SIDNEY -- The sound of seven 2,200-horsepower generators running full blast is a deafening, teeth-rattling roar.

It is also the sound of the oil boom playing out on the rolling prairie near Sidney. The generators, mounted on semitrailers, power pumps that force sand and a watery gel into layers of oil-saturated rock 10,000 feet below the surface.

The liquid, shooting out of a perforated steel pipe at pressures of thousands of pounds per square inch, creates horizontal fractures in the rock some 50 feet out to each side of the pipe. The sand keeps the cracks open, and the oil flows through the sand, ready to be drawn to the surface.

That new technology, paired with ever-increasing world demand for oil and the prospect of untold billions of barrels waiting to be sucked from the plains of Eastern Montana and North Dakota, is fueling a new kind of oil boom -- one that seems destined to last many years.

Jimmy Knapp, the founder of Knapp Oil Corp. in Sidney, came out from Michigan to Baker during an oil boom in 1954. The current cycle, he said, is his third oil boom, maybe his fourth.

"But this one doesn't look like it's going to go bust, not for a long time," he said.

Tom Richmond, a petroleum engineer and administrator of the Montana Board of Oil and Gas Conservation, said the boom in Richland County, of which Sidney is the county seat, accounts for 99 percent of all the oil activity in Montana, and all of it is basically a "technology play."

That's because geologists have known for years about layers of oil trapped in the Bakken formation, as it is called, but it wasn't until horizontal drilling was used in tandem with fracturing that any appreciable amounts could be recovered.

This spring, the United States Geological Survey estimated that there are 3.6 billion barrels of recoverable oil using existing technology in Montana and North Dakota portions of the Bakken formation, which also extends into Saskatchewan and Manitoba. The whole oil-producing region is known as the Williston Basin.

As if that weren't tantalizing enough, a USGS geochemist estimated eight years ago that the Bakken could contain more than 400 billion barrels of oil. Match either estimate with oil selling last week at around $130 a barrel and you've got a boom on your hands.

'Always a chance'

In the Elm Coulee field, the name given to the long, narrow band of prairie near Sidney where exploration and drilling are clustered, the boom has already peaked. Richmond said oil production in Montana dropped 4 percent in 2007 from 2006 -- from 36.2 million barrels to 34.8 million -- and has since leveled off. But as ever in the oil business, anything could happen.

"In Elm Coulee, there's always a chance of somebody finding another sweet spot," Richmond said. "That's why people are so excited -- the reports say there is more oil there than has been found."

One sign that this boom is fundamentally different is that it is already longer than the last one, with no sign of a let-up, Tim Lechner said. Lechner is a Billings native who moved to Sidney in 1990 to work for Burlington Resources and later went to work for Headington Oil Co. as a drilling and production engineer. He got into the business in 1978 after graduating from Montana Tech, near the middle of the last boom.

Because of the long dry spell between booms, Lechner said, the oil industry essentially "lost a generation." Lots of people working in the industry are in their 20s and lots are over 50, but few are in between.

"It's been a hard boom in that respect -- everybody has had to carry a big load," he said.

That applies not least to the workers out on the drilling rigs and doing the fracturing, or "frac jobs" as everybody calls them. Richmond said the rigs used to have three crews working eight-hour shifts. Now, thanks to a shortage of labor, the rigs employ two crews working 12-hour shifts.

"We hire whatever local people are available," Lechner said. "We need more people over here, but we have trouble attracting them."

That might come as a surprise, considering the high wages.

"If you can pee in a jar, 25 bucks an hour to start. That's not bad for a kid straight out of high school," Richmond said.

And with jobs in the oil field going begging, it's harder than ever to fill positions at Main Street businesses in Sidney. Those well-documented troubles -- The Gazette reported last year that the McDonald's in Sidney was routing drive-through orders to a California call center -- have come to be seen as a cost of being at the center of an oil boom.

Wendell Elliot, the owner of Elliot Oil, said some businesses may have to close earlier in the evening because of the labor shortage, but they're making money when they're open.

"It's been very good to the community," he said. "The local businesses have done extremely well."

Another difference noted by several observers is that the oil field workers don't come to town to spend money as they did in the old days. The motels are still busy, but with crews working 12-hour shifts and often living on-site in "man camps," they don't use the motels or local housing nearly as much as they did in the boom of the 1970s and '80s.

Larry Tveit, a former state senator from Sidney and an independent consultant to landowners sitting on oil-producing land, said the workers are also less rowdy than they used to be, thanks to stricter DUI enforcement and frequent drug testing -- the peeing in a bottle mentioned by Richmond.

"They don't come to town to play like they did in the other boom," Tveit said.

Lesson learned

On the other hand, Elliot said, Sidney and other towns in Richland County have learned the hard way how to cope with the boom. There has been none of the rush to build housing or other projects, which resulted in a lot of developers and contractors turning houses over to the banks

"This boom is being handled a lot differently," Elliot said. "The last time the community really overbuilt."

Knapp echoed that statement. "It's not as crazy as it was before," he said. "They learned their lesson."

Even so, Sidney Mayor Bret Smelser thinks the state is not doing nearly enough to make sure the effects of this boom are lasting. Montana appears to have at least 15 or 20 years of oil, Smelser said, and while that will produce a continuing stream of tax revenue, it won't add many jobs in Sidney and other areas of the oil patch.

More than anything, he said, there should be at least one oil refinery being built in Eastern Montana. Such a project has been talked about for years, Smelser said, but there has been nothing more than talk. He's convinced that the guarantee of a "clean and healthful environment" in Montana's 1972 Constitution -- and all the lawsuits resulting from that guarantee -- scares away investors.

So does the perception that Montana doesn't welcome new business, Smelser said, exemplified by the state's business equipment tax, which has an effective rate of about 1.5 percent.

"Basically our constitution is one hang-up and our tax system in the other," he said. Montana has been drilling the Bakken since 2002 and North Dakota has been doing so for only two years, he said, "but I'd say they're two years ahead of us in infrastructure, in adding value-added infrastructure."

"As fast as our state moves, I think North Dakota will have two or three refineries before we have our first one," he said. Smelser said Gov. Brian Schweitzer promised two years ago to do what he could to promote the construction of new refineries in Eastern Montana, but Smelser hasn't seen much progress.

Tveit, the former state senator, echoed that criticism, saying the state and Schweitzer are too beholden to environmentalists.

"He talks good," Tveit said of the governor, "but he does a lot that's anti-business."

Evan Barrett, the governor's economic-development director, said the Schweitzer administration has been doing what it can to bring a refinery to Eastern Montana.

Barrett said he made a presentation specifically about refineries to a group of about 30 business people and civic leaders, including Smelser, in Sidney two months ago. The presentation included property tax comparisons between Montana and North Dakota and a look at the permitting process in Montana and four or five other states.

Barrett said he also spoke about the possibility of building everything from a "mini" refinery employing six to 10 workers to a "mid-tier" refinery the size of those in Billings. Overall, Barrett said, Montana "looks very favorable from a permitting perspective," and though "taxes are always complex and always contentious, we're not in a hugely uncompetitive position." North Dakota has no tax on business equipment.

Barrett said he told people at the presentation that the next step was up to them. If they want the governor's help in attracting a company to build a refinery in Eastern Montana, they need to come together as a community and demonstrate support for such a project, he said.

Schweitzer is "looking forward to them making a community decision to proceed," Barrett said, and stands ready to help, but "we don't feel like the state should impose a choice on the community."

Lots of tax revenue

Smelser is also critical of the way Montana apportions proceeds of the tax on oil and gas production.

Under a 1999 law that created incentives for horizontal oil wells, the state tax on such wells is just 0.8 percent on gross value for the first 18 months in the life of the well. After 18 months, the tax goes to the maximum, 9.9 percent. Because the Montana boom started in 2002 or so, nearly all the wells are "off the tax holiday," to use Richmond's words.

That 9.9 percent tax generates an enormous amount of money. In just one quarter of 2007, the tax brought in more than $62 million, of which nearly $29 million was distributed to the counties where oil and gas production occurs. Most of the rest of the money goes into the state's general fund, with some going to the university system, natural resource operations and other funds.

The Legislative Fiscal Division estimated that the oil production tax would generate $101 million for the general fund in fiscal year 2008.

In Richland County, which accounts for almost all of the oil activity and some of the natural gas, the revenue stream is wide and deep. From May 2007 to May 2008, Richland County's share of the tax came to just over $48 million, of which $22 million went to the county itself and the rest to elementary and high school districts in Sidney and seven other Richland County communities.

Even so, Smelser said, towns like Sidney receive, proportionally, very little. All they get is a cut of the "license and privilege tax" imposed on wells by the Board of Oil and Gas Conservation. That tax can be no higher than 0.3 percent, and it has been gradually reduced over the past few years because the fund balance had grown so large.

Under state law, the difference between the old, higher tax and the new, lower one is distributed to towns and counties in the oil patch. Smelser said the tax -- which brought nearly $1 million to Sidney last year -- definitely helped. Among other things, Sidney has purchased a new fire truck, undertaken a sewer replacement program and built a water slide at the city swimming pool.

But to really take advantage of the boom and position itself for the future, Smelser said, Sidney should be getting a much bigger share of the taxes -- and Helena should be getting a lot less.

"I think there's so much else we could do if the rest of the state would give us the financial resources or let us do it ourselves," he said.

When the boom started, Smelser said, he figured the population of Sidney would have grown to 7,500 by now. Instead, "we're struggling to make 5,000 in the next census."

His biggest concern, Smelser said, is that North Dakota is making so much money off the oil boom -- and making it on both sides of the state line. Thanks to lower taxes there and a friendlier business climate, he said, up to three-fourths of the crews working in the Montana oil fields are based in the Williston, N.D., area.

"There's still a huge amount of money flowing across the state line," he said. "That's the part of this I don't think Western Montana understands."

Questionable impact

At least one economist in Western Montana downplayed the importance of oil to the Montana economy. Larry Swanson, director of the Center for the Rocky Mountain West in Missoula, said the revenue generated by the oil boom "is a meaningful component" of the state budget, "but it's not driving it."

In 2006, when the oil boom in Montana was as its peak, he said, employment figures showed that health care, government, construction, retail, professional and technical services, manufacturing, financial services and transportation all ranked ahead of mining, which includes the oil and gas industry.

Swanson said years of "brainwashing" have convinced Montanans that it's a good thing when commodities prices rise because Montana is a commodity state. But in Swanson's view, while the oil boom has created some millionaires and boosted business in a few communities, high oil prices have been a huge drag on the rest of the state's economy.

During the last energy crisis, in 1981, when a barrel of crude was going for a then-whopping $35, energy expenditures as a share of total personal income rose to a record high of nearly 20 percent in Montana, Swanson said. If oil prices continue to rise as they have in recent months, that figure could rise above 20 percent during 2008, he said.

Swanson said the state should be investing in conservation and alternative energy. There was talk of such things after the last energy crisis, he said, but as soon as oil prices fell again, "we were all fat and happy and we didn't have to think about that."

"We lost 25 years since last energy crisis," he said. "We can't afford to do that again. You've got to have leadership, and that leadership has to say, 'This is going to come sooner or later.' "

In the meantime, in the words of longtime oilman Jimmy Knapp, "there's a lot of people making a lot of money out here."

With so much oil under the Williston Basin and with world demand continuing to rise, Knapp sees a long, steady boom. Even if oil prices were too fall to $80 a barrel, or even a little less, he said, it would still be profitable to drill in the Williston. But he doesn't see prices dropping that low for a long time.

"I don't think I'll ever see it," he said.

But Richmond, with the oil and gas board, has seen the crash of expectations before. At the tail end of the last boom, people were so caught up in the excitement that they kept drilling wells even after it had become clear that they were unlikely to cover the costs of drilling.

He said it was "like the guy at the slot machine: Maybe the next quarter will win me a million dollars."

Despite the amazing rise in oil prices, Richmond said, he's been around the business long enough to know how quickly things can change.

"People tell you the fundamentals have changed, that the price can't go any lower than this," he said. "Well, I've heard that before."