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Business law is filled with a wide range of regulation and regulatory issues, and one of the main areas of business law for my research is energy law.  Regulation impacts energy businesses at many levels. Energy companies have to deal land use regulations, air and water quality regulations, work place regulations, and (often) securities regulations.  

On the land use and permitting side of things, oil and gas law has long been considered primarily a state issue, making such regulations relatively local (i.e., not federal).  In recent years, with the increased use of high-volume hydraulic fracturing, many local governments have decided to restrict the process in their localities, splitting from state regulatory regimes that would allow the process. Interesting cases related to fracking bans from New York, Colorado, and Pennsylvania provide good examples of this process. 

Texas Professor David B. Spence’s article about local hydraulic fracturing bans: The Political Economy of Local Vetoes, 93 Texas L. Rev. 351 (2015), discusses the debate about whether local governments should be ale to overrule the state law on oil and gas operations.  Here's the abstract:

As the controversy over fracking continues to sweep the nation, many local communities have enacted ordinances

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In September, Myles Udland  wrote an article citing Burton G. Malkiel and his book, A Random Walk Down Wall Street, noting, "The past history of stock prices cannot be used to predict the future in any meaningful way." This is a great point.

I also saw Udland's article from today, which notes oil prices (and stock prices) have gone bonkers. Both prices have fluctuated wildly, and oil has been mostly trending mostly downward. As I have said before, I don't expect prices to stay low (sub-$70 per barrel) for long, but time will tell.  

Low oil and gas prices are certainly having an impact on markets and economies. The big one right now is Russia, which is struggling, in major part because of low oil prices.  The ruble has taken a beating, and the nation's central bank raised interest rates from 10.5 to 17 percent. Wow.  

The bulk of U.S. oil production appears safe well in the low- to mid-$40 per barrel price range, and I don't think it will stay below $55 for long.  Then again, as much as I follow all of this, I am still a law professor, and not a financial analyst, so…

Many financial industry analysts are bearish on the oil industry right now. I'm not sure they're right, as I note below, but I also think it's important to recognize that financial market impact of oil price fluctuations is not the only impact U.S. oil production has on markets generally.

One thing I want to make clear at the outset, though, is that I am not a financial analyst, or an economist (as I have previously noted). My comments here are reactions to things analysts are saying based on my experience researching U.S. shale oil markets and activity, as well as the U.S. transportation sector in recent years.  My thoughts are related to my expectations for how I think the companies and people in the industry are likely to react, and reflect my hope that financial market changes don't negatively impact other essential planning, in areas related to health, safety, and the environment, the industry desperately needs.

Back to the market predictions:  Goldman Sachs and some other analysts see the oil sector as over saturated and anticipate continued supply gluts to keep prices down.  According to a report from Goldman analysts, U.S. price indicator West Texas Intermediate (WTI) crude will fall…

Today started in Williston, ND, and we then went to Mountrail County.  We vistied Tioga and Stanley, then headed south through New Town and Killdeer on the way back to Dickinson, where we stay tonight before flying out tomorrow morning (ridiculously early, I might add). 

We started the day at Williston State College, where we learned about the TrainND program and other degree programs.  TrainND works with companies to do OSHA and other safety training, and trained more than 16,000 people last, the vast majority of whom were employed.  The College also offers degree programs for those seeking to be Lease Operators and PLC-trained operators. Interesting for academics, the college had 38% turnover last summer.  The college has invested in campus housing for faculty, which can be part of the incentive package to bring people.  Apartments run from $2600/mo for 1 and 2 BR options, with home rentals over $3K.  Seventy percent of new faculty hires are moving into the new campus housing apartments (which looked nice from the outside). Just like the industry, the college is "catching up" with the whole thing. 

We saw more densely packed well sites, such at this 9-pack (nine wells on one…

We covered a lot of ground today, driving up from Medora, ND, to Williston, ND, through Watford City.  The traffic was not terrible for us, though the truck traffic and the road construction was slow going for a while.  We're told we missed the worst of the traffic because our timing was good. It still felt like big city traffic in what is not a big city.  Traffic

Watford City has been a prime example of a place where the oil boom has caused significant growing pains. A recent article in The Atlantic asked, What If Your Small Town Suddenly Got Huge?, and explained: 

The Bakken oil boom has brought rapid growth to many towns and cities in western North Dakota, including Williston, north of the Missouri River, and Dickinson, alongside Interstate 94. But Watford City, where the population has jumped from just 1,400 people six years ago to more than 10,000 today, has experienced a particularly dramatic shift in character. 

There is dirt being moved everywhere: for roads, for housing, and, of course, for oil.  Driving this region you see very few homes, rolling hills, a few small buttes, and some abandoned farm homes. Oil wells blend in surprisingly well…

Following are some pictures from my adventures so far, as described in my prior posts on my Bakken Oil trip in western North Dakota, here and here. Thanks to co-blogger Haskell Murray for the suggestion.

 This is a picture of one of the mudrooms from a crew camp near Dickinson, ND, in Dunn County:

Mudroom

This is a VIP room in the same facility. It has a private bath, while other rooms are smaller and share a jack-and-jill style bathroom. 

VIP

This is the sign for the guest laundry — No Greasers. 

NoGrease

This is a picture of the crude oil site for loading oil on the tanker cars.  

OIlfield

A crude storage tank: 

CrudeStorage

Most of the oil coming out of North Dakota, 1 million barrels a day, is shipped by rail: 

Railcars

This is North Dakota crude. It comes from the ground a little more orange in color, but mellows to this over time.  It's not thick; it almost like iced tea. 

NDCrude

Flaring natural gas remains a problem, though some gathering is underway to help reduced the amount of flaring in the state. 

Flare

Finally, some pictures from Theodore Roosevelt National Park:

TRPark1

TR2

Ttpan

TRHorses

This experience has been rather remarkable, and I'm only two days in to the trip.  We covered a lot of miles today, and not all of it was related to the oil and gas business. I started the day with a run, at a misty 43 degrees, after a high of 85 yesterday.  This is not relevant, other than to saw I was a bit cold this morning.  

 Target Logistics Dunn County Lodge

A few visits of interest today: First:  Target Logistics Dunn County Lodge, which is a crew camp site.  These are often know as "man camps." They prefer "workforce housing." I'll stick with crew camps. 

It was was an impressive site for quickly built housing. The facility provides housing that does not take away from the local community, and deals with parking, water, and utility issues, as well as other resource issues.  The site has about 600 beds, and costs about $8-$10 million to build. They plan about a 20-month payoff for the build, which they met. Impressive. 

Prices are geared to be market competitive. The average is about $120 per night, which includes all food and utilities, though companies negotiate their own deals.  The people who…

Today marked the first day of several meeting with people from North Dakota to discuss the oil boom and how it has impacted the state.  I lived in the state, and I loved it, so I think I am a little more connected than many to what's happened here.  That said, I lived on the other side of the state from the oil boom, and I only spent five (largely great) years in North Dakota, so while I'm informed, I have hardly "lived the boom."  I've just been watching and trying to pay attention. 

A few things I was told tonight struck me as significant: 

1. Housing costs are still a huge issue. Building a new house in Dickinson can run upwards of $250 per square foot. A one-bedroom apartment can easily run $1300.

2. In 1997, there were 698 hotel rooms in the city, largely for tourism jumping off for the North Dakota Badlands.  By 2004, that number was 754.  As of 2013, that number has increased to 1632. (The number is true of 2014, too.) 

3. In 2005, the average daily rate for a hotel room was $53.96

By 2008: $68.95

2009: $75.57

2010: $87.59

2011: $109.52

2012 :$124.03…

I'm currently flying at about 30,000 feet on my way to Dickinson, North Dakota.  Regular readers know I do much of my research in the energy sector and that the impacts of horizontal drilling and hydraulic fracturing have had on the local, regional, national, and global economies are an interest of mine.  This trip marks my first return to North Dakota since I left the University of North Dakota School of Law in the summer of 2012, and it will be my most extended trip to the Bakken oil patch in the western part of the state. 

I have the benefit of traveling with a group from West Virginia University, and we're gathering information for a variety of applications, all of which I hope will help us plan for a more sustainable economic and environmentally viable energy future.  The trip is scheduled to include meetings with government officials (state and local), industry representatives, landowners, farmers, educators, and others.  I'm looking forward to this rare opportunity to hear so many different perspectives from people living in the heart of the U.S. oil boom. 

Over the last few years, I have written about the challenges and opportunities related to the shale oil and…

I study both business law issues and shale oil and gas regulation, and I see a lot of overlaps between the two. Big business, is after all, big business.

The political intensity related to shale oil & gas development, is a concentrated version of many other types of regulation, such as we related to securities and publicly traded corporations.  I am currently finalizing an article regarding the Pennsylvania Supreme Court's decision in Robinson Township v. Commonwealth, which overturned Act 13, the state's law designed to promote hydraulic fracturing and horizontal drilling.  In major part, Act 13 largely eliminated local zoning of oil & gas development.  

David B. Spence's article, Responsible Shale Gas Production: Moral Outrage vs. Cool Analysis, provided one good source for analyzing the regulatory backdrop of shale law and regulation.  I recommend it highly. 

Here's the abstract:      

The relatively sudden boom in shale gas production in the United States using hydraulic fracturing has provoked increasingly intense political conflict. The debate over fracking and shale gas production has become polarized very quickly, in part because of the size of the economic and environmental stakes. This polarized debate fits a familiar template in American

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