Picture this if you will. A sleepy little town in Northwest corner of North Dakota passes through its days in peace and serenity. It struggles daily to find enough funds to keep the doors of City Hall open, much less attract new residents to its borders,which brings in additional tax revenue. Its cold long winters and dreary prairie horizons do not help in building rapport with people. This plain existence continues for a hundred years until 2006 when it all turned around for the community and suddenly the little town had more people than it had beds for them. This is the reality of being a city in North Dakota since oil was rediscovered in the Parshall Oil Field in 2006.
The Bakken formation in North Dakota is one of several shale gas reserves in the USA exploding on the scene when a new technique to extract the substance, called hydraulic fracturing, started being widely employed. Oil and gas companies, being pushed by many who want the country to be less dependent on foreign fuel reserves, have moved into several areas of the country to make towns, and several of their citizens, rich overnight. In North Dakota alone, 2000 millionaires have said to be created since the boom began in the mid-2000s. Some individuals are bringing in 100k a month in gas royalty payments. The boom has given North Dakota a billion dollar surplus because of the new taxes and its own royalty payments.
North Dakota is now second in oil production in the USA. Texas is still number one as it has its own share of shale gas reserves around the state including one now dominating everything in the small towns in south Texas, called the Valley. We highlight five cities from these two states that have seen their fortunes change because of this oil boom. Reminiscent of the 1800 gold rush towns, all of these cities on the list are seeing the benefits of a fast expansion while suffering the pains of growth and prosperity.
5. Watford City, ND
Watford City is the first of three North Dakota cities to make our list. It is the county seat of McKenzie County, which is the fastest growing county in the US, and had 1,744 residents when the 2010 census was taken. Today, the town has nearly 2500 residents, an increase of 73 percent(some say the temporary workers camped outside of town make the population closer to 7,000). Its average income today is $65K while in 2000 it was just over $29K. A median house in Watford City is $275k (it was $50K in 2008). The city’s budget has grown from $3M in 2011 to $11M in 2013. Probably the greatest indication of its oil boom is the $56M recreation center it will be asking residents to approve in June. The proposed 240,700-square-foot facility will have an indoor pool, two sheets of ice for hockey and skating, three basketball courts, a concert or event venue and conference rooms. This is quite the contrast from the 1990s when the city lost half its population to people leaving for brighter horizons. As with all the cities in our list, there is a cost to all this wealth and influx of people, higher crime rates. According to some reports, its crime rate is now twice the average of other US cities. Like the old gold towns of the 1800s, this town has seen an increase in its sex industry and sex crimes. It had 28 sex crimes last year, the year before that, it didn’t have any.
4. Cotulla, TX
This south Texas town sits about 70 miles north of the Mexico border, southwest of San Antonio, Texas right on top of the Eagle Shale Formation. As with four other cities on our list, Cortulla has been known as a small town with high unemployment and few job prospects. In 2008, this sordid fact changes when the reserves are discovered about 2 miles deep into the shale. In the span of four years, the area has seen 8000 oil wells spring up (with permits for 5000 more), pumping more than 1 million barrels of oil daily. This high activity makes it the second largest oil producer in the country. Cotulla has reaped the benefits, with its tax revenue increasing nine fold in six years to $200M in 2013. Cotulla’s leaders are working to sustain the infrastructure as more and more trucks and rail cars rolling into the area on a daily basis. These same leaders are keeping a level head as well, knowing full well that one day’s oil town can turn into tomorrow’s ghost town. Not all Cotulla residents are pleased with the recent developments, stating that the impact on the land and the environment heavily outweigh the short term benefits of being an oil town. Cotulla is not alone in its concerns with the Texas Commission on Environmental Quality having received more than 300 complaints from around the state. Some citizens are complaining of nosebleeds, difficulty in breathing and other health ailments. Finally, if you are wondering where you have heard the name of Cotulla before. President Lyndon Baines Johnson made this town famous in the 1960s when he carried it with him as he moved to pass the Civil Acts act.
3. Minot, ND
Minot is the second North Dakota city on this list and the fourth largest in the state. Nicknamed the “Magic City” because of its great growth in a short time, the city’s metro area has grown from 69,000 residents in 2010 to 74,000 in 2013. The city itself has seen its number grow from 40,000 to 43,000. Built in 1886 as part of the Great Northern Railway, Minot has a long history of rapid growth with a tent city in 1885 growing into a full fledged city in 1886 with 5,000 residents. Minot’s city budget is $84M this year, an increase from $74M in 2006. Minot residents, as with many in North Dakota, have seen the oil boom with mixed blessings. For many, it is not the quick rich scheme it is for others as many do not own the mineral rights to their land. Most individuals will see something from the oil companies for the disruption the wells cause to the land, but fewer than one would think is actually becoming millionaires because of the oil boom. Minot has also seen many local residents become homeless because of the lack of available housing. Cities across North Dakota are approaching building cautiously as they do not want to be left with empty buildings if the oil biz should ever dry up.
2. Williston, ND
Williston is the fastest growing city in the US by doubling its population in three years with another anticipated 100 percent growth in the next three years. Oil companies are very interested in this once small community as it is in direct line to nearly 24 billion barrels of oil in the Bakken Formation. This large deposit of oil spans 200,000 square miles from Montana to North Dakota and is the source of the North Dakota’s sudden wealth. Williston faces the same challenges as the other North Dakota cities as housing is limited and crime rate is increasing. The housing shortage has caused rents to sky rocket to New York like levels. A 700 square foot one bedroom apartment currently rents for nearly $2400 a month (New York average is $1500 while LA has an average of $1400). Demand of six figure salaried individuals is driving up the prices. Many of the apartments have mud rooms where oil workers can undress and store their muddy clothes from working at the oil fields all day; a luxury not seen in either LA or New York.
1. Midland, TX
Midland Texas makes the top of list. Midland is the hometown of President George Bush and First Lady Barbara Bush. Midland ranks first in economic growth with an increase of 14.4 percent in its GDP. This number beats all the other urban areas of the country including Houston, New York and LA (average US city GDP growth: 3.1 percent). Along with its economic prosperity, its population has swelled, making it the second fastest growing city in the nation. As with the other cities on this list, Midland has seen its list of growing pains, including housing shortages and sharp value increases in the housing market. It has reached the point where the Midland School District is investigating buying housing for its teachers to lease, because their salaries are not high enough to afford the rents or mortgages. A more worrisome development, however, are teachers leaving for the higher paying oil jobs, which makes any kind of leasing program obsolete. Midland is no stranger to oil booms. President Bush has made most his money in the Midland oil fields before the oil dried up the first time, a history lesson any of the cities on our list should mind closely. All good things come to an end!