Economic Contribution of the Petroleum Industry to North Dakota

The purpose of this study was to estimate the economic contribution of crude oil and natural gas exploration, extraction, transportation, and processing in North Dakota in 2005. Primary data for the study came from three separate surveys of firms involved with various aspects of the petroleum industry. Exploration, the process of finding mineral resources, was estimated to have direct impacts (in-state expenditures) of $445.1 million. Extraction, the process of developing and recovering mineral resources, had direct impacts of $909.6 million. The processing sector of the industry, which included pipeline transportation of crude oil and natural gas, had $132 million in direct impacts. The North Dakota Input-Output Model was used to estimate the secondary economic impacts (multiplier effects). The $1.4 billion in direct impacts were estimated to generate $2.4 billion in secondary impacts. The gross business volume for the entire industry in North Dakota in 2005 was estimated at $3.9 billion. Other economic measures for the industry were estimated, which included direct contributions to local and state government tax revenues of over $280 million, 5,267 full-time jobs, economy-wide personal income of $1.5 billion, statewide retail sales of over $900 million, indirect contribution of $55 million in state government general tax collections, and secondary employment of 20,650 full-time equivalent jobs. While only a snapshot in time, results from this study would suggest that recent upswings in energy prices, increased drilling activity, and growth in oil and gas production in North Dakota have made the petroleum industry the one of largest single industries in the state.