Western North Dakota oil fracking is a lousy investment

Fracking in western North Dakota has produced no profits and negative return on investment since 2014. Thus, there is economic justification for diversification of energy production in North Dakota.

In 2014, there were approximately 2,300 wells drilled at an average cost of $10 million/well or total investment of $23 billion for fracking that year alone. Let's say instead of drilling 2,300 wells only 2,000 in 2014 were drilled instead and the investment funds for those 300 non-drilled wells went to solar energy production. That is $3 billion that could have got you 1.5 billion watts (1,500 MW) of solar panels at $2/watt; 1,500 MW of solar in western North Dakota would probably give you near 2.250 billion kWh of energy every year for 25 years.

Cass County, including Fargo and West Fargo, uses around 2 billion kWh of energy each year, so that energy could be used to electrically power the most populated county in North Dakota for decades.

A WOW place

Fracked wells drilled in 2014 will have produced the majority of their oil by 2017. Since oil has been at such a low price for most of this period, those wells will not make back the initial $10 million dollars/well investment and therefore generate no overall profit.

Had private investment in 2014 been encouraged to divert a relatively small amount (300 wells worth) of funds to solar or even wind energy they could have electrically powered Fargo/Cass County for decades and have a steady income the whole time eventually doubling the initial investment no matter what the price of oil is. It would take years to build 1,500 MW of renewable energy providing steady jobs, the whole time and attracting long-term people to those western North Dakota communities. Had we diverted all the private investment in 2014 alone to solar and wind energy, western North Dakota would be a WOW place for decades.

Wells pump out

We not only know the cost of drilling a well from the Department of Mineral Resources but they also provided information that on average for fracked wells the oil production drops by half in the first six months and by the first three years the majority of oil produced from the well has already

happened. Given this short three-year time span in order for fracked wells to go beyond their return on investment and actually make a profit you need really high oil prices for three years in a row between $80-$120/barrel from the time oil production on the well started.This actually did happen between January 2011-January 2014, but never happened before and obviously since.

Cleaner, smarter

Oh yes, with solar and wind energy you get no radioactive waste, no toxic waste water - up to 10 million gallons/well which has to be permanently removed from the water cycle (you really hope it is) - no spills of oil and/or toxic leaks in pipelines, no train explosions, no tens of thousands of deep holes in the ground, no methane flaring, and no final product that kills 53,000 Americans a year by vehicle exhaust emissions which target kids, damage environment, and create roller coaster economies. Did I miss anything?

Fracking/oil production in North Dakota is economically insane. Private investment in it should be diverted to renewable energy production that lasts for decades and provides long term jobs where you are not gambling on the price of oil for three year periods every time you drill a well. We will not get back the financial investment in oil drilling since 2014 and foreseeable future.

(All numbers used were sourced from the state Department of Mineral Resources, scientific studies, a comprehensive energy study of Fargo/Cass County, 2015 Xcel Annual Report, and solar production results from Fargo for last three years.)

Bagu, Ph.D., lives in Fargo.