaver notes. Add to this the fact that when the Missouri River reservoirs were filled behind the dams, the state of North Dakota permanently lost about 550,000 acres of land—with 155,000 acres of that land belonging to the Three Affiliated Tribes—making the USACOE’s recent restrictions even more impactful.
The governor of North Dakota and the state’s congressional delegation are working with the USACOE to resolve this issue. The USACOE is currently involved in a national study to develop policy regarding surplus-storage fees. At present, the USACOE has approved one industrial water-use permit from Lake Sakakawea and will not impose a surplus-storage fee until the national study is complete.