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North Dakota Oil Creating 'Overnight Millionaires'

JAMES MacPHERSON   06/30/08 06:00 AM ET   AP

North Dakota Oil

BEULAH, N.D. — Oscar Stohler was raised in a sod house in western North Dakota and ranched there for nearly seven decades. He never gave much thought to what lay below the grass that fattened his cattle.

When oilmen wanted to drill there last year, Stohler, 83, doubted oil would be found two miles underground on his property. He even joked about it.

"I told them if they hit oil, I was going to buy a Cadillac convertible and put those big horns on the front and wear a 10-gallon hat," Stohler recalled.

He still drives his old pickup and wears a mesh farm cap _ but it's by choice.

In less than a year, Stohler and his wife, Lorene, 82, have become millionaires from the production of one well on their land near Dunn Center, a mile or so from the sod home where Oscar grew up. A second well has begun producing on their property and another is being drilled _ all aimed at the Bakken shale formation, a rich deposit that the U.S. Geological Survey calls the largest continuous oil accumulation it has ever assessed.

Landowners in western North Dakota have a much better chance of striking it rich from oil than they do playing the lottery, say the Stohlers. Some of their neighbors in the town of about 120, from bar tenders to Tupperware salespeople, have become "overnight millionaires" from oil royalty payments.

"It's the easiest money we've ever made," said Lorene Stohler, who worked for decades as a sales clerk at a small department store.

State and industry officials say North Dakota is on pace to set a state oil-production record this year, surpassing the 52.6 million barrels produced in 1984. A record number of drill rigs are piercing the prairie and North Dakota has nearly 4,000 active oil wells.

The drilling frenzy has led companies to search for oil using horizontal drilling beneath Parshall, a town of about 980 in Mountrail County, and under Lake Sakakawea, 180-mile-long reservoir on the Missouri River.

"I have heard, anecdotally, that there is a millionaire a day being created in North Dakota," said Ron Ness, president of the North Dakota Petroleum Council.

Kathy Strombeck, a state Tax Department analyst, said the number of "income millionaires" in North Dakota is rising.

The number of taxpayers reporting adjusted gross income of more than $1 million in North Dakota rose from 266 in 2005 to 388 in 2006, Strombeck said. The 2007 numbers won't be known until October, she said.

Bruce Gjovig, director of the University of North Dakota's Center for Innovation, said his informal survey estimates the number of new millionaires in Mountrail County, one of the biggest drilling areas of the Bakken, may be as many as 2,000 _ or nearly a third of the county's population _ in the next three to five years.

North Dakota's per capita income in 2007 was $36,846, ranking the state 30th in the nation and up from 42nd in 1997, said Richard Rathge, the state Data Center director and North Dakota demographer.

"The two main drivers are energy and agriculture income," Rathge said. The increasing wealth in the state from oil should push the average annual wage in North Dakota, he said.

The oil boom has spurred several "Jed Clampett-like" tales of ordinary folks getting rich, said Tom Rolfstad, the economic development director for the city of Williston.

Rolfstad said he hasn't spotted any Ferraris or Rolls Royces in town, though several people can afford them now.

"I'm seeing a lot more big, shiny gas-guzzling pickups," he said.

Several homes that cost more than a million dollars also are being built in Williston, he said. The community of about 12,500 people is perhaps best known as the hometown of NBA coach Phil Jackson.

Most people "don't want people to know how much money they got and they don't want to be tagged with being wealthy _ they want to be themselves," Rolfstad said.

Oscar and Lorene Stohler said their newly found wealth hasn't changed them.

"We still know what tough times are," Oscar said. "We grew up in the Dirty '30s."

"We put our kids through college without that oil money," Lorene said.

The couple moved a few miles east to Beulah and paid cash for their new home, the first one they have owned. They have established trust accounts for their four children.

Lorene said the only thriftless purchase was an automatic sprinkler system for her flowers that surround the couple's new home. And Oscar bought a $1,000 ring for his wife to celebrate their 60th wedding anniversary.

"We got enough now to buy new stuff," Lorene said, "but we like our old stuff."

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Filed by Nick Graham  |