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L'Actualite, Canada

North Dakota’s Example

By Pierre Duhamel

Translated By Louis Standish

31 January 2013

Edited by Gillian Palmer

Canada - L'Actualite - Original Article (French)

North Dakota is, from an American point of view, in the middle of nowhere. The nearest American metropolis is Minneapolis, Minnesota. Its capital, Bismarck, is located around 2,000 kilometers from the Atlantic, the Pacific and the Gulf of Mexico. It goes without saying: Bismarck is as far from Houston, the American oil capital, as Chibougamau!

Far from large cities and sparsely populated, it was far from being the most prosperous state. Petroleum has changed all of that.

The population of North Dakota is growing more quickly than all of the other states, economic growth there is the most rapid and the citizens’ incomes have grown 79 percent since 2005. In Montrail County, in the heart of the oil country, the average income of each person is $52,027. The annual salary of a worker in the oil industry in North Dakota is $91,400.

The unemployment rate is only 3.1 percent in North Dakota; there is no other state doing better. Oil exploration has created a boom in jobs, from specialized personnel on all the drilling sites to construction workers and unskilled workers for restaurants and shops.

North Dakota produces around 450,000 barrels of oil each day. Production could double by 2015. They suspect existing infrastructure is inadequate. In order to transport oil, there must be some new oil pipelines, railways and supplementary routes. Rapid population growth creates considerable stress on the housing market.

Why do the inhabitants of this state embrace the oil industry while numerous Quebecois fear the consequences of this industry’s development in Quebec like the plague?

Without a doubt, there are several reasons, among them the fact that the social security net of governmental transfers toward the provinces and less prosperous regions is more elevated in Canada than in the United States.

But there is another factor that seems important to me — ownership of the subsoil itself.

In Canada, natural resources belong to the provinces. They are a collective good. In an interview with Radio-Canada on the subject of oil in the town of Gaspé, former Prime Minister Bernard Landry clearly summarized what changed:

“The big St. Lawrence River that passes across my house is on an extraordinarily navigable route that doesn’t belong to the people of Verchères. That’s a naturally Quebec treasure. And the energy of the James Bay equally appears to the whole of Quebec, and the oil of our subsoil as well as minerals equally make part of our collective heritage, not of a town or a district.”

In North Dakota, a farmer or someone else can be the owner of his land and all that’s found below it all at once. He has a particular interest in oil development. An article from Reuters explains how this works.

Imagine that a well produces 100 barrels a day at about $80 a barrel. This well generates $248,000 over a 31-day month. The owner of the land rights on 20 percent of the harnessed land could receive a check for $43,896 a month. Thanks to the perceived royalties, 2,000 to 3,000 residents of North Dakota could become millionaires each year.

At this price, the real harm of cultivation is easily accepted. If they exploited a well in a town, each citizen could receive a (small) royalty check.

The state of North Dakota also receives a royalty of 11.5 percent of mining revenues. It also invested 30 percent of earned monies in a spot that can’t be touched until 2017.

The discussion on oil exploration in Gaspé poses this fundamental question: How can we accommodate the collective Quebec ownership of a resource and the interests of a community or some individuals on or under which something is situated?

There is also something else: Do you want to take advantage of our resources?



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