In Brief:
With its abundance of natural resources, the state of North Dakota continues to be a net exporter of energy. Transmission lines carry electricity from coal-burning plants and wind farms beyond its borders to neighboring states and Canada. Synthetic natural gas made from lignite is delivered via pipeline to the Midwest and oil from the vast Bakken Reserve ends up at refineries around the country.
The state’s oil and gas industry alone accounts for more than $42 billion in gross business volume, 50,000 jobs and nearly $4 billion annually in state and local tax revenues. This abundant supply of energy has reduced, if not theoretically eliminated, U.S. dependence on foreign oil. Besides oil, however, North Dakota may have something to offer of greater value as the country's energy production becomes increasingly green.
Today the U.S. relies heavily on China to supply the rare earth elements needed to manufacture personal and commercial high-tech devices and equipment, as well as for national defense. As the world transitions to green energy, North Dakota’s vast coal reserves may one day be a source of these critical minerals and the products developed from them.
If this happens, it will add another chapter to North Dakota's lengthy history as an exporter of energy production.
The Discovery of Oil
In 1950, convinced there was oil to be found, the Amerada Petroleum Corporation began drilling in a wheat field a few miles outside of Tioga, a small town in the northwest corner of North Dakota. Reports of the time suggest that farm owner Clarence Iverson was concerned more about his water supply than anything the wildcatters might find.
After seven months of fighting through mud and waiting out more than one blizzard, oil was discovered on the Iverson Farm. Named after the property owner, Clarence Iverson No. 1 was the first commercially viable well in North Dakota, launching a rush of drilling in an area known as the Williston Basin.
The Bakken brothers had their name attached to a historic and vast deposit of oil. But Clarence Iverson got his name etched in stone. Dedicated in 1953, a seven-foot-tall, red granite monument marks the spot where the Amerada Petroleum Corporation first struck oil. Over its 28 years of operation, the Clarence Iverson No. 1 well produced a total of 584,529 barrels of oil and 818 million cubic feet of natural gas. Iverson’s first monthly royalty check totaled $172.27. He died a wealthy man in 1986.
The state has endured a series of boom-and-bust cycles over the ensuing decades. In the early 2000s, the adoption of fracking to extract difficult-to-reach oil led to record production and revenue. By 2019, wells were producing 1.5 million barrels per day. The state enjoyed a billion-dollar budget surplus in 2011.
A Future Full of Coal
Long before Clarence Iverson No. 1 was pumping oil, coal was being mined in western North Dakota where the world's largest deposit of lignite sits close to the surface. At the current rate of production, there is enough of the low-grade coal here to last another 800 years. Once numbering in the hundreds, the handful of remaining mines supply 57 percent of North Dakota’s electricity generation, the balance coming from wind and other renewables.
The majority of North Dakota’s generated electricity is exported to other states and Canada. As the nation transitions from coal in order to meet increasingly stringent emissions standards, out-of-state markets for North Dakota power are in jeopardy. Neighboring Minnesota for example, at some point will no longer be a customer, having recently committed to be free of carbon-based energy by 2050.
Winds of Change
Not all of North Dakota’s natural resources are found underground. Less than 20 miles from Clarence Iverson’s farm, hundreds of recently erected wind turbines dot the rolling landscape just north of Tioga, often in close proximity to working oil wells.
Following exponential growth over the past decade, wind now accounts for a third of the power generated in North Dakota. The state ranks seventh nationally in wind-generated electricity. The proliferation of wind turbines is only expected to increase as associated costs of operation continue to go down. But there are still opportunities to diversifying an economy based largely on the extraction of fossil fuels.
An Abundance of Rare Earth Elements
John Kay is an engineer at the Energy and Environmental Research Center, on the North Dakota University campus in Grand Forks, 300 miles east of Tioga. With funding from the U.S. Department of Energy (DOE), Kay and his team are evaluating the potential of a viable domestic supply of the rare earth elements and critical minerals found in western North Dakota.
Products made with rare earth elements are ubiquitous in today’s world. Critical minerals are found in computers, cellphones, TVs, lighting and medical instruments. “Practically every device we use needs some form of these critical minerals in order to work properly,” says Kay. “They're totally ingrained in modern society.” Military equipment and therefore national defense is also heavily dependent on rare earths.
Kay’s group, The Williston Basin Carbon Ore, Rare Earth and Critical Minerals (CORE-CM) Initiative is one of 13 similar programs, all supported financially by the DOE and other partners. Scattered around the country, they are located in traditionally carbon ore-producing communities that have been hit hard by the declining demand for coal. The ultimate goal is to promote economic growth by creating new industries and supporting what is already in place, while reducing reliance on foreign supply chains and their potential for disruption.
The vast majority of rare earths are now sourced in China where they are in much greater concentrations and therefore easier to separate and process. Any rare earth elements mined in the U.S. today would likely be shipped to China where they have the know-how to extract them from the ore they are found in. It wasn’t always this way. “We have to learn again how to properly do it,” says Kay. “We're trying to take other countries out of the [supply] chain altogether. And that's what's going to take time, as we develop all those pieces.”
Significant amounts of rare earths are known to be locked within the abundant shale and coal deposits found in the Williston Basin. Flare gas, waste from oil production and combustion by-products from coal-based power generation have also been identified as potential sources of critical minerals.
As the world and North Dakota move away from fossil fuels, coal’s potential may ultimately outweigh its heating value. “It's all changing,” says Kay. “And the power companies recognize that. And they're adjusting and accommodating for these other forms as well as they can. You had the last decade and wind turbines that popped up everywhere. And they have become vital. With these critical mineral and rare earth elements, it ties into all of that.”
David KIDD
