Oil

U.S. oil shale boom puts big squeeze on small towns

Reuters News
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Posted: Feb 25, 2012 1:28 PM
U.S. oil shale boom puts big squeeze on small towns

By Laura Zuckerman and Lori Grannis

(Reuters) - The suspected kidnapping and murder of a Montana teacher by two men said to be seeking work in the oilfields of North Dakota underscores the darker side of a regional energy boom that has pumped jobs and money as well as newcomers and crime into rural towns.

Stepped-up oil and gas development in northwestern North Dakota and northeastern Montana is punctuating the landscape with drilling rigs, trucks and hastily erected barracks, known as "man camps," to house thousands of mostly male workers crowding into small communities where residents once greeted each other by name and left their homes and cars unlocked.

Even as oil and gas companies pour hundreds of millions of tax dollars into those states, leaders of boomtowns like Williston, North Dakota, and neighboring Sidney, Montana, say they are ill-equipped to cope with the rapid influx of people, traffic, construction, crime and soaring demand for housing.

"If it had been gradual ... but that's not how a boom works; the thing happens overnight," said David Montgomery, a Williams County commissioner whose district encompasses Williston, where the population has swelled to an estimated 20,000 from 14,000 in 2010.

In Sidney, Montana, about 45 miles southwest of Williston, officials have been scrambling to keep pace with oil and gas activity that is expected to double the population - from 5,000 to 10,000 - in five years and add an estimated 774 new students to the public school system.

The town was unprepared for a months-long spike in crime that culminated January 7 with the abduction and violent death of a local high school math teacher, Sherry Arnold, according to Mayor Bret Smelser.

"Sherry's case brings all of this into focus," he said.

Two men, Lester Vann Waters, 47, and Michael Keith Spell, 22, are charged with aggravated kidnapping in the disappearance of Arnold, who authorities believe was snatched off the street as she jogged near the suspects along a truck route in Sidney.

According to the sworn statement of the prosecutor overseeing the investigation, Waters was looking for a woman to abduct and kill when he strangled Arnold, 43, in a crack cocaine-induced frenzy in the back of his Ford Explorer.

The prosecutor's affidavit says Spell confessed to helping bury Arnold in a shallow grave. Her body has not been recovered.

Court documents say the two men had come from Parachute, Colorado, a city that has experienced economic ebbs and flows linked to oil shale, to find work in Williston.

OVERWHELMED IN WILLISTON

Thousands of high-paying jobs have prompted the unemployed and under-employed from cash-strapped states across the nation to flock to the Williston area.

The energy boom is tied to a vast oil shale formation that stretches across parts of North Dakota, Montana and Canada. The Bakken formation contains the largest known reserve of light sweet crude in North America and is the source of 113 million barrels of oil produced in 2010 in North Dakota. The sparsely populated state ranked behind only Texas, Alaska and California among U.S. oil producers.

The Bakken was discovered in 1951, but development - which has occurred off and on since then - accelerated about three years ago along with the advent of hydraulic fracturing, or fracking. The production-boosting technique injects large amounts of water, chemicals and sand underground to crack rocks or dense sands holding fuel.

Senior citizens on fixed incomes and other residents unable to meet monthly rents that can skyrocket from $300 to $3,000 have been pushed out of the community even as some oilfield workers living in their cars - despite annual salaries that can top $100,000 - have joined a local health club to gain access to the facility's showers.

Fast-food and retail chains have been hard-pressed to retain workers amid the lure of higher-paying, plentiful energy jobs, and long lines have become commonplace in motels, restaurants and grocery stores. Business also has climbed at the two strip clubs in the city.

"It will never be the same - but that's progress," said Montgomery, a native.

FEAR AND FIREARMS

Evidence in Sidney and in Williston suggests worries about the downsides of the energy boom are displacing the optimism that came with ramped-up production and revenues.

"Without Sherry, we had some people looking and thinking, 'We may need to re-think this,'" Smelser said. "With her death, people are saying, 'We really do need to re-think this.'"

Having suffered the gravest harm, the city is now looking for a heftier share of the taxes paid by energy companies so that Sidney can augment its law enforcement and other municipal services, the mayor said.

The farming community enrolled 101 new students last year with no additional revenues to offset the increase, said Dan Farr, superintendent of Sidney schools.

"We have received families from every state in the union, and the culture in the classroom has changed," he said, adding that teachers have logged long hours restructuring lessons and lesson plans to encompass varying degrees of academic ability.

Talk in town since Arnold vanished has centered on "how are we going to protect ourselves," said Joanna Hughes, co-owner of a Sidney consignment store that carries firearms.

In the span of a year, the shop has doubled the number of handguns and rifles it stocks, and sales are soaring, she said.

The sense of foreboding has not stopped at the state line.

"There is a lot of fear in northwest North Dakota right now, especially with what's happened to Mrs. Arnold," said Montgomery, the county commissioner from Williston.

Utah State University sociologist Richard Krannich said years-long studies of boomtowns in the West show a sharp rise in negative consequences such as crime and the fear of crime in the earliest phases of a boom.

"But we also saw the recovery once the initial phase ended and the workforce stabilized, the pressure on local services eased and infrastructure caught up with demand," he said.

That recovery can't come too soon for some.

"When I look at Sidney, as opposed to a large city where crime happens frequently, these things aren't supposed to happen in small-town USA," Farr, the school superintendent, said.

(Editing by Steve Gorman)