 Okay, I think we're going to get started here, so if everybody wants to put their phones on mute, like I am, otherwise you can donate money to the local 4-H if it goes off, I suppose. How much? 20, how about that? So that's why you all got your warning right now. But for those of you that don't know me, my name is Callie Thorne. I'm originally Callie Wold from this area. I'm the McKinsey County Extension Agent, and we know that there's a little bit of action going on here with the oil boom and stuff, so Marcia and I want to put this program together. Marcia's in the back. Many of you know her. Marcia Helen Soss, the FCS agent up at the courthouse. So I'm going to begin, I'm going to be very quick because some of you have seen this presentation before. This is about the fourth time I've done this, and you guys are going to use the clickers for this. I'm going to guess that not everybody's is going to work, but we tested some of them earlier and it did. But I'm going to go through and just ask you guys a few questions on this, and then we're going to read through a quick little story, and then we've got a few other speakers here today. So if you ever need a break though, coffee will be coming out shortly. Cookies, bathrooms are in the hallway there, so get up to move if you need to. So I'm not going to talk a whole lot on this, but it'll kind of get your mind going on some of the positives and negatives that we've been seeing because of the oil boom out here. And a lot of other times we've talked a little bit what is Extension's role and what can we do, but we're not going to take quite as much time here, but we'll kind of see where the discussion leads today. Okay, so if you look, this is your first question for those of you that have the little clickers. I think I know how to work this, so if your answer is yes, hit a 1, and it might blink green for you. See, the fun thing for me is up there if you see the number of responses is going up. So so far, 24, you have answered, and you can hit it more than once. It's going to take your last answer. If you don't know what you're doing, you can hit 2, hit no. But I'm trying to think, I have no idea how many we've got here. And again, just hit it a few times, and it's just reading it up here. You don't even have to point it up here or anything, but we're up to 38 now, 39. So I just want to get kind of an idea how many we've got here. 40, 41, 50 clickers out there, so we'll call that good. Okay, so 93% of you know how to work the clickers. That's good. But the fun thing about this is we can keep it kind of anonymous, so when I get to some trickier questions that are coming up, you can actually answer them without the group knowing how you're answering. And a lot of this pertains more to those farmers, ranchers, landowners, those who are heavily involved with the oil boom that way. So if a question doesn't pertain to you, you don't have to answer it, okay? Okay, so here's your first question. The oil boom has hit number one. If it's completely changed your way of life, a high impact, daily life has been changed. Two, somewhat of an impact, maybe your job or something similar. Three, very little impact, or four, what oil boom? See there, we've already got 42 clicked in. And we won't take a lot of time to discuss that, but that's kind of what I figured. They actually held a similar meeting yesterday in Crosby where they had a little over 100 people attend, and then we're doing it in Watt for today, and tomorrow they're going to speak again briefly down in Bowman. And so we know, you know, it varies quite a bit. Crosby, Bowman versus what's going on right here in Watford. So I knew we have a one and two here. I'm glad we have oil in our county. Yes, or no? And again, you can click it more than once just to make sure your answer got in. It's only going to take it one time. But it seems like we've typically got about 42-ish answers. Okay, so it's about three quarters of you are glad, and a quarter of you wish it was not here. Okay, I'm going to skip that. Oil or other, whether it's gas or because you've got land or whatever the case may be, has made a positive impact financially in our life. Yes, now wait till you read them all. Yes, we receive some sort of income and love it. Yes, we receive money, but it's not worth it. In other words, you'd give back all that money if you could. Or three, the impact has done nothing for us. We're just still living here in Watford and not benefiting in any way. We don't have oil pads on our land or nothing. There's no sort of oil check coming to us, or gas, or whatever it might be. Although 30% is still kind of high, and it's been interesting. We've seen different results because like I've said, I've done this with a beef. Mainly beef producers too. There was about 15, 20 of them. I've done it with some, I want to say it was Farm Bureau. And I also went out to Squagap and did it with about 15 people. It's fun to compare the results. Even within our county, you know, Squagap versus Watford City and the impact they've seen. Is it usually more, yes. What was my question? Oh, received money. Not necessarily, no. Maybe with my beef producers, you know, most of them had some sort of money they were receiving and stuff. But like Squagap was a lot less there even. The oil boom has how affected your farming and ranching operation? If it doesn't affect your farming and ranching operation, you don't have to answer. But has it positively, negatively, or has there been some of both regarding your farming and ranching operation? Or I guess you can put that it has not affected you? Although I think if you have a farmer ranch in McKinsey County, it's somehow affected you. Okay, so a little bit of both, but more, a lot more negative than the positive. We will continue to farm and or ranch even within the midst of the oil boom. So those of you that are farming and ranching, or if you know your kids or your family well enough, you know, go ahead and click in. Yes, we aren't going anywhere for a long time. Or number two, yes, but once we retire, there's no one to take over. Or three, we've been looking at selling. We're looking at getting out of it. And it may or may not have to do with the oil boom. So it's always good to see, kind of. Just over half aren't going anywhere for a long time. And that's, you know, that's kind of a change we don't see just here, right? Agriculture in general. It's getting harder and harder for young people to come and take over. Or what do they say that the average person is now three generations removed from the farm. So that's just a huge change we're seeing all across the U.S. We plan to live here as in McKinsey County or wherever you live for the rest of your lives. Oil boom or otherwise. Are you guys going to stick around and you think, yes, Western North Dakota for life? Hit one. Two, we're planning to get out of this chaos. Or three, you're just not sure what you want to do now. That'd be a big change for you to up and leave, whether you've been here for generations or Watford's changed a lot, so you're just not sure what you want to do. Okay, those are some interesting numbers even. You know, not even half of you are definite yeses. About 21% that say you're ready to leave here. Just about 40% are kind of questioning what they're going to end up doing. I think the oil boom is here to stay. Or do you think it could up and go in a few months or even a few years? Okay, I'm always kind of surprised at those numbers, but I think maybe what Jean has to share. Some of you, some of the things I think a lot of you maybe haven't heard. Some of the things we're going to talk about today are some of the numbers and things like that, so a lot of times I, you know, being younger and growing up here my entire life are still kind of different and difficult to hear or hard to believe even the numbers we hear and the numbers we see of what's projected, but Jean will cover some of that a little bit later. I'm very open to all of the changes that have been taking place. And be honest, have you been very open to all the traffic, the new people, the changes taking place? Okay, that's good, I think. Sometimes I think the nose are usually a lot higher that they're not open to the changes, but I think it's almost been here long enough now that I think if we think about it, we know there's nothing we can do about it, so we can either change our own attitudes or leave, I guess. If I could go back to the way things were pre-oil boom, I would, one, yes, two, no, and think about what that means. That means no traffic, no long lines at the post office, no waiting at the grocery stores, but that also means no money, no money for a lot of people, you know. So there's definitely positives and negatives, so if you had to choose, if you could go back to the way things were, would you, you'd give it all back. Okay, so about 40 and 60%, 60% said no, you wouldn't go back, even with all the changes it's brought. But you look at it the other way, that's pretty impressive too, that 43% of you would go back, you'd give it all back to have it back the way it was. And this was just a picture I'd always show at the end, I found this online. This was from the year I graduated from Watford in 2005, and the caption below it was, a busy night in Watford City, this is Main Street. And you can see outlaws, the new restaurant was just getting built and stuff, and there's five cars on the right-hand side and maybe a couple over there, and then there's the old come-and-go looking south and stuff, and that was the caption, somebody was visiting here, and they were kind of making fun of, this is a busy night in Watford City, and then those are just some current, and there's even more current ones than that, so. And I just wanted to read this really quick so you know we'll move on to the next one, just so we know this isn't just a complaining session or anything, but I think this was kind of a fun little story. Some of you have heard it before, I know some of you carry it with you now daily, or it just makes you think a little bit more, so I'll read it to you guys quickly, and if you didn't get one you can pick them up on the back table, but it's called What's It Like in Your Town? Once there was an old and very wise man, every day he would sit outside a gas station in his rocking chair and wait to greet motorists as they passed through his small town. On this day his granddaughter knelt down in front of his chair and slowly passed the time with him. As they sat and watched the people come and go, a tall man who surely had to be a tourist since they knew everyone in the town began looking around as if he were checking out the area for a place to live. The stranger walked up and asked, so what kind of town is it that we're in? The older gentlemen slowly turned to the man and replied, well what kind of town are you from? The tourist said, in the town I'm from everyone is very critical of each other. The neighbors all gossip about everyone and it's a real negative place to live. I'm sure glad to be leaving. It's not a very cheerful place. The man in the chair looked at the stranger and said, you know that's exactly how this town is. An hour or so later a family that was also passing through stopped for gas. The car slowly turned in and rolled to a stop in front of where the older gentleman and his granddaughter were sitting. The mother jumped out with two small children and asked where the restrooms were. The man in the chair pointed to a small bent up sign that was barely hanging by one nail on the side of the door. The father stepped out of the car and asked the man, is this a good place to live? The man in the chair replied, what about the town you're from? How is it? The father looked at him and said, well in the town I'm from everyone is very close and always willing to lend their neighbor a helping hand. There's always a hello and thank you everywhere I go. I really hate to leave. I feel almost like we're leaving family. The older gentlemen turned to his father or turned to the father and gave him a warm smile. You know that's a lot like this town. Then the family returned to the car and drove away. After the family was in the distance the granddaughter looked at her grandfather and asked grandpa how come when the first man came into our town you told him it was a terrible place to live. And when the family came into town you told him it was a wonderful place to live. The granddaughter lovingly looked down at his granddaughter's one dream blue eyes and he said no matter where you move you take your own attitude with you and that's what makes it terrible or wonderful. So I think that's a pretty fun little story and you might think of Watford quite a bit when you read this story and so feel free to keep this or share it with others and just kind of keep it in mind as we go through discussing our meeting today and stuff. So with that do you guys have any quick questions for me or we'll move on to the next speaker. Next up we're going to have then Dale Enerson is going to be up next. He's originally from Stanley area he's now in Jamestown and he's with Farmers Union but he's going to talk a little bit today and he's a mineral and landowner and so he's going to try to connect with a lot of you guys and just kind of give us an update there and a feel for what he's been seeing and things. So let's welcome Dale today. Testing. Very much as was introduced here I'm from the Stanley area originally I worked for the North Coast State Farmers Union office in Jake Stoutman there about 10 years and my son part of her operation we're actually about 10 miles north of Ross and part of my job at North Coast Farmers Union is working with co-ops around the state and we have about 130 co-ops I help with financial audit reports and board training and board planning and so forth here so that's been a big part of my job but interestingly being a native of this area folks from the rest of the state now all of a sudden the questions are well what's it really like on West is it really is bad as people say roads as bad as you say I love this. So at North Coast Farmers Union and if any of you get our little magazine we've been featuring some kind of oil field education for folks we've been involving Dave Sikowski who's one of our speakers this afternoon and some questions and answers so I hope you get a chance if you haven't looked at that some of the issues that are happening out here in Western Dakota as we'll show you just a minute here the other thing of course most of you know the North Coast Farmers Union just had a tour bus for calling kids to camp and folks to various kinds of co-op meetings we have brought seven groups of people out here in the last couple of months people from the rest of the state want to come out and see what does the oil boom look like and all of those trips have been full waiting lists and we got about another seven or eight trips this spring so the rest of the state is interested in what's going on out here and I think it's important because you folks including my region Western Third we're the legislature right now telling folks that yes we need to share the wealth and do some of our infrastructure needs as well as the needs of the rest of the state and I think the more people we can get out here the better they're going to understand what we're doing we'll take just a few minutes and kind of set the stage for our two other speakers this afternoon you guys go to a high-priced concert you don't see the main act right away you have to kind of put it up on a fan and so forth so I'm fulfilling that role here today so anyway we'll just take a few minutes and share with you some of the things that I see that's happening with our Farmer's Union or General Farm and Ranch families in North Dakota so if we could get this to work here I guess nothing new with seeing an oil rig we have about 200 or just about 200 rigs operating in North Dakota and every month we're producing a couple hundred oil wells and if you think about it behind that oil well there's lots of folks like you probably that are going to get a little piece of royalty out of that so it has a huge impact but before we all feel really smug about that you know one of the things that I always used to do in my former life here before Farmer's Union and when I was farming and I taught adult farm management to a lot of folks for a number of years it was always important to kind of think back if we have a big success on our farm was it something that we really did well because we managed it or was it done luck and in a lot of cases we all think that the oil is a big deal but really when we think about it it maybe gets down to where your grandfather home said it what part of the state he stayed in where he came from how was he able to keep those mineral anchors how has your family in three and four generations what are the variables of mineral anchors to get you to the position today that you maybe have some mineral anchors that are worth some money so we have to kind of think about this all along and of course in the oil country just like in the rest of life we have a lot of haves and have nots people who have family mineral interests now are booming but a few years ago these were practically worthless so all of a sudden the values has really changed of course you've all seen various haves of the oil industry in North Dakota and I just wanted to show you there's actually a bigger area than this but the really hot area in terms of drilling and leasing and pipeline construction and all of this is kind of your area McKinsey County, Montreal County Williams County we had a meeting like this yesterday I've been Crosby, a lot of interest up there and we're also seeing that this really looks like a lot of stuff but as Dave Sikowski, our speaker later this afternoon his family owns acres out of the darkest area that part of the state probably will benefit eventually but under the current economic situation and under the current drilling boom it seems like we're really concentrating in this what the geologists would call the Bakken mature area and what that means is as the ancient ocean cemented as we've had the heat and pressure over millions of years creating oil this is the most mature or the hottest area geology and that's what made what the geologists would call the mature area of course I also like to say that people from Montreal and McKinsey County are more mature than other folks when I talk to the rest of the state they don't always believe me here you guys are maybe all aware of this but at least people in the fringe area I think one of the things that you should spend a little bit of time just in your own self interest is go to the website of the North Dakota Industrial Commission Department of Mineral Resources and this is really your key as to what's going on in your county where the drilling is going on where the permits are issued which way the horizontal links go on the wells that we see drilled whose land is affected here so this is a resource and again if you don't have this website written down that's fine if you just search for the North Dakota Department of Minerals you'll find this one of the most useful things there at Marsh is it has the maps if you could see where all of the production is happening and the drilling is happening it also has the daily reports of the due permits that are issued for McKinsey County or whatever it's all on this page so most people need to spend a little bit of time there we have about 190 drilling rigs I think in the last couple of weeks and again you all aware that there's a lot of it in this particular area one of the issues that we wanted to bring to your attention today and you maybe all thought of it here you are veterans of the oil business but this is a picture from that North Dakota Industrial Commission and this is a part of the old Tioga oil field we started developing oil resources 50-60 years ago in Tioga but of course under the old technology each of these represents a square mile look how many scattered oil wells that we had we had in some cases 8 or 12 wells in a section well today we're going to have 8 or 12 wells or more in a section in a two section spacing but we're not going to space it out because you think about this back then we had to have a road out to each one of these tanks at each of these wells and so forth and in the next picture we'll show you how we have changed from that and we've become a lot more efficient but one of the things that's affecting you then is when you lease your minerals it used to be that your lease probably spent a lot of time talking about the surface damages reclamation where they can put the tanks and the pipelines and stuff on the drilling site that was important when we were developing an oil field like this now if we switch to what the map looks like today of course it varies in different parts but this is an area I guess north of Newtown I just picked this because there's a huge concentration now instead of those scattered dots all around we have in this particular case we've got one site here we've got one pad but we've got six different wells and think how much more efficient that is we have just one set of tanks or one set of connections there and that has really changed how it works for the oil companies but more importantly for you as individual mineral owners if you just have a small tract of land chances are if your minerals are being developed you likely won't have a well on your particular land now obviously if you have a lot of surface acres that's still a big issue but one of the things that we're seeing a lot of is that there's a lot of difference between the mineral leases that we used to do because we were so concerned about the surface now we have a separate surface owner agreement that the oil company or the mineral developer is going to kind of negotiate with the individual farmer so just to give you sort of a perspective different oil companies have experimented with all different kinds of formations there's a lot of these wells in this area that are gas wells and this has been sort of there designed now to come out with these kind of a pattern over in this area southwest of Stanley south of Ross this is all the whiting oil field and instead of those kinds of things they come up with less of their multiple pads but they basically figured out how to put all of their wells along the road to reach individual well because we've got the wells drilled pretty much along our main roads here so it's changed how we as farmers and ranchers deal with some of the surface issues because of how we're doing the drilling now just briefly and I know back in room you probably can't see this but if you go to this industrial commission report every business day it will list all of the wells that are being permitted and you don't have to be an oil man to figure it all out I guess but first of all when we number our wells in North Dakota these are consecutive from the first well the Clarence Iverson well in North Dakota so this was here current as of a couple of weeks ago we've drilled roughly 25,000 wells in North Dakota and everyone is numbered consecutively now we actually have about 8 to 9,000 wells that are producing in North Dakota there are quite a few that were drilled were dry holes or they drilled and produced and they've since been abandoned but that's how many wells we've drilled since 1951 I guess so again most of you are familiar with this but if you look at the daily permits it's going to tell you that this one here for instance was the Oasis Company Oasis Petroleum the well is named the Jenny Mon probably a surface owner or a family member where the well site was being drilled sometimes the Oasis Company names it themselves sometimes they get the surface owner a chance what name would you suggest especially as we get multiple wells it's going to give you the legal description southwest corner of section 11 we actually very precise it's 540 feet from the south line of that tract of lead and it's 925 feet from the west line of that so it gives us a pretty exact spot where that well is going to be it's a development well so it's already in a developed field the Willow Creek field it's going to be 21,000 feet from the ground down two miles out two miles the total depth is going to be 21,000 feet and it's going to be at an elevation of 2,100 feet and then it has a federal American control units to do that number as well so again not that you are going to be concerned about every well that's drilled but at least those that are drilled in your neighborhood this is a wealth of information and when you go to the bar and the coffee shop you can appear very knowledgeable here that you know what's going on with the wells that are being drilled what are the other things that a lot of folks from the rest of the state don't understand is the well produces 1,000 barrels a day wow, they multiply that times the price you guys are going to be billionaires out here well in my cases I suppose that the owners are but all of these wells at least the way we are doing it with today's technology have a huge decline curve and what starts out as a 900 barrel a day well again all kinds of differences here but in about five years time is probably less than 100 barrels a day and then it tapers off and over the next 20, 30, 40 years that's what we have to sort of base our income on not necessarily the first year so as I mentioned my organization, our good partners union we've had a lot of interest so we bring our boss out usually we've had folks from the eastern part of the state and since you can't find multiple homes for a whole bus full of people we try and bring them out and usually we take them we'll start a lot of cases in the new town area look at some wells some fracking sites some various kinds of things there saltwater wells work our way up to Ross a lot of you know the elevator Ross has a big site and they're unloading unit trains of frack sand the rest of the state folks don't understand all of that all works we usually work our way over to Tyoga we feed these folks a noon meal at the man camp which is a big deal for them you know there's all kinds of different ones we usually go to the capital lodge 2600 people at the capital lodge man camp and they do a nice job explaining it all but they brag they are in North Dakota's 14th largest city anybody think about that one man camp we usually work our way over to Tyoga back to Tyoga show the gas flat rail loading facilities we usually take them across country up into North Ross by area take them out to the oil well it's a big deal for most of the rest of the state to get their picture taken by an oil well so we try to do that this was the early morning counting group that they brought in so anyway we are in the midst of an area of a lot of interest for the rest of the state of course we get them a little bit of a warning fastened safety belts have removed dentures it's not that bad safety touching wires causes instant death $200.5 so what do they see just briefly then in Marston this was a big deal a few years ago rather than one well we put two out of that we raise in your country as well six wells or even more are going to be the common way that we do that and that has implications of how many people are going to participate with a service order agreement different from what they used to do we try and show folks the fracturing and again most people have no idea the amount of water and sand that it takes to frack these wells in a lot of cases they don't understand the fact that the rural electric isn't immediately going to bring power and the fact that we have to have generators and engines and so forth running these wells sometimes a year or more the other interest of course that's a big deal for all of us I think is how much of our mineral incoming to form of the gas is being flared the industrial commission says roughly about 30% of the natural gas produced in North Dakota is now being flared we're making all kinds of efforts to use up that gas but the problem we have is the price of gas is literally pretty cheap and there isn't a lot of incentive for these oil companies to hurry up and build pipelines out to this so we're still seeing a lot of the flaring that goes on I see there is some legislation that's been proposed this year of tightening up that generally the oil company has a year to flare it off they have to go back to the industrial commission and in most cases they'll get another six months or another year so we've been pretty lax with that and again a huge amount of resources we could say probably going up in flames you've probably all seen this on the internet but if you look at weather satellites there's different pictures but you can basically see in North Dakota the lights of Bismarck light up but this whole orange goal in western North Dakota is a variation of the natural gas plus all of the lights of the oil field so flaring is a big deal the other issue that I know you folks are dealing with all the time and we are at Montreal County as well is all of these smaller pipelines exiting out of the wells obviously when we first drill a well we have to truck away the oil the salt water the gas gets flared we have to try and deal with all of that eventually then we're probably going to end up with some of these gathering pipelines and we have a lot of farmers and ranchers that are dealing with these pipeline easements part of the discussion today I think Dan will mention some of the concerns about that lots of issues as far as farmers and ranchers go as to where they put the pipelines maybe down here you don't have any rocks but if in Northern Montreal County one of the things that we really have to specify in our pipeline easements is we want them to clean up the rocks afterwards because you know we've picked rocks for a lot of years there pick up a pipeline and you've got a whole bunch more rocks so you're going to deal with that closet your pipeline easement and of course one of the things that you hear about is there are a lot of issues with some of these big pipelines like alliance and some of those huge long distance pipelines but the state industrial commission the state public service commission now is starting to exert some influence on some of these smaller pipelines as well and we're talking about three inch lines four inch lines plastic lines metal lines all kinds of configurations for the pipelines that will be going across your farm a lot of cases of these gathering lines are again all over the board but the most common one in Montreal County is a pipeline company will negotiate with you maybe a 55 foot 50 foot easement and up to four trenches or four pipelines within that 50 feet pretty common and even in the wintertime now obviously there's pipeline installation one of the things that I think you have to talk about as a barber is are they going to come back a year from now and repack them because typically those pipelines have been settling and again dropping a tractor wheel in there or cattle stepping in there there could be some real issues again get those of your clauses of your pipeline easements another one is sooner or later they're going to have to bring the pipeline up have some valves and control structures and so forth it's all right to negotiate these right inside the fence of the pasture but out in the middle of a quarter section of good cropland you don't necessarily block that and typically those are somewhat negotiable as to where those above ground structures will be the other issue that I think is sort of important and I think you've seen it here just like everywhere else are co-ops it's not like it used to be you go into the co-op today you probably don't know a soul and they're doing a huge business you go to the radial meeting they've made a lot of money but it's all from not saying that the co-ops aren't doing very well they all are but it's certainly different than what we used to we think about this one of the questions that was asked about was do we want to go back to what it used to be different feelings on that but this is the co-op it's so busy just like yours is I guess but you can't hardly do business in there they've named themselves the mock and central there but when we think about it and if we compare that to a few years ago a few years ago people couldn't find jobs and things were kind of lean in farming and ranching now there's a sign in the window you can't see it here but it says hiring all shifts all times of the day even including weekends so you could literally go find a job and they welcome you with open arms any time of the day most of our local businesses are overrun with trucks we have some housing issues that's a whole separate subject interestingly people have told me now I haven't had this experience yet but when you negotiate a surface owner agreement that you agree to give them six acres, four acres for a well site one of the clauses that you probably should include in there is that nobody can live on your site because technically the oil company if they want to prevent some of their folks the part of their cathars out there if you don't necessarily have that exclusion in there well what are you going to do so you might want to think about that or maybe you want to be in the housing business but you'd want to do it on your own land rather than on the oil company's acres I think by the way so part of what Dave's going to talk about this afternoon mineral leases you're probably in the area here where a lot of the leases are done the leases are being worked by conduction but of the fringes of our territory that's still a big deal the leases are being along to expire, you're going to release them and that would be the thing I can talk about along the leases what the bonus is what the royalty percentage is the other thing then as we continually change from single pads to multi pads the surface owner agreements where you want the surface you may or may not want the minerals underneath it those are a negotiable process and again it varies by oil companies, it varies by areas that you're in but typically those are going to say we're going to pay you a certain amount initially an annual payment as long as there's an oil well there or some companies have chosen that we're going to pay you a higher amount to begin with and that's all you'll ever get and then there's some renegotiable after a few years so again those are negotiations that you want to think about and then of course the other part of it is this pipeline easements and all kinds of things that you want to think about before you give easements for a pipeline so I guess my closing words would be we've got a lot of things to deal with I sense that there's a lot of what we might call landowner and surface owner fatigue we're tired of dealing with leases we're tired of easements we're tired of all of this kind of stuff we're going to get the decisions that we're making today first of all the bonus and all of that stuff at the initial production of the well is probably important to you but we've got to think about for the next 20, 30, 40 years is the loyalty percentage and all of that kind of stuff your kids and grandkids are going to have to live with that so let's do it right let's be educated that's part of why we're here today so for that questions you know they said well they're not paying any tax on it either but is there a way you can get for the mineral owner to get paid for some of that gas at least as far as that's the best incentive for them to finally help it out well as they will talk about here that's going to be a negotiable thing as you a lot of us are beyond that but if you're negotiating a new mineral lease at this point you really need to put some provisions in there after six months after first year the mineral owner is going to get a percentage of that there's going to be penalties those are all negotiable just as a matter of a little bit of bragging one of the projects that we've worked about the Tertsville Farmer's Union myself and Mark Watney was this whole nitrogen fertilizer plant that's going to be built east of Jamestown that's going to take 73 million cubic feet of natural gas a day and obviously some of that's being flared but in about three years time after the construction period we'll be making nitrogen fertilizer so we need more of those kinds of businesses whether it's power plants or fertilizer plants or industrial kinds of uses because we're going to be producing an increasing amount of natural gas for years and years and years when will that plant be up? the CHS plant that was announced going to start construction this summer takes about three years to build it 16 before it produces the first ton of nitrogen it's about 10 miles east of Jamestown if any of you are familiar with the little town of Spiritwood there's a big mulching plant out there it's adjacent to that there's a big gas line there there is one gas line and they're negotiating to bring in a second one from the north because they want an uninterruptible supply of of cats they'll be all three medicines produce anhydrosemonia and liquid it anyway let's get to the rest of the program and then maybe we can answer some questions thank you hey thank you Dale next up we're going to have Jean Vader economic development director for Mackenzie County whom many of you know very well I think the neat thing is a lot of you probably don't get to hear Jean talk very often you know we'll get to hear him at chamber things or different places like that but we wanted him to come today to give a little bit of an update just on what he sees happening here at Mackenzie County so he'll kind of do some of that he'll go over there's also been some results shown on far as production numbers population different things like that that I think are pretty interesting and then he might also go into some of the advanced technology that we might be seeing too after a while so I'll bring up your presentation but let's thank Jean for taking time to be here today you're going to enjoy that but half my presentation was just done so I'm the economic development director you know I've been here for 18 years grew up here I'm going to talk pretty much about Mackenzie County though because is this jumping by itself it doesn't matter I was going to show you that first photograph you saw there it reminds me that we're not 100 years old yet so he's not 100 years old yet so as we're dealing with all of this stuff and we're getting frantic about we need to recognize that most of this change has come in the last 5 years and we're on the county level trying to figure out how we're going to deal with the next 30 or 40 or 50 years so we're already kind of jumping ahead of what you're seeing today those people there that's kind of what's left of what I can see but those are the people that made the early decisions to make us what we are so keep that in mind as we move forward on this thing at the bottom we jumped a long ways now it's alright, go back now there we go slow as we look today I'm going to jump some of these slides here one thing that's coming up and I'm going to jump quite ahead because he saw some of this thing what we're dealing with today is trying to figure out what's happening on a national level with this little thing it's getting costly to produce in the parking so what you don't need to recognize is that this technology that we're seeing is hyper technology hyper tracking technology it's starting to open up a lot of other plays out there the main ones that we're dealing with right now that some of the people are moving to are the Barnett and Ealford shale and those are the Texas shale plays they're a little less expensive to drill in right now mainly because of weather availability of labor in the market so you're seeing the Ealford shale and Barnett shale they're actually coming in and doing some hyper tracking in those areas the areas in Wisconsin some interest out there this is Marcellus shale that you're hearing out there this is where a lot of that fracking information that you're getting out there is coming out of this Marcellus shale that's pretty much a gas play out there so there's some relations with hyper fracking out there not so much in the local shale plays for me like if some of this stuff moves out of the area it's going to move to the Ealford, the Barnett those are the areas that it's moving to right now because it's less costly to produce this you'll also see this Monterey area huge huge volume of available shale play out here but there's a moratorium on fracking out here there's also a moratorium on fracking in almost this area as well so I expect as we're doing our planning it leaves us this Bakken area and it is still one of the most prolific shale plays in the country so you know that's something that we have to remember when we're doing our planning we already saw that you know 7800 wells were expected to be drilled in the next 15 years here this is another thing that we show quite a bit it's not a very good look at this right now but that old piece that you saw that old Bakken play remember it's four counties 85% of the production in the shale play comes on a McKinsey mine trail done in McKinsey that's what when we're in Bismarck we're trying to explain as they talk about North Dakota being an oil fight you got Dickinson down here you got mine up here and you got Bismarck here these people we continually are fighting for them for our share of our impact dollars and it's a daily challenge for us to understand that our agricultural community is trying to deal on a positive side of all this play but it's all happening here so the second largest play in the United States right now falls within these four counties within about 70 miles a profile of miles as what I could see this is the old play down in Bowman and this is the old play over in the Sydney area looks like the plays are moving now more probably over into Montana we're not seeing, this is just my speculation from talking to our mineral people it's not moving too much outside of this area everybody else they're worried about it up to this area impact them so much but it's so prolific it looks like it's staying in this area right now and I'm not sure it's a projections because of that you already saw this before you know how the fractional techniques work this is a presentation I do quite regularly you saw this here's something that is a little bit interesting though there's a small piece here you're going to have four or eight wells on each one there's the middle bucket that they're producing from and here's your three forks you're using from something that hasn't come up too much those of you up in that tobacco garden area if you've been familiar with that Charlotte well up there they're doing a little 1140 barrels out of that particular well that's the only one and that's another three forks well I'm not sure but it's likely that they'll continue to do three forks wells in that formation there this as you know in the last 18 months the three forks thing become kind of a big deal in fact down in my area they're all three forks wells it's likely that we could even see another layer of production based on what they're finding up there again this is that spacing thing I think the main thing that I wanted you to take away is we're doing our planning the main thing to remember that's a four section spacing that if you look over at the Montreal County they're kind of getting more drilled up kind of what you need to think about is this is probably where we're at right now that well and this well that's about what we've drilled here so if you're a planner here you know that we've got maybe maybe four maybe eight maybe even 12 more wells per per drilling unit that's 1288 years they'll do them on multi pads the good thing is if you live right here you're going to be in the middle of an industrial zone that's just how it's going to be so again if you look at the old blue butte spacings up there you know when you go up the blue butte you'll see a quarter section of land it's got 30 or 40 wells on that area those old units it looks to me the best way to look at that is when you get on top of hill around Wattford City you'll see a mile north they're starting to run that line you'll see a mile south they're starting to run that line but that's the future these wells here are the ones that we're planning for in our planning right now so I want to get some numbers on that you already see how that looks the thing that we talked about gas flaring and one thing that we're finding out is the they're building gas plants around here and they're making money off of gas they're flaring it and they're waiting a little bit but these gas plants right here if you see what they've built even in this area now we've got capacity in 2012 well beyond what gas production is so I'm hoping and I hope if the state continues to push it then we're going to get that gas into those if you look at McKinsey County right here there's four major gas plants within 10 miles of Wattford City that's what a lot of that activity was over the last five years is building those gas plants and building those gas plants 1 August you know I did a $250 million gas plant to do a $150 million expansion right now once that gas gets produced that wet gas gets produced it is worth money here's what they're looking at though for the future of the Bakken right here I'm going to spend a little time on here here's where we are right now 2010 2015 it looks now we're about $800,000 to $900,000 barrels it looks like we're going to be around that $900,000 barrels per day out here probably out until even out into 2055 but let's just take it to 2025 we know that we'll probably be there here's where our proven reserves are here's what we'll probably do we could be up to 13,000 the projections I looked at today it looks like oil is going to stay up it just looks like every time they find a new play out there they find some other reason not to develop it but this would be at say $100,000 or $90,000 oil this would be where we're at right today and to lead us to believe that we're not going to see some serious production over the next 30 years here's what it means to us you know you have 150 to 200 rates we're at and Mackenzie County has about 50 or 60 of those at any given time although it's 150 rates you have about 30,000 jobs another 10 to 15,000 building infrastructure one thing that has not been mentioned these 200 rigs they're dropping a little bit but as you can probably tell the rigs are getting much more efficient and where they're drawing wells in you know 20 to 30 days or even 3 years ago it was 60 days so less rigs are growing more wells I keep looking at that rig count and I can't believe that we even talk about it it means really nothing what really means the significance is the number of wells that are being drilled and those continue to be increased right now they're behind fracturing we still are expecting 35,000 to 40,000 new wells out in this area and I can guarantee you that they're not going to be anywhere other than Mackenzie Dunn Williams and Montreo here's what the profile this is Len Helms' profile it's a pretty easy thing to look at here's our years here's 2025 years we are right now 2010 we're about right here the dark maroon thing is the number of rigs that we're anticipating and the green is the number of wells that are anticipating being completed so we're looking at the drilling plans that they have out there right now go to 2025 with the permits that are out there right now you can expect that we'll increase we're at 2012 right now so you know we're probably at 60 rigs we'll probably run there it's going to drop a little bit down to about 50 just because there's other factors there that shouldn't run until about 2025 so I would say that we're the estimate we're kind of leveling out on our drilling right now but the wells that come on are going to be moving out there to about 2050 that's what those actually the wells are going to be producing out there based on that model that I showed you before here's what the bottom line on this and you know I'm a rancher so you're trying to figure out we're here to try to figure out how this impacts the farming and ranching community I guess a peripheral on that is the jobs come with that and jobs the people provide a huge impact to us and it's something we have to deal with but this is the real model we're working with right now based on what it takes to get this thing done again here's 2012 we're about right here right now you know this is for the state of North Dakota you know about 38,000 jobs it looks like till 2020 we're going to continue to build drilling these are the purple as the drilling jobs that kind of I don't know what color that is it's a different kind of blue that's the fracking jobs the lighter color is the gathering jobs that's your oil pipelines and then the green is the production jobs so I always use the example of two of my son was one works for marathon he's in production one works for halibut he's in exploration but the interesting thing about this is this exploration thing still stays pretty solid up there for the state it doesn't completely drop off to anything nothing and everything tells you that all of this is going to grow and maintain above where we are right now that's for the state of North Dakota when you go to Bismarck they read that to believe that that's for the whole state and you know that it's again for those four companies it might be moving a little more south to Dickinson but that's not been what they thought it was going to be it hasn't got up to bottom like they thought it was going to be this is just me talking to industry people it's done better over into Montana but it's still sticking around here this is what I deal with though again we're talking about 8 to 9,000 jobs in McKinsey County right here and that's in the exploration industry so that is the exploration is drilling all of the cement crews and all of the chemical groups the water hauling anything that takes to drill a well that's going to continue probably up to that 13,000 level clear up to 2025 and these are based on Lynn Helms' model based on what we've already got permitted out there what we know as a reserve you'll also see the production jobs and gathering jobs at about 2,000 I don't know let's call it 2,023,24 we should have our pipeline infrastructure and we'd be done fracturing these jobs and we'd be re-level out about 2025 somewhere around 10 years from now we're going to see a leveling but it's about where we are right now so what does that mean for us for permanent housing we're thinking that we're going to have about I think everybody you talk to but this is based on the latest model that I don't know I guess Ricky you were in the state well and the gas impacted counties got together with the state and NDSU and did a real intensive study on what was really happening with the industry and took it to the legislature so those decisions that are being made in the legislature right now are coming off this study that I just showed you they did it for every county but what you'll find out that study if I showed you the complete study is in ground zero of this thing Montreal County they've been doing that up there for 6 or 7 years so they're probably a little further along but this area looks like the growth is going to bring us up at least quadruple our size and maybe $20,000 is what they're looking at for 2036 they get asked it every day I have no idea it all depends on how many houses we get built houses get built based on these projections houses get built based on what's happening in the other parts of the country all of those things a little bit there's a little bit interesting too though is what kind of jobs are out there the drilling jobs, the gathering jobs, the fracking jobs those are those jobs that are in that kind of purple the deep purple thing if you look we're 2012 right now say 7400 drilling jobs 549 gathering jobs 1500 fracking jobs 1600 production jobs we jumped down here to 2025 we went from 1600 production jobs to almost 5900 production jobs so these jobs do take they take this bucket takes a little more a little more work than some of the old oil fields did in terms of what it takes to keep them running these numbers drop off as you get down here but the production numbers stay in that by 8,000 that's the job range I don't know I hope this is interesting it's fascinating to me because it all comes down to the boom and bust thing which is really the question of the day what happens with boom and bust I'm going to go in just briefly into some of the things that I see happening there's what happens with secondary employment the technology change what happens with oil collection waste water distribution pipelines what happens with natural gas what happens with oil price dynamics what happens with permanent residence and do we crowd out other economic sectors these are the big issues that we're dealing with one thing that I'm finding out I'm just going through this today that I thought was pretty interesting and it involves that things that probably have issues to you is your survey said probably what most of us see we don't mind this little thing but I think if you're like me you don't want it to wreck everything and so oil companies appear to be more interested in that than what you think if you get outside this area you go to Denver or you go to New York or you go to basically anywhere else in the United States they don't like this they don't like oil they do not like it at all and so that's where our population base is it could very well happen that we'll wind up at a time where you can't hydrofrack if that happens then that changes everything so you kind of got to decide at what level is it worth it well what I'm seeing the oil companies doing I just pulled out three or four different things in my mind if I were a if I were Randy Kuala I saw him sitting back there if I were investing right now I'd be investing in green technologies because it looks like that's what's happening you talk to these companies right now they're aware that they could lose their abilities to fracture what's the big issue with fracturing it's the perceived issue that there's chemicals going into the water it doesn't matter that that has not been proven that it's here or not it doesn't matter what the public thinks is what matters it looks to me like they're developing organic type materials that they're going to use for hydrofracking if they do that that changes everything so that's part of that technology change there I saw for example that Halliburton for example this has been using this is just really recent stuff so I don't know it by heart but if you're planning here Halliburton has got an enzyme that they're using now and it's all chemical it's all chemicals it's all organic and if they do something it's called clean stem and it's using fruits and vegetable and enzyme and that's what basically replaces all the chemicals in the fracking chemicals that go down there if they do that then that changes the whole scenario that's basically what we asked for because you don't want to see those chemicals in my mind the biggest challenge for chemicals right now is not in the fracturing piece it's putting them on trucks and driving them by my house and the truck tipping over and getting into my water or whatever or just the trucks on the highway in general Schlumberger they're experiencing a fracking material it's kind of a it's a fiber it's taking fiber and cultural fiber and combining with their frack fluids and that's an organic technique that they're using already too and Halliburton is using what they're trying to do to reduce their numbers of trucks is they're actually reducing they've got a if you think about time is money in the well field if it takes you eight days to frack a well you can cut that down to three that makes some money I see what they're doing now as they're rolling out a you know as you know how fracturing works they have a a series of balls that go down that line to hold off the pressure you have to drill through that and retrieve that ball and that's what it takes all the time they're using our organic material that they can they can it disintegrates after I think 12 hours or 8 hours they run the ball down there the hydrofrack and that disintegrates so they can I think they cut 30% off the time of fracturing a well and they're also doing sliding sleeves so instead of running explosive down there they're preperforating the well and then they slide the sleeves those are things that are happening today so I think that what you're going to find out is that the biggest driver on this industry is probably money and if these companies are seeing that this hydrofracking is a problem clear to the presidential level that they have to fix it cause public perception is what drives that also the development of water and pipelines you know those are things that just have to get built out to get trucks off the road I think most of the surveys that we have found have been the biggest fatigues that we're finding out are citizens the biggest fatigues factor is traffic so you know we can only build roads as fast as we can build them we just have to reduce traffic and it's truck traffic and the only way you can do that with those pipelines the pipelines are the things that companies need you to participate in they're the ones that impact you the most so there you have it you can't do without it but if a thousand citizens want a pipeline that's running across the front of your yard you're the one that has to deal with it so I think that's why our next presenter is going to talk about that how do you deal with it you might philosophically like it but if it's changing your way of life it's not such a great deal what we're trying to do around here is a shift towards permanent residents we don't know when they did that study there's a job there's a job of a house there's a job of somebody who comes here from Denver for two weeks and flies back for two weeks and when you build the communities you've got to know that where we all said we don't want to go through what we did before where people come take our resource and leave so that's where we're getting into the housing that we're building and trying to figure out a way to keep our people here and that's what we work with on a daily on a daily basis I probably won't get into that at length that's part of the presentation but crowding out of other economic sectors one challenge that Kelly and I when we talked about doing this and believe me I appreciate you recognizing the ag community in this it's one part of the community that might get left out is what happens when it gets easier to not farm or not ranch it's happening up in Montreal where there's just too much activity and people are leaving but what happens when it's easier to just leave the land idle or walk away because we all know what the economics of farming and ranching where people just forgot the other day is what happens when you've just farmed three quarters on the other side of high 85 and your farm is on the other side of 85 there's a point where you just say I'm not going to do that anymore and then who picks that up I don't know what's going to happen with that but I do believe that that's a traffic thing and some of the technologies are bringing these wells into eco-pads and getting them into quarters is going to help and one company that's dealing south of Arnegard a year ago told me their long-range plan though is to have no visible equipment on a well pad and what they'll do is what they're planning on doing is recycling all their water not having any tank batteries on their well pads and he asked me specifically this is a big company would there be a thirst for irrigation water in that area south of Arnegard well it's perfectly irrigable land I kind of chuckled about it but then I look at this note today and probably 80% of the companies right now are looking at recycling their water to a not potable but water that would be able to be irrigated on so I said well how are you going to do that I have a well on every quarter section he said your pivots will be able to go over top of the well heads so if you're in my position to look at 20 years down the line where's that in the leagues because I don't want to lose agriculture that would be very exciting the first thing that I wanted to do here when I came here is get these lands irrigated didn't spend long on the process so the shift towards permanent residents crawling out of the economic sectors you'll see it already if your small coffee shop or grocery store or whatever if their value of their property is far beyond you can make off that property run in the coffee shop then it becomes maybe some other business and you lose your coffee shop well if you believe in the free market you just got to let that happen but that's what's going on here's something that's kind of interesting I just threw this in at the end when you're looking at the Bridger Pipeline did a presentation this is the reality of one well well when you drill a well the soil is moved by trucks it has been historically and that's what we're trying to get to with pipelines that's kind of what we're talking about today how do you get into pipelines without impacting everybody we don't want trucks we want pipelines I've asked a hundred farmers and a hundred pipeline companies how they want to do it some don't like corridors I think the reality to me is to be returned I don't mind a pipeline but it better look like it did ten years ago but that's it it's all oil coming out of there 16% of its water which is a short term piece of that and that likely will get piped in and out of there too so anyway it's going to last a long time 5,000 producing wells today 2,100 wells per year each well produced 30 to 50 years and we go back to that original I don't know, I just wanted to think that kind of covers what I wanted to cover we all come down to when I'm dealing with the developers I want to come in here or the state of North Dakota and I'm not fighting with the state but we're trying to fix the road two sessions ago they said why would you want to do that, there's nobody up there then last session they said now we're building roads in the middle of the wilderness so we do know this stuff the stuff is out there we don't work in a vacuum when companies don't work in a vacuum your county and city officials don't work in a vacuum but it's been hard to get the state to keep up with this and what I want to leave you with is you need to apply pressure to it I think you need to apply pressure in the fact that it's not a state thing it's McKinsey Montreal, Dunn that's where the impact is it's right there I don't see any oil wells out here I see nothing out here but right in here I'm very optimistic about what I can do for us but I want to do it not at the expense of every other citizen here too how am I doing with Kelly? great can I keep my job? so I think most of you are here for the next part of the presentation about what you do as a landowner to deal with this what are they talking about we're getting the water are you going to borrow salt water? what do they do about this water thing it's already happening and I would say probably in two or three years you'll see 30-40% recycling water and it's not because they love you it's because it costs too much I found that out that they recycle it there's a thing I wanted to mention you still got to do some with the salt the fresh water is fine but you still got the salt that's still going to have to go to injection wells or something one of the things that happened in the state it's really we've seen an impact and your commissioners can tell you that is when they close open pats on pats that sounds like a good deal but now what they have to do is they have to find a place to take that waste and so what you're seeing in McKinsey County is open pit landfills it's a real issue nobody wants an open pit in the well well but they got to take that somewhere and they are they have technologies to do it but it does take 30-40 acres and it could be next to your house so there's a whole bunch of other issues there too but yeah they're recycling water are there any issues on trying to get rid of all the disposal on your land then from the well companies from the well companies that ain't the right thing they still have to do some of the salt and so we're not you're hearing some things about disposal wells not from the industrial commission that would be the environmental community probably to try to keep that from happening am I answering your question kind of sort of but you know like putting the investment up on Keltner's land just south Indian Hill I've got to go I'm just like 6 miles away we cannot force little ways to go ahead and take the dry cuttings up there it's cost too much well I don't want disposal on my land we agreed to put multiple pits in the same unit on one site so let's put tracer wire on we can find it again but there's no way I can force them in that's a good question for the gentleman back here but when he's talking about it's two different kinds of ways one is production water and one of it is solid waste so yeah production water that hasn't been too much of an issue for saltwater disposal but that's drilling solids they used to bury it on your land you don't want that either that's another challenge I can't believe we've got a way with covering that up I'm sure that that'll come back on us someday I don't know the legalities of how you do that but that would be a contract item you should save for the next week how'd you like how to dodge that that's included the pit liner way in there too didn't it the world has changed quite a bit it is greener so go to randy and invest in green technologies that's where it's at if you ask me can I ask something on that I got a real peeve all the one calls going in and I was going to try to get a drug bill I got a real peeve with 10 bucks all over our county if anyone had a county level we could put up ordinance or some kind of use would what he said is a real question is and I'll just use it from well I can't imagine it thousands of one calls a day every construction project every utility, every phone, every electrical and they have to flag them so what's happening with this question is what happens is they put the flag in and they're supposed to leave them for 14 days but then nobody's responsible for removing them they say they will but in Canada there are queues line of stuff that are illegal but we use would or something by degradable because we combine two or three of them and we try to avoid only the plague and we don't know where they went that's a good issue I don't have an answer for it but yeah I talked to some of that do it they're supposed to it's enforcement and they're not any good after those 16 days I worked with REC they do have some plastic ones available there is a landowner question but I would say that would be one of those things you can say as a landowner you can come across this land but exactly but the rental stuff is where we have big trouble but that's going to be the only way you're going to control that yeah other questions for me? I'll answer some at the end here the real guy is coming up here so I'll give this to Cal okay let's thank Jean again for spending time okay and I think we're actually going to take Dave it was going to be our last speaker but we're going to take a quick little 10 minute break or so so you guys help yourself with some coffee cookies, use the restroom and then we'll get started back up shortly with David Sikowski from NDSU REC that's good you have she's still clenching on you but you wouldn't go yeah you better stand you'd better stand you'd better stand you'd better stand you'd better stand you'd better stand you'd better stand oh god