Posts Tagged ‘North Dakota’

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Recognizing the risks of Somali remittances

March 11, 2014

This piece is also appearing over at Terror Finance Blog today:

Last week, Bell State Bank in North Dakota announced that it would stop doing business with companies that remit money to Somalia.  The move follows decisions by Minnesota banks in 2011 to stop providing Somali remittance services, and an attempt by Barclays last year to cut off its partnership with Dahabshiil, a money transfer company with primary operations in Somalia.  The banks have been challenged in courts on both sides of the Atlantic, and advocacy groups have heavily criticized the banks’ decisions on humanitarian grounds.

Indeed, humanitarian considerations are of the utmost importance.  Unfortunately, money transferred to Somalia, particularly through Dahabshiil, all too often falls into the wrong hands and perpetuates the cycle of violence in Somalia.  Banks should stand fast in their original decisions, and here are five reasons why:

  1. The risks are real.  The frequency of cases involving Somalis in the West transferring funds to al-Shabaab over the last few years presents genuine concerns to financial institutions.  For instance, four men in California were found guilty last year of transferring money to al-Shabaab through Shidaal Express, a Somali hawala business.  Two Somali women in Minnesota were sentenced in 2013 for sending money to al-Shabaab through several remittance channels including local hawala dealers and Dahabshiil.  A Saudi-American was also indicted last year for wiring money to al-Shabaab.  In 2012, a man in London admitting transferring £8,900 to fighters in Somalia.  Danish intelligence revealed in 2012 that the equivalent of thousands of dollars a day is sent to terrorist organizations outside of Denmark—mostly to Somalia, and often unwittingly.  In addition to genuine risks on the ground in Somalia, Western banks have real reasons for concern that if they continue relationships with Dahabshiil, they could subsequently be fined by regulators at a future date if political winds change.  U.S. banks are surely aware, for example, that decisions on whether to fine, settle with, or prosecute banks with lax compliance programs have a great deal to do with the shifting political and prosecutorial priorities of whoever happens to be in charge at the Department of Justice and the financial regulatory agencies.  One official may take a very friendly view toward facilitating Somali remittances this year, but a different person will be calling the shots two years from now.
  2. The risks are not decreasing.  Gone are the days of 2012 when al-Shabaab appeared to be on the ropes in 2012 both financially and militarily.  Al-Shabaab was able to turn around its financial situation after the fall of Kismayo by cutting deals with occupying forces.  Al-Shabaab continues to profit from imposing taxes on commodities such as charcoal and sugar, and their role as ivory trade middlemen between poachers and buyers appears to be growing.  Al-Shabaab is still capable of carrying out devastating strikes such as the Westgate Mall attack and the recent assault against Somalia’s presidential palace that left 11 dead.
  3. Dahabshiil poses a unique risk.  Western readers should be aware of alleged failures in Dahabshiil’s anti-money laundering and counter-terror finance compliance programs to include possible extortion payments made to al-Shabaab to operate in Somalia (which Dahabshiil denies).  One Guantanamo Bay detainee previously worked for Dahabshiil, and the presiding officer at a hearing for that detainee determined that his Dahabshiil branch transferred money for terrorism.  However, coverage of these allegations has been limited partly due from legal threats against journalists and online reputation management by Dahabshiil. Read the rest of this entry ?
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Freedom from Arab oil boosted by record production in North Dakota

March 29, 2013

770,000 barrels per day closer to independence

Texas, federal waters, and North Dakota constitute the holy trinity of the U.S. energy production, and North Dakota contributes an increasingly larger portion of the total.

Bakken output puts us the U.S. closer toward energy self-sufficiency, which, over time, will mean less power for OPEC, fewer petrodollars going to state sponsors of terrorism, a decreased risk of supply interruptions, and less pressure for America to become involved in the squabbles of the Middle East.

This encouraging data comes to us from PennEnergy on Mar. 18 (hat tip to Steve Maley):

http://www.pennenergy.com/articles/pennenergy/2013/03/north-dakota-oil-production-reaches-new-high-in-2012.html?cmpid=EnlDailyPetroMarch192013

North Dakota oil production reaches new high in 2012

North Dakota crude oil production (including lease condensate) averaged an all-time high of 770,000 barrels per day in December 2012. Total annual production more than doubled between 2010 and 2012 through the use of horizontal drilling and hydraulic fracturing of deposits in the Bakken Formation in the Williston Basin. North Dakota production in 2012 trailed only Texas and the U.S. Federal Offshore region, and the state accounted for 10% of total U.S. crude oil production.

Much of crude oil production in North Dakota is gathered and transported by truck to railcars leaving the state. In the four counties where production is concentrated, about 75% of production is transported by truck, and this can cause supply chain problems at times. Severe weather can impede truck travel, which may lower oil production in the state. Once on-site storage tanks at production sites are full, production stops until the trucks can move again. For example, in November 2012 North Dakota crude oil production fell slightly from the October level to 735,000 bbl/d because of weather-induced transportation problems caused by an unusually heavy snowstorm. Pipeline networks, which can be more efficient and less subject to storm disruptions than trucking, are currently being expanded.

Weather slowing or halting truck transportation can also affect the completion of wells that are not yet producing. According to the North Dakota Department of Mineral Resources (DMR), almost all (95%) wells drilled in North Dakota use hydraulic fracturing to produce the crude oil embedded in shale rock and tight (low permeability) formations. To start production, each well needs hundreds of truckloads of material (900-2,000, including 800 truckloads of water, according to the DMR) on-site that are delivered by tank trucks to storage tanks, unless a sufficient quantity of water is available at the wellsite. The total amount of water needed for hydraulic fracturing must be at the wellsite before hydraulic fracturing can begin.

Because over 80% of North Dakota’s wells are located in only four counties—Dunn, McKenzie, Montrail, and William—in the northwest area of the state, harsh weather in these areas can reduce the state’s total crude oil production, as happened in November 2012 and again in January 2013.

It’s also worth noting that pipeline expansion would help even further—a point lost on extreme environmentalists and Democrats.

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Fracking our way to energy independence

June 25, 2012

Using hydraulic fracturing to extract heretofore inaccessible energy deposits under the surface of American soil sounds great, but can it really make a difference compared to the oil production juggernaut that is Saudi Arabia and the Persian Gulf?

Yes indeed.  Even Thompson Reuters has conceded that fracking dramatically increases production.  Take a look at this graphic that shows the significant impact that fracking has had on production in Texas and North Dakota:

More so than sifting through millions of financial transaction data for suspicious activity, more so than combing through thousands of currency transaction reports, more so than sanctioning and blacklisting individual foreign terrorists overseas who may or may not even have any accounts in a Western bank, fracking presents one of the best tools for draining terrorists’ wealth.

Fracking increases U.S. energy output, reduces global prices, lowers dependence on Saudi Arabia and the Persian Gulf, and minimizes the wealth that accrues to hostile foreign powers who reallocate the profits toward terrorism.

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2011: North Dakota oil boom

January 3, 2012

A key story in 2011 was the growth of North Dakota’s energy sector, which in itself is a metaphor for the energy potential of the entire Western Hemisphere if we have the political will to tap into it.

This is relevant to terror financing because the less money we pay to Saudi Arabia for their oil, the less money that Saudi energy, banking, construction, and government sectors have to divert profits into zakat and sadaqa toward jihadist causes around the world.

We do not need to remain wholly reliant on Wahhabi oil.  The Americas are blessed with natural resources.  We have the ingenuity to exploit those resources in a manner far more sensitive to the environment than how the House of Saud would conduct drilling in Arabia.  The only thing we lack at the moment is the national leadership to authorize expanded domestic energy production.

As documented by economist Mark Perry, North Dakota production has been increasing nicely since 2009, and skyrocketed in 2011:

Domestic drilling works

That’s nice, you say.  But you’re wondering if kicking the addiction to Middle East oil is really possible.  The evidence over the past year suggests that it is, as the U.S. steadily reduced imported oil as a share of its consumption:

Sorry Saudis, we can fuel ourselves

We will have a choice in 2012.  We can continue electing obstructionists like Barack Obama to office who will block the Keystone Pipeline, who will stymie offshore drilling, and who will delay the re-balancing of energy dependence back to our own hemisphere.  Or we can elect somebody who will enable increased energy production in the U.S.

As the North Dakota success demonstrates, the resources are there and we can put more Americans to work in the process.  The best way to eliminate Saudi dependence is self-dependence.

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The North Dakota model: A recipe for getting off Saudi oil & putting Americans to work

October 24, 2011

Why buy sharia oil from the Arabian peninsula and help fund an oppressive Saudi system that also diverts profits toward terrorism?  The only “good” answer for years has been “we have to.”

Except we don’t have to.  Slowly but surely, through consistent and persistent development of energy resources in the United States and throughout the Western hemisphere, we’ll continue tipping the balance away from Middle East oil.  IF, as economist Mark Perry suggests, we are willing to acknowledge and follow North Dakota’s blueprint.  From the American Enterprise Blog last month:

There’s no shortage of bad economics news these days. In August there were no new jobs created, retail sales were flat, consumer confidence plunged to recession-era lows, and it was reported this week that the nation’s poverty rate last year rose to the highest level since 1993. Yet, amid all of the national “gloom and doom” there is an amazing story of a booming economy in North Dakota, America’s most successful state by every economic measure. Here are some recent facts about North Dakota’s economy, which is flourishing as a direct result of the booming oil and gas production in the state’s oil-rich Bakken formation:

1. North Dakota set a new record in July for the most oil ever produced in a single month—more than 13 million total barrels at the rate of 423,600 barrels per day—an increase of almost 14 percent above the previous record in June, and a gain of almost 32 percent from July of last year (see chart below). In just a little more than two years (since June 2009), oil production in North Dakota has doubled to its current level. At the current rate of ongoing record-setting production increases, North Dakota will likely surpass California (540,000 barrels per day) and Alaska (550,000 barrels) by next year to become the number two oil-producing state in the country, behind only Texas (1.4 million barrels).

2. While the national economy struggles to add jobs in the current “jobless recovery,” jobs in North Dakota are increasing at a record-setting pace, and not just oil-related jobs. The overall state employment level reached an all-time high in July and is 10 percent above the pre-recession level in 2007. In contrast, U.S. payroll employment is still 5 percent below the December 2007 level. Oil-related employment in North Dakota has more than doubled in just two years, from 6,600 jobs in July 2009 to 15,800 jobs in July of this year (see chart below).

Energy  sector jobs & production

3. In the first quarter of 2011, North Dakota led the country with a 6.9 percent increase in personal income compared to the previous quarter. Second place Wyoming’s income growth at 2.6 percent wasn’t even close, and North Dakota’s income growth was almost four times the national average of 1.8 percent.

4. In 2010, North Dakota led the country with a 7.1 percent increase in real state GDP, almost three times the national average of 2.6 percent, and two full percentage points above the 5.1 percent economic growth for second-place New York.

5. North Dakota’s jobless rate continues to be the lowest in the country. In July, North Dakota’s 3.3 percent unemployment rate was lower than second-place Nebraska’s rate of 4.1 percent by almost a full percentage point, and was almost six percentage points below the national rate of 9.1 percent.

6. At a time when other states are facing declining revenues and budget deficits, North Dakota’s tax revenues are soaring and it currently has a $1 billion surplus. In May, the state legislature passed a bill to reduce individual income tax rates.

7. In this video about Williston, North Dakota, a city in the heart of the state’s oil-rich Bakken formation, MSNBC reports that the local Walmart has a hard time keeping up with demand and sells out of merchandise almost every day, and the local McDonald’s is one of the busiest in the country.

8. North Dakota home prices have risen consistently even through the national housing bubble and subsequent crash, and are currently at record-high levels. While the national real estate crash has brought average U.S. home prices back to 2003 levels, home prices in North Dakota have continued to appreciate every year through both the recession and financial crisis, and are now 46 percent above 2003 levels.

Bottom Line: North Dakota’s impressive economic success clearly illustrates some of the proven benefits of domestic energy production: ongoing growth in jobs, output, and income; a jobless rate close to 3 percent; a bubble-resistant housing market; and a huge state budget surplus. There’s no reason why the economic success of North Dakota can’t be duplicated elsewhere, if we would only open up more U.S. land and off-shore areas to domestic energy exploration and drilling.