An oil drilling rig near Bismarck, North Dakota.
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Oil prices have slipped in 2025, and the tremors are being felt across the U.S. energy sector. In May, for example, North Dakota’s producers signaled plans to cut drilling rigs as crude dipped below $60 a barrel, offering a familiar reminder that prosperity in oil country is always cyclical. Yet even amidst the latest slowdown, the state remains a model of stability. Its secret isn’t luck or geology. It’s management.
This resilience didn’t happen by accident. Two decades ago, North Dakota was an afterthought in America’s energy landscape, better known for wheat fields than wellheads. But when the Bakken boom arrived, the state paired technological innovation with pragmatic governance, crafting a permitting and regulatory framework built both for speed and public trust. That combination has allowed North Dakota to weather the industry’s booms and busts, and to outperform much larger energy states in fiscal stability.
Fast, Cheap, and Predictable Permitting
North Dakota’s regulatory framework is a case study in simplicity. Companies pay a modest $100 fee for drilling permits, compared to $12,500 in Pennsylvania, and typically receive approval in 20 to 30 days. That efficiency has proved pivotal since 2010, when horizontal drilling and hydraulic fracturing really opened up the Bakken Formation to commercial-scale production.
Between 2010 and 2023, the state produced more than 5 billion barrels of crude oil, second only to Texas. The boom reshaped the economy of the western counties around Williston, driving down unemployment, lifting median household incomes by tens of thousands of dollars, and expanding the tax base that funds education, infrastructure, and conservation efforts.
North Dakota field production of crude oil, 1981-2024 (millions of barrels)
Competitive Enterprise Institute
The permitting process has also gone digital. Through NorthSTAR, firms can electronically submit applications and regulatory forms, and in the case of hydraulic-fracturing operations, file a notification within 24 hours of commencement of drilling activity.
Transparency and Trust
Speed is only half the story. By any measure, the system maintained by North Dakota’s Department of Mineral Resources and Department of Environmental Quality is a masterclass in transparency. Regulators provide regular public updates on oil production and incidents. Monthly reports on production are publicly posted. Well data are searchable online. And in the rare event of a spill, whether from a pipeline or a well site, it is logged in a unified public database.
North Dakota has done something few energy states manage. It has kept its citizens in the loop and its regulators on record. By keeping residents informed and regulators visible, the state has sustained public trust in an industry often viewed with suspicion elsewhere, proving that it is possible for states to expand oil production and still hold industry accountable, all without paralyzing themselves in the process.
From Boom Revenue to Lasting Wealth
Fiscal restraint has been just as important as regulatory streamlining. North Dakota collects a combined 10 percent oil-extraction and gross-production tax and distributes the proceeds among a suite of constitutionally-protected trust funds designed to outlast the boom.
The Legacy Fund alone—North Dakota’s sovereign-wealth-style savings account—receives 30 percent of all oil extraction tax distributions. As of early 2025, it held about $11.5 billion, generating $601 million in earnings for the 2023–25 biennium. The Resources Trust Fund receives 20 percent for water and energy projects. The Common Schools Trust Fund and Foundation Aid Stabilization Fund each take 10 percent to support K-12 education and budget stability for retirement obligations. The remaining 29.5 percent, known as the “General Fund Share,” supports infrastructure, pensions, and disaster relief, with only part of the moneys entering the state’s General Fund.
North Dakota state government annual general revenue and expenditure, 2005-2021
Competitive Enterprise Institute
This is a model of disciplined governance. Even during downturns, North Dakota has typically maintained a budget surplus, thanks both to these funds and a constitutional provision placing restrictions on state borrowing. The result is a fiscal cushion that few energy-rich states can match.
Preparing for What Comes Next
The next chapter in North Dakota’s energy story may be written not in oil but in gas. As the gas-to-oil ratio in the state continues to rise, government officials are eyeing opportunities to harness cheap natural gas for data centers and AI infrastructure. Meanwhile, new permitting challenges are emerging around carbon-capture pipelines and CO₂ storage wells, technologies that could help define the next decade of U.S. energy policy.
North Dakota’s proven mix of pragmatism and transparency puts it in a strong position to lead again. While other states have chosen to ban or restrict fracking, North Dakota has charted a different course. It innovates, regulates smartly, and reinvests wisely. Its system isn’t perfect, but it has delivered real dividends in the form of stronger public finances, higher incomes, and a durable institutional framework that tempers the ups and downs of global commodity markets.
In an era when permitting delays and regulatory gridlock often stall major projects for years, North Dakota offers a reminder that effective government is possible. It isn’t about the government doing more either. It’s about doing better. The rest of the country could do worse than to look north to a flat, windswept state that quietly figured it out.
Source: https://www.forbes.com/sites/jamesbroughel/2025/11/02/how-north-dakota-mastered-the-permitting-game/
