By Matthew Frank

1-i12coverThree years ago, as Forrest Smith walked around an old oil field on the Fort Peck Reservation, in the remote northeastern corner of Montana, he spoke optimistically about the potential for the Bakken oil boom to reach the reservation and pull the Assiniboine and Sioux tribes out of poverty. Smith, the tribes’ minerals director, called the Bakkena geologic, economic and cultural phenomenon exploding on the Northern Plains”a light at the end of the tunnel.”

Since then, oil prices have nose-dived from around $100 per barrel to, for a time, less than $30.

I phoned Smith last week. “There was no light at the end of the tunnel,” he said.

The tribes have three wells in production today. They’re not the kind of horizontally drilled and fracked wells that unlocked the Bakken boom, mostly around Williston, N.D., about an hour’s drive east from Poplar, the seat of the Assiniboine and Sioux. Such wells have eluded the tribes, and with today’s oil prices, there’s no incentive for exploratory drilling that might yield one. Rather, these wells are decades old and the tribes are likely losing money each time the few pump jacks churn, penetrate the earth and draw crude that Shell eventually hauls away.

That was the case over fiscal year 2015, Smith says, when the tribes’ wells operated at a loss, compared to the roughly $2 million that flowed to their general fund between the fiscal years of 2010 and 2014.

“Fortunately—or unfortunately, however you want to look at it—what we lacked in oil and gas operations,” Smith says, “we made up for in the gambling department.”

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Susie Perry, the tribes’ deputy finance manager, says the portion of the $75 million settlement reached in 2012 with the U.S. government allocated to individual tribal members “contributed to the upswing in our gambling.” Gaming revenues from the reservation’s three casinos are up about 25 percent, she estimates.

The Bakken oil boom many tribal leaders and members had been hoping for never materialized, despite them having leased more than a quarter of the 2-million-acre reservation to oil companies. And a boom won’t arrive any time soon, if ever. Smith describes the mood as “doom and gloom.” On a reservation with a tribal unemployment rate of 57 percent, as Chairman Rusty Stafne reported last year, that mood tends to prevail regardless.

Missing the boom, though, largely insulated the tribes from the bust—one that arrived much more quickly than most economists had predicted. Today there isn’t a single drilling rig in all of Montana. The growing pains that accompanied the boom around towns such as Sidney and Williston, as well as on the Fort Berthold Reservation at the center of the Bakken in North Dakota, have been replaced by the vacuum of economic contraction.

Source: Over a barrel | News | Missoula Independent