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By JENNY MICHAEL

The Environmental Protection Agency said fears a moratorium will be placed on hydraulic fracturing are unfounded.

The agency is in the process of conducting a congressionally-ordered study of hydraulic fracturing, also known as “fracking.” Hydraulic fracturing is used to retrieve natural gas and oil and is widely used in North Dakota’s oil fields. Pressurized fluids, which can include small amounts of diesel, are forced into fractures to extract the wanted substances.

From the study, the EPA plans to issue guidelines for states such as North Dakota to issue permits for use of hydraulic fracturing involving diesel. The EPA has authority under the federal Safe Drinking Water Act to make sure hydraulic fracturing operations do not pollute drinking waters when diesel fuels are used in the processes, the agency said.

“The guidance document is not intended to be a regulatory document and would not itself require any state to change its regulations,” Jim Martin, administrator of the EPA Office of Water, said in a statement to the Tribune. “In fact, it is based on existing best practices in use by the industry today.”

The issue of the EPA’s study has been a point of discussion in North Dakota for some time. In early November, legislators included $1 million in a disaster relief bill to allow the state Industrial Commission to join lawsuits involving potential EPA regulation of hydraulic fracturing.

In comments to the Tribune for a story that ran Sunday, Lynn Helms, director of the Department of Mineral Resources, indicated it was possible the EPA could put a moratorium on hydraulic fracturing as soon as January. However, Helms since has said he was not predicting that as an outcome.

Sen. John Hoeven, R-N.D., said in a statement Tuesday the EPA has clarified it will not put a moratorium on hydraulic fracturing. Hoeven arranged a conference call Tuesday with EPA officials, in which the agency said it will provide a process for the state of North Dakota to comment on the guidelines before they are finalized. The state will continue as the primary regulator of hydraulic fracturing.

Cynthia Dougherty, EPA’s director of the Office of Ground Water and Drinking Water, said in the call that the agency is working on a definition of diesel. Martin, in his statement to the Tribune, said the EPA will provide additional opportunities for states, the public and other stakeholders to comment on its draft guidance as soon as it is ready.

“The American people do not have to choose between securing an available energy resource and protecting its drinking water from pollution,” his statement said. “They can have and deserve both.”

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(AP)  BISMARCK, N.D. — North Dakota oil drillers have outdone last year’s record crude production and are nearing a milestone of a half-million barrels of oil a day, according to an Associated Press analysis confirmed by state and industry officials.

The AP count based on current drilling activity and production estimates found the state already has surpassed the 113 million barrels produced through all of 2010.

Ron Ness, president of the North Dakota Petroleum Council, confirmed the numbers on Wednesday and said the state should end the year with about 150 million barrels of oil.

“Those are significant numbers for home-grown domestic crude,” said Ness, whose group represents about 250 companies working in the state’s oil patch.

Record drilling, strong crude prices and favorable fall weather have pushed production in the state’s oil patch, said Lynn Helms, director of the North Dakota Department of Mineral Resources.

The state Industrial Commission said crude production in September totaled 464,122 barrels a day, or nearly 123,000 more barrels than September 2010. The state Industrial Commission said crude production through September totaled about 105.8 million barrels.

September statistics are the latest available because oil production numbers typically lag at least two months, but current drilling activity indicates the state likely surpassed last year’s record sometime in October, Ness said.

North Dakota sweet crude prices have been nudging $100 a barrel this week, up about $25 a barrel from last year.

Helms said the state would surely hit the half-million daily barrel mark by year’s end.

“We should be about there,” said Helms, the state’s top oil regulator. He earlier had predicted the state to reach 475,000 barrels by the end of 2011.

A record 204 rigs were drilling in western North Dakota in the past week, nearly all aiming for the rich Bakken and Three Forks formations. Helms expects about a dozen more rigs working by the end of the year.

The state had a record 6,071 producing oil wells in September, up 120 from August, and nearly 1,000 more than a year ago.

“It looks like we will continue drilling wells at a record pace,” Helms said.

Still, oil production has been slowed by the lack of crews to perform hydraulic fracturing, a process that uses pressurized fluid and sand to break open oil-bearing rock 2 miles underground. Helms said an additional 10 so-called frack crews are slated to be working in western North Dakota by next spring, bringing the number to 45.

The ability to move crude to market is keeping pace with North Dakota’s oil production, said Justin Kringstad, director of the North Dakota Pipeline Authority.

The so-called daily takeaway capacity for North Dakota and eastern Montana at present is about 773,000 barrels, including 438,000 by pipe and 335,000 by rail, he said.

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By Kristen Hays and Selam Gebrekidan

HOUSTON/NEW YORK | Mon Nov 21, 2011 1:17am EST

HOUSTON/NEW YORK (Reuters) – The Bakken shale oil bonanza in North Dakota has already upended the U.S. oil market once by reversing a decades-long decline in production.

Now, as the boom fuels a surge in diesel consumption, the remote state may boast a second milestone: construction of the first U.S. greenfield refinery in 35 years.

Tiny by industry standards, the 20,000 barrel-per-day plant — which received county zoning approval a week ago and now awaits a final state air permit — illustrates how the tight-oil revolution is reshaping the U.S. energy industry in unexpected ways.

Frenzied drilling activity and a crush of truck and rail traffic across major shale energy fields from Texas to Pennsylvania have fueled a spike in diesel consumption nationwide of more than 10 percent in recent months.

In North Dakota, far from the rust belt refineries of the Midwest and now America’s fastest-growing state economy, the $200 million refinery presents a perfect opportunity.

“We knew it was just a matter of time before everything opened up,” says Mel Falcon, a former oilfield roughneck and head of operations for Dakota Oil Processing, the private development company behind the project. The refinery will produce almost exclusively diesel fuel, he says.

Drilling in the prolific play has exploded thanks to technological advances in tapping Bakken and Three Forks crude in hard shale, tripling output in just over three years to more than 464,000 barrels per day (bpd) as of September.

Hundreds of diesel-fueled trucks are needed to accommodate such growth in a largely remote state, hauling crude to the nearest pipeline or rail head, hauling refined products to the drilling site or trucking in sand and water. These are key ingredients to hydraulic fracturing, or fracking, which involves injecting a mix of water, sand and chemicals into shale formations at high pressures to extract oil and gas.

That is on top of diesel used in the fracking process as well as the trains that transport Bakken crude to other states in the absence of sufficient pipeline capacity.

Local diesel terminals were sucked dry this month — some for hours, others for days — as a major Indiana refinery underwent planned maintenance while fuel demand rose due to seasonal demand from farmers and shippers at the tail end of the autumn harvest and the Bakken shale oil plays. Some truckers had to drive hundreds of miles to fill up.

“Trucks arrive at the loading station and some wait three to four hours and others in excess of eight hours,” said Bud Kerr, operations manager at J5, a hauling company in North Dakota. “The problem appears to be worse than what it was last year.”

FRACKING DEMAND

The growth in diesel demand is small on a national scale, but dramatic for the region. Diesel consumption in North Dakota shot up 29.3 percent in September from a year earlier, nearly two-thirds higher than previous years, to 2.37 million gallons (56,000 barrels) per day, state tax data showed.

That is just 1.4 percent of total U.S. demand, ranking the state 30th — but rising quickly. Nationwide, diesel demand in October rose 12.3 percent, or about 460,000 bpd, from a year ago, according to the American Petroleum Institute, which pointed to shale gas development as a key driver.

The average Bakken drilling rig uses about 1,500 gallons of diesel a day, according to industry figures. Mike Rud, spokesman for the North Dakota Petroleum Marketers Association, put the estimate higher, saying the state’s 200 rigs are responsible for total demand of some 600,000 gallons per day.

“When you combine the energy sectors with the demand from a strong agricultural economy and bustling construction, you create the perfect storm in terms of demand for a state on the end of pipelines,” he said.

Besides trucks, railroads have also accounted for the rise in diesel demand. Rail has emerged this year as a critical mode of transportation for the oil industry as existing pipeline networks are overwhelmed by the surge in Bakken output.

More than 100,000 bpd of crude is now moved out of the Bakken by rail. Last week BNSF, a leading shipper, loaded a 103-tank train at the newly completed Bakken Oil Express bound for St. James, Louisiana, some 1,700 miles south.

BNSF says a typical train in its fleet can move one ton of freight 495 miles on one gallon of diesel, based on average fuel consumption in normal conditions. Last week’s train hauling 70,000 barrels of crude — approximately 10,000 tonnes — would then consume some 34,000 gallons.

This month’s diesel demand surge reverberated as far away as Chicago. Differentials in the Midwest cash diesel market spiked to their highest level in three years until the restart of BP Plc’s crude and coker units at its 405,000 bpd refinery in Whiting, Indiana, helped loosen the market.

Traders expect the Bakken demand to keep rising.

“We’re going to need a supply side solution to this tightness, because development is not going to slow down up north in the Bakken oil field,” a Midwest trader said.

NEW REFINERY

Now North Dakota has just one refinery, Tesoro Corp’s 58,000 bpd refinery, about 223 miles southeast of the new refinery’s site.

Tesoro aims to begin construction before year-end on a 10,000 bpd expansion of the Mandan plant geared mostly toward increasing diesel output. Still, the state will be far from supplying its own diesel needs. Much of what it consumes comes from refineries in Montana and Minnesota.

The Dakota Oil Processing project is expected to fill 252,000 gallons per day, or about 10 percent, of the state’s current diesel needs, said CEO Chester Trabucco.

“The singular focus of this refinery is to be able to provide diesel to the local community and the oil industry,” Trabucco said. “By definition, providing that diesel relieves suppliers to better cover their agricultural customers.”

The project involves a refinery on 160 acres that was zoned for crops. Pending state approval of an air permit and secured financing, the company hopes to break ground at the first thaw in May 2012 and start it up a year later, Trabucco said.

It is not the only proposed new refinery in the country.

In 2007, Dallas-based Hyperion Resources Inc proposed building a 400,000 bpd refinery and electrical power plant project in the southeast corner of South Dakota, about 675 miles from the site.

At the time, U.S. gasoline demand was high, prices were rising and capacity was running short, prompting plans to expand. Most refiners opted to expand existing plants instead of building new ones, given the regulatory hurdles and costs.

A company called Garco Energy built a tiny 4,000 bpd plant in Wyoming on the remnants of a natural gas processing facility.

But times have changed.

The global recession and high oil prices have put domestic gasoline and fuel demand into a near terminal decline; refiners on the East Coast are shutting down and others are exporting.

Hyperion has not given up on the South Dakota proposal, but a lengthy permitting process and two construction extensions pushed the planned groundbreaking back to mid-March 2013.

Analysts say even the smaller North Dakota plant is not yet a done deal.

“They still have to go through the regulatory and environmental review process,” said Mark Routt, an analyst and engineer at KBC in Houston.

Jim Semerad, manager of compliance and permitting for the North Dakota Department of Health’s air quality division, said the state is reviewing the project’s permit.

MUTED OPPOSITION

Unlike the local outrage that has stalled shale gas drilling efforts in New York or the not-in-my-backyard attitude that has often thwarted other industrial projects, there is limited opposition to the Dakota Oil Processing plant.

Susan Zimmerman, a part-time rancher and farmer who lives about 10 miles from the proposed refinery site, has gathered about 50 signatures from neighbors worried about emissions and increased truck traffic near their serene farmland.

“This area has not been very populated,” she said. “We don’t have the infrastructure for all of this, all the traffic. These roads are small.”

She said her chief concern is trading fertile farmland for a refinery when oil prices could fall and snuff out the boom.

“What happens when oil goes down and you don’t have the agriculture to fall back on? You can’t put all your eggs in one basket. I just feel this can be put in a better place on less productive land.”

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By Mark Shenk

Surging crude output in the Bakken shale formation is set to make North Dakota a bigger oil producer than OPEC member Ecuador.

The CHART OF THE DAY tracks North Dakota’s production, which has almost doubled in the past two years, as Ecuadorean output has stagnated.

North Dakota and neighboring Montana are home to the Bakken Formation, identified by the U.S. Geological Survey in 2008 as having as much as 4.3 billion barrels of recoverable oil. Companies extract the oil with hydraulic fracturing, a technique that shoots water, sand and chemicals into shale.

“There’s been an amazing jump in North Dakota output,” said Rick Mueller, a principal with ESAI Energy LLC in Wakefield, Massachusetts. “We are looking for output to be anywhere from 700,000 barrels to 1 million barrels a day within five years.”

North Dakota pumped a record 464,129 barrels a day in September, the most recent month with available data, according to the state government, up from 86,072 barrels 10 years earlier. The state is now the fourth-biggest producer in the U.S. after Texas, Alaska and California, according to the Energy Department.

Ecuador produced 485,000 barrels a day in September, according to a monthly Bloomberg News survey of oil companies, producers and analysts, near the top of its range for the past four years. It was OPEC’s smallest producer until Libya’s production was disrupted this year by the insurrection that toppled Muammar Qaddafi.

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Bismarck, ND –  North Dakota will likely leapfrog California and may even overtake Alaska in the next year — far outpacing earlier industry predictions — to become one of the nation’s three biggest oil-producing states, a government regulator said.

Government and industry officials had predicted that North Dakota likely would hit the No. 2 spot within the decade but the explosion of drilling activity has accelerated the timeline.

Not considered a big oil state until recently, North Dakota went from the ninth-biggest producer in 2006 to fourth in 2009, where it currently stands. This boom is thanks to advances in drilling and hydraulic fracturing techniques and a rise in oil prices that made it more profitable for companies to tap into the vast reserves trapped in the Bakken and Three Forks shale formations.

North Dakota’s 5,951 wells produced about 444,000 barrels per day in August, the last month for which figures were available. Last August, the daily barrel count was about 350,000, officials said then.

With nearly 200 wells being drilled and plans for 1,500 to 2,000 new wells over the next year, North Dakota should overtake California as the nation’s third-largest producer sometime in the next 12 months, said Lynn Helms, the director of North Dakota’s Department of Mineral Resources.

“We should pass California by the third quarter of next year,” he said.

North Dakota pumped a record 113 million barrels of oil in 2010, and production estimates show the state should top that by at least 20 percent this year.

North Dakota’s oil patch is pumping about 118,000 more barrels of crude daily than a year ago and more than double the production in 2008.

The rise in state’s oil production, which forecasters predict could reach up to 700,000 barrels daily by 2015, comes as oil production is slowing in California and Alaska.

Steve Grape, the domestic reserves project manager for the U.S. Department of Energy’s information administration, said California produces about 539,000 barrels of oil daily, compared with about 550,000 barrels in Alaska and about 1.2 million barrels daily in Texas.

“No data I’ve seen shows California’s production increasing, so they do have a target on their neck,” Grape said. “And Alaska’s production is declining faster than California’s.

The number of producing wells in North Dakota jumped from 5,115 to about 6,000 in the past year, and that number is expected to rise by up to 2,000 wells in the next year, Helms said.

There were 193 rigs being drilled as of Friday, which is more than double the average daily rig count in 2009.

Helms said about 95 percent of the rigs drilling in North Dakota are trying to tap into the Bakken and Three Forks formations in the western part of the state.

State and industry officials say 99 percent of rigs drilling in those formations hit oil, and that nine of 10 are profitable.

“God bless North Dakota,” Grape said. “Anything is possible in a year but it’s going to depend on the number of wells producing, the takeaway capacity to move crude to market, and of course, price.”

Helms said so-called takeaway capacity with rail, truck and pipelines is “more than adequate” at present thanks to millions of dollars in infrastructure work that has included new rail shipping facilities and pipeline expansions in the state.

North Dakota sweet crude was fetching about $79 a barrel late this week, up about $4 from a year ago. A record high of $136.29 a barrel for the state’s crude was set in July 2008.

Oil companies have said that drilling in North Dakota is profitable if oil prices are more than $50 a barrel.

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By JAMES MacPHERSON , 08.18.11, 01:30 PM EDT

BISMARCK, N.D. — North Dakota oil drillers are on pace to crush the state’s crude production record despite a year fraught with worse-than-normal winter weather and record spring flooding that idled rigs and hampered access to the oil patch.

The state Industrial Commission said crude production through June totaled 64.6 million barrels. Based on current production estimates, the state should end 2011 with about 133 million barrels, up about 18 percent from the record set last year.

North Dakota produced 11.2 million barrels of crude in May and 11.5 million barrels in June, according to the latest Industrial Commission figures available.

Ron Ness, president of the North Dakota Petroleum Council, called the production remarkable because the weather conditions this year have been among the worst in the state’s 60-year-oil history, stranding millions of barrels at well sites.

“So many roads were shut down we couldn’t move crude,” said Ness, whose group represents about 250 companies.

Lynn Helms, director of the state Department of Mineral Resources, has said there were 822 idle wells in February, up from 760 in January. The number of idle rigs peaked in June at 900 because of soggy conditions and weight restrictions on roads that made many well sites inaccessible to trucks and other equipment needed to move the crude off site.

Oil production numbers typically lag at least two months. Ness said he expects the state to match or exceed June production every month through the end of the year.

“We’re still out there trying to catch up,” he said.

North Dakota is nearing 400,000 barrels in daily production and 200 active drill rigs. Ness said the state could reach both of those milestones within the next few weeks.

State records show a record 193 rigs were drilling Thursday, up about three dozen from a year ago and more than double the average daily rig count in 2009.

North Dakota’s oil patch pumping about 100,000 more barrels of crude daily than a year ago at this time and about double the production in 2008. State and industry officials estimate the state could hit 700,000 barrels daily by 2015.

North Dakota had a record 5,558 producing oil wells in June. Nearly 95 percent of rigs drilling in the oil patch are aimed at the rich Bakken and Three Forks shale formations, and 99 percent of them hit oil, while nine of 10 are profitable, state and industry officials say.

North Dakota is the nation’s No.4 oil producer and accounts for about 6 percent of U.S. crude production, said Steven Grape, the domestic reserves project manager for the U.S. Department of Energy’s information administration in Dallas.

Agency figures show Alaska production is pegged at about 550,000 barrels a day, followed by California at 540,000 barrels. Texas leads the nation with about 1,410 million barrels daily.

Grape said production in Alaska and California is declining. He said North Dakota is poised to trail only Texas in crude production “if the trend continues.”

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By JAMES MacPHERSON

BISMARCK, N.D.

North Dakota’s oil patch marked its 60th anniversary on Monday amid record production, drilling activity and government estimates that show the industry is likely still in its infancy.

Since April 4, 1951, when Amerada Corp.’s well struck oil on Clarence Iverson’s wheat farm near Tioga in the northwest part of the state, some 1.85 billion barrels have been produced in North Dakota, state Industrial Commission records show. Officials estimate that at least twice that amount remains untapped in the Bakken shale and the Three Forks formation below it.

“As technology increases, we know oil is still down there — a lot of oil,” said Ed Murphy, the state geologist and director of the Geological Survey. “Who knows what the next 60 years will bring?”

The Bakken shale has been the biggest producer of crude in recent years, due to advances in horizontal drilling and hydraulic fracturing techniques. But the now-booming Bakken has accounted for just 11 percent of the crude pumped from the state’s oil patch to date. Industrial Commission records show 49 percent of the oil produced in North Dakota has come from the Madison formation, a layer of oil producing rock directly above the Bakken that was tapped for decades using traditional vertical wells.

Bakken production had been just 13 million barrels until 2004 but jumped 191 million barrels since then, records show.

Three years ago, the U.S. Geological Survey estimated that up to 4.3 billion barrels of oil could be recovered from the Bakken in North Dakota and Montana, using current technology. The agency called it the largest continuous oil accumulation it had ever assessed. The federal report found up to 2.6 billion barrels of Bakken crude could be recovered in North Dakota, compared with the state’s estimate of 2.1 billion barrels.

The state also has estimated another 1.9 million barrels of crude can be recovered in the underlying Three Forks formation using current technology.

“Those reserves are, of course, off the charts as far as potential,” said Ron Ness, president of the North Dakota Petroleum Council, which represents about 250 companies. “For 55 years we did OK producing from other zones, then the Bakken overshadowed all the other successes.”

North Dakota has about 5,300 producing oil wells; about 2,000 of those have come online in the past three years, aimed at the Bakken and Three Forks. Nearly 95 percent of rigs drilling in North Dakota are aimed at those formations, and 99 percent of them hit oil, while nine of 10 are profitable, state and industry officials say.

Record rig activity pushed by strong crude prices and refinements in drilling technology could result in North Dakota — which is currently the nation’s No. 4 oil producer — seeing a twofold increase in production in four to seven years, state and industry officials say.

Industrial commission records show 171 rigs were drilling on the state’s anniversary Monday, three short of a record set in mid-March. State and industry officials expect as many as 200 rigs to be drilling in North Dakota later this year.

North Dakota pumped a record 113 million barrels of oil in 2010. State officials estimate the state will produce 700,000 barrels daily in four to seven years.

The well that struck oil on Iverson’s farm 60 years ago, which came after decades of dry holes, triggered an oil rush throughout the Williston Basin, a 134,000 square-mile-area that includes North Dakota, South Dakota, Montana and the Canadian provinces of Saskatchewan and Manitoba. Western North Dakota accounts for more than a third of the Williston Basin acreage.

“It was a huge deal for the entire Williston Basin,” Ness said. The basin has produced more than 5 billion barrels of oil to date.

The Clarence Iverson No. 1 produced 585,000 barrels of oil over 28 years. Ness said no special ceremonies were slated to commemorate the well that started it all.

“The celebration is the activity,” Ness said. “That speaks for itself.”

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They’re drilling for oil, attracting high tech, and keeping the tax burden moderate. Result: 3.8% unemployment.

By JOEL KOTKIN

Living on the harsh, wind-swept northern Great Plains, North Dakotans lean towards the practical in economic development. Finding themselves sitting on prodigious pools of oil—estimated by the state’s Department of Mineral Resources at least 4.3 billion barrels—they are out drilling like mad. And the state is booming.

Unemployment is 3.8%, and according to a Gallup survey last month, North Dakota has the best job market in the country. Its economy “sticks out like a diamond in a bowl of cherry pits,” says Ron Wirtz, editor of the Minneapolis Fed’s newspaper, fedgazette. The state’s population, slightly more than 672,000, is up nearly 5% since 2000.

The biggest impetus for the good times lies with energy development. Around 650 wells were drilled last year in North Dakota, and the state Department of Mineral Resources envisions another 5,500 new wells over the next two decades. Between 2005 and 2009, oil industry revenues have tripled to $12.7 billion from $4.2 billion, creating more than 13,000 jobs.

Already fourth in oil production behind Texas, Alaska and California, the state is positioned to advance on its competitors. Drilling in both Alaska and the Gulf, for example, is currently being restrained by Washington-imposed regulations. And progressives in California—which sits on its own prodigious oil supplies—abhor drilling, promising green jobs while suffering double-digit unemployment, higher utility rates and the prospect of mind-numbing new regulations that are designed to combat global warming and are all but certain to depress future growth. In North Dakota, by contrast, even the state’s Democrats—such as Sen. Kent Conrad and former Sen. Byron Dorgan—tend to be pro-oil. The industry services the old-fashioned liberal goal of making middle-class constituents wealthier.

Oil also is the principal reason North Dakota enjoys arguably the best fiscal situation in all the states. With a severance tax on locally produced oil, there’s a growing state surplus. Recent estimates put an extra $1 billion in the state’s coffers this year, and that’s based on a now-low price of $70 a barrel.

North Dakota, however, is no one-note Prairie sheikdom. The state enjoys prodigious coal supplies and has—yes—even moved heavily into wind-generated electricity, now ranking ninth in the country. Thanks to global demand, North Dakota’s crop sales are strong, but they are no longer the dominant economic driver—agriculture employs only 7.2% of the state’s work force.

Perhaps more surprising, North Dakota is also attracting high-tech. For years many of the state’s talented graduates left home, but that brain drain is beginning to reverse. This has been critical to the success of many companies, such as Great Plains Software, which was founded in the 1980s and sold to Microsoft in 2001 for $1.1 billion. The firm has well over 1,000 employees.

The corridor between Grand Forks and Fargo along the Red River (the border between North Dakota and Minnesota) has grown rapidly in the past decade. It now boasts the headquarters of Microsoft Business Systems and firms such as PacketDigital, which makes microelectronics for portable electronic devices and systems. There are also biotech firms such as Aldevron, which manufactures proteins for biomedical research. Between 2002 and 2009, state employment in science, technology, engineering and math-related professions grew over 30%, according to EMSI, an economic modeling firm. This is five times the national average.

While the overall numbers are still small compared to those of bigger states, North Dakota now outperforms the nation in everything from the percentage of college graduates under the age of 45 to per-capita numbers of engineering and science graduates. Median household income in 2009 was $49,450, up from $42,235 in 2000. That 17% increase over the last decade was three times the rate of Massachussetts and more than 10 times that of California.

Some cities, notably Fargo (population 95,000), have emerged as magnets. “Our parking lot has 20 license plates in it,” notes Niles Hushka, co-founder of Kadrmas, Lee and Jackson, an engineering firm active in Great Plains energy development. Broadway Drive in Fargo’s downtown boasts art galleries, good restaurants and young urban professionals hanging out in an array of bars. This urban revival is a source of great pride in Fargo.

What accounts for the state’s success? Dakotans didn’t bet the farm, so to speak, on solar cells, high-density housing or high-speed rail. Taxes are moderate—the state ranks near the middle in terms of tax per capita, according to the Tax Foundation—and North Dakota is a right-to-work state, which makes it attractive to new employers, especially in manufacturing. But the state’s real key to success is doing the first things first—such as producing energy, food and specialized manufactured goods for which there is a growing, world-wide market. This is what creates the employment and wealth that can support environmental protection and higher education.

Thankfully, this kind of sensible thinking is making a comeback in some other states, such as Ohio and Pennsylvania. These hard-pressed states realize that attending to basic needs—in their case, shale natural gas—could be just the elixir to resuscitate their economies.

Mr. Kotkin is a teaches at Chapman University and is an adjunct fellow at the London-based Legatum Institute.

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