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Oil Boom Creates Millionaires and Animosity in North Dakota

STANLEY, N.D. - From the cab of his combine 10 feet off the ground, Doug Kinnoin sees acres of barley scrawnier than last year's bumper crop but good enough to fetch top dollar as malt for beer instead of cattle feed. What he can't see, as the amber stalks give way to the combine's rollers, is the black gold 2 miles below.

"There's oil all around," says Kinnoin, 37, who says an oil company staked a claim here in March. His father owns shares in 10 new wells. So does that make Kinnoin and his family millionaires?

"I guess so," says the laconic bachelor, who plans to stay in his double-wide mobile home with the deer trophy head and gun safe in the living room. "It's not something we talk about."

The gently rolling hills here speak for Kinnoin and other new or soon-to-be millionaires who live at the edge of the nation's breadbasket. Cold War missile silos have been joined by drilling rigs, oil wells, natural gas flares and pipeline trenches. Geologists first discovered oil here in 1951, but it took the recent spike in gas prices and new technology to make drilling economical.

Now, after decades of watching their children flee the prairie for brighter futures elsewhere, North Dakotans in the state's sparsely settled west find themselves sitting atop the largest contiguous oil deposit in the lower 48 states. There are an estimated 4.3 billion barrels of recoverable oil in a deposit under parts of the Dakotas, Montana and Canada - about half what the USA uses in a year.

"It's bigger than Texas," says Herb Geving, 75, of Parshall, a former landfill owner who has two oil wells on his land.

"It's unexpected, a blessing," says Larry Lystad, 57, of Stanley. He is among the descendants of Scandinavian and German homesteaders now looking to reap as much as $1 million a year per well from oil leases and royalties.

"These people have been farming rocks for generations," he says. "It's like winning the lottery."

Or the booby prize.

Some who own only the surface of their land because forbearers sold off the mineral rights beneath complain about traffic and trucks chewing up their roads. Restaurants, motels and hospitals helplessly watch employees leave for higher-paying oil jobs. A nursing home recently offered $1,000 signing bonuses for housekeepers.

Schools started the fall short of teachers priced out by a housing shortage that has seen rents double as oil companies snap up whole apartment buildings for their workers, says Tom Rolfstad, economic development director in Williston.

"It's the good, the bad and the ugly," Mountrail County Extension agent James Hennessey says. "The good is the guy with seven wells who's a millionaire in 24 hours. The bad are those who own the land but not the minerals underneath, and whose roads are tore up and they're not getting anything. And the ugly is the disparity, which creates a lot of animosity."

Many hope the new millionaires - Bruce Gjovig of the University of North Dakota's Center for Innovation calculates two are made each day - will follow the lead of another hometown boy made good. Ray Rude, inventor of the Olympic diving board, donated millions to this town of 1,300, including an aquatic center.

At Joyce's Cafe, the regular breakfast crowd compares notes: Who hit oil and who is still waiting. Who inked an oil lease and who got their signing bonus. Who is collecting royalties and who is spending their windfall.

At Stanley Equipment, owner Roger Gjellstad had a customer plunk down $90,000 for a heated tractor, the rancher's first after 50 years of freezing each winter as he fed his cattle.

In New Town, Kenton Onstad knows several locals who have retired their mortgages in one payment. Some have started college funds. One family visited Norway.

Full Story: http://www.usatoday.com/money/industries/energy/2008-09-09-dakota-drilling_N.htm

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