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project-funding-black-gold-rushProject Funding and the new "Black Gold Rush"
Oil and Natural Gas Fracking (hydraulic fracturing) in recent years has created regional economic booms for some states.  In fact, the oil and natural gas fracking in North Dakota and other US states has been dubbed the "Black Gold Rush" because of the surge of people, businesses, commercial and residential real estate development, and many other factors into these economic "hot pockets".  North Dakota, in the last few years, has become the second largest oil producing state behind Texas.  Many people, from oil workers to investment bankers to construction company owners are taking advantage of this historical season of opportunities.
On January 24, 1848, when James Marshall found gold at Sutter's Mill in Coloma, California, the famous California Gold Rush began, creating an economic boom which spanned from 1848 to 1855 and has lasting effects we can see today.  Many companies that were started during this gold rush are still in business over 150 years later.  Additionally, roads, towns, and other man-made endeavors still exist today because of this Gold Rush back in 1848.  Many people risked all and were handsomely rewarded for their risk.  Others did not venture out to California and played it safe, while some others paid the ultimate price - their lives.  Some experts predict that this rush around the Bakken Fields in North Dakota will last for nearly 30 years.  Others are not so optimistic.
Originally, there was so much gold available in the California Gold Rush, that people were able to find nuggets of gold lying on the ground, free for the taking.  As the gold rush continued and the surface gold became more scarce, other methods like mining and panning became popular ways to extract the rich resources from the California hills.  New technologies were created, as well as new businesses, in the wake of this gold rush, much like what is happening in North Dakota. 
Right now, in North Dakota, oil and natural gas fracking have had a significant impact on the local economy surrounding the Bakken Fields, a 200,000 square mile area in the Western part of the state.  Many other factors, including the 2007 oil drilling tax break in North Dakota (enacted by the state government) shifted much of the fracking activities from Montana to North Dakota, helping North Dakota to become the 2nd largest producer of American oil.
Other factors affecting the economy surrounding the Bakken Fields include: 
  • At least 170 billion barrels of crude oil are available in the rock formations
  • Oil production is up 600%
  • Many families have been moving there - population boom
  • Average oil worker is making $112 K per year - far above national average
  • Inexperienced oil workers starting at $66K per year
  • Jobs at establishments like Wal-Mart and McDonald's starting at $14 per hour plus signing bonuses
  • Resident Millionaires has increased from 43rd to 29th in the nation
  • Unemployment is at a record low of 3%
  • over 75,000 jobs have been created over the past few years

While there are many positives literally flowing out of the Bakken Fields, government authorities and a minority of local citizens are also dealing with some of the negative impacts.  The state government feels the pressures from environmental activist groups because of the earthquakes, and the fracking methods which require injecting water, chemicals and waste-water deep under ground.  Law enforcement agents are feeling the increase in crime rates in certain pockets where the population is growing rapidly due to the demand for employment.  And, in many areas, the costs of housing and rentals have increased as much as 3 to 5 times in the past few years.

With every economic event of this magnitude, people, corporations, investors and governments will end up experience 1 of 3 possible outcomes, or a combination thereof:

  • Some will seize the day (Carpe diem) and will be rewarded well for their work and diligence
  • Some will take risks and be stung by some of the negative dynamics of population increase and investment frenzy
  • Others will sit on the side-lines and watch it go by
Every economic  "rush", whether created by the discovery of gold in 1848, the impact of new technologies like the Internet Bubble in the 90's and  the Dot Com crash of 2000 - 2002,  and the "Black Gold Rush" occurring right now in North Dakota will have positive and negative opportunities and consequences.  What distinguishes the fortunate, the not-so-fortunate, and the bench-sitters is the ability to see and seize the equitable and ethical opportunities that these economic surges provide.  
Where will you be after the "Black Gold Rush" has come and gone?
5th Avenue Acquisitions & Venture Capitalists provide funding through the 144a Bond Fund and other Angel Investment co-ops for projects ranging from $10M to $500M. We are currently actively funding projects in many industries including:  Major Real Estate development and acquisitions, Warehousing, Logistics, Agriculture, Energy & Mining, Procurement, Pharmaceutical and non-Pharmaceutical technologies, and more.  Learn more about our 144a Bond Fund, or contact us to discuss capital options for your project.