Prairie Business July 2014

July 2014

Making a Mark in M2M Foresight leads to success in one of the world’s fastest growing industries pg. 28

ALSO Disruption on the Prairie Innovators aim to develop disruptive technologies

pg. 32

Get Well Tips on implementing a successful wellness strategy

pg. 36

|INSIDE| July 2014 VOL 15 ISSUE 7

DEPARTMENTS

FEATURES

6 Editor’s Note

BY KRIS BEVILL

Tech talk 8 Business Advice

BY MATTHEW D. MOHR

Fundraise legally 8 Management Matters

BY JOHN GIRARD

The sound of business 10 Finance

BY MOLLY O’SHAUGHNESSY

Could you retire now?

Machine-to-machine technology utilizes small sensors and equipment, like the device shown here for monitoring rail cars, to transmit data over a network to the customer.

PHOTO: JOHN BROSE

12 Economic Development

28 Rise of the Machine (to Machine)

14 Health Care Reform

BY JIM GARTIN

Feeding the leaders

MACHINE TO MACHINE

BY DAVID MARTIN

Health care reform, health savings accounts and you

Foresight leads to local tech firm’s success in one of world’s fastest growing industries

16 Prairie News

TECHNOLOGIES 32 DISRUPTIVE Prairie-Based Disruption

20 Prairie People

Small firms throughout the region aim to develop disruptive technologies

CARE 36 HEALTH Get Well

22 Business Development A handier way to pay 26 Economic Growth Registration data highlights ND’s economic growth

Wellness strategies, policy updates to be discussed at health care summit

38 Talk of the Town Prepping for prolonged growth

EVENTS Managing Railroad Capacity for Future Success – Midwest Association of Railroad Shippers summer meeting .............................................July 14-15 Lake Geneva, Wis................................Information: mwrailshippers.com/upcoming_meetings.asp FMWF Chamber of Commerce Health Care Summit ..................................................................July 22 Fargo, N.D...............................................Information: fargomoorheadmncoc.weblinkconnect.com/ events/eventdetail.aspx?EventID=3438 Manufacturing and Logistics Conference...............................................................................July 23-24 Williston, N.D..............................................................................................Information: manlognd.com/

42 Energy 44 Energy: Drilling Data 46 Business to Business 48 By the Numbers Follow us on Twitter https://twitter.com/PrairieBiz Check us out on Facebook https://www.facebook.com/PrairieBusiness

Scan this with your smartphone's QR Reader to visit our website.

Alex Warner, founder and CEO of Pedigree Technologies.

PHOTO: JOHN BROSE

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Prairie Business Magazine July 2014

Next Month The August issue of Prairie Business magazine will cover a unique entrepreneurship school being launched at the University of North Dakota. Also included, the economic impact of pheasant hunting in South Dakota and coverage of the North Dakota Governor's Pipeline Summit.

www.prairiebizmag.com

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|EDITOR’S NOTE|

Tech talk he northern Plains technology sector is often described as being emerging and full of potential.

This is true, but it is also somewhat misleading. Yes, there are a growing number of new tech firms in the area, but there are also a healthy number of tech companies that have already become established, well-respected leaders in their chosen niche.

This month’s cover feature profiles Pedigree Technologies, a Fargo-based firm specializing in providing software systems for machine-to-machine applications. Many people were still discovering the Internet’s capabilities when Alex Warner founded the company from his basement a little over a decade ago on a hunch that there would eventually be a large market for companies that could collect and transmit data from equipment to end-users. Today, the “Internet of Things” as it is sometimes called is estimated to represent a trillion-dollar market. Pedigree Technologies has experienced triple-digit growth in recent years and was named North Dakota’s second-fastest growing company last year. Warner says he expects the market will only continue to grow and he intends to continue growing his company along with it from its base in North Dakota. Read “Rise of the Machine (to Machine)” to learn more.

A number of other technology firms in the region are working on that “next big thing,” – a technological process or product that could significantly change lives or the way we do business. Disruptive technologies are being developed all around us, but we may not realize it yet because it’s impossible to measure their impact until they come to market. In “Prairie-Based Disruption,” contributing writer Rob Swenson highlights several potentially disruptive technologies being developed in our region, including portable, solar generators that can be used for a number of applications, perhaps most importantly to power small refrigerators that can be used to store medicine in underdeveloped countries. Other firms are focused on developing cures for infectious diseases, mobile apps and advanced materials for use in a wide variety of industries.

Experts say the pro-business tax and regulatory environments in the Dakotas encourage the launch and expansion of entrepreneurial ventures, including tech firms. The region’s universities also contribute handily to the industry through research and development of the workforce. Look to the origins of many of the region’s existing technology firms as proof of higher education’s impact on the industry — many have been launched or fostered at university incubators. Further evidence of higher education’s impact on the industry can be found in this month’s Business Development article. Technology developed in Spain that enables people to pay for goods and services using a device that reads biometric details from their fingerprint found its way to the Black Hills of South Dakota via the South Dakota School of Mines and Technology. As a result, Rapid City is now the testing ground for this fascinating technology which has the potential to revolutionize payment systems around the world. Check out “A handier way to pay” to read about the technology and why local businesses are embracing it.

Finally, I want to draw your attention to our upcoming “50 Best Companies to Work For” contest.

Our September issue will highlight the top 50 small and large for-profit companies in the Dakotas and western Minnesota, based upon feedback from their employees. To enter into the running, employees need to complete a short survey ranking the company on a number of aspects including pay, benefits and overall company culture. Visit our website — prairiebizmag.com — and click on the “50 Best Companies” tab to complete the survey. Submissions will be accepted until July 18, so pass the link around and be sure to get your business the attention it deserves.

T

KRIS BEVILL Editor kbevill@prairiebizmag.com

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Prairie Business Magazine July 2014

KORRIE WENZEL, Publisher RONA JOHNSON, Executive Editor KRIS BEVILL, Editor BETH BOHLMAN, Circulation Manager KRIS WOLFF, Layout Design, Ad Design

Focus on your business, because CenturyLink has your data and voice solutions covered.

Sales Director:

JOHN FETSCH 701.212.1026 jfetsch@prairiebizmag.com Sales:

BRAD BOYD - western ND/western SD 800.641.0683 bboyd@prairiebizmag.com SHELLY LARSON - eastern ND/western MN 701.866.3628 slarson@prairiebizmag.com Editor: KRIS BEVILL 701.306.8561

kbevill@prairiebizmag.com

Editorial Advisors: Dwaine Chapel, Executive Director, Research Park at South Dakota State University; Bruce Gjovig, Director, Center for Innovation; Lisa Gulland-Nelson, Vice President, Marketing and P.R., Greater Fargo Moorhead EDC; Tonya Joe (T.J.) Hansen, Assistant Professor of Economics, Minnesota State University Moorhead; Dusty Johnson, Chief of Staff for South Dakota Gov. Dennis Daugaard’s office; Brekka Kramer, General Manager of Odney; Matthew Mohr, President/CEO, Dacotah Paper Company; Nancy Straw, President, West Central Initiative Prairie Business magazine is published monthly by the Grand Forks Herald and Forum Communications Company with offices at 375 2nd Avenue North, Grand Forks, ND 58203.

Qualifying subscriptions are available free of charge. Back issue quantities are limited and subject to availability ($2/copy prepaid). The opinions of writers featured in Prairie Business are their own. Unsolicited manuscripts, photographs, artwork are encouraged but will not be returned without a self-addressed, stamped envelope.

Subscriptions Free subscriptions are available online to qualified requestors at www.prairiebizmag.com Address corrections Prairie Business magazine PO Box 6008 Grand Forks, ND 58206-6008 Beth Bohlman: bbohlman@prairiebizmag.com Online www.prairiebizmag.com

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Prairie Business Magazine July 2014

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|BUSINESS ADVICE|

Fundraise legally

BY MATTHEW D. MOHR any aspiring entrepreneurs seek initial fundGrand Forks, N.D., has an active and strong angel ing for their enterprise by asking friends, investment fund comprised of a group of very astute indineighbors and relatives to “invest” in their viduals. At one meeting a person presented a formal busiidea. Sometimes the individual decides to take a formal ness plan complete with a request for angel funding. approach to raising money from known local investors Everything seemed to be in order, but upon reflection one or angel investors. There are a number of regional angel of the angel fund members pointed out a variety of securiinvestment funds which have been set up to provide ty violations, so no investment was made. In this case, had sources of funds for new business ventures and help the entrepreneur hired a competent lawyer, his money guide the business toward success. Many aspiring entre- would have been well spent and he probably would have preneurs don’t realize raising money from external the funding needed to launch his venture. sources requires following very strict state and federal If you are ever approached by a person selling an idea securities laws. for his great investment, read the information and check I have been presented a variety of “private placement the proposal for its legality along with investigating the permemorandums” by businesses hoping to secure funds, but son to determine his legitimacy. There are a lot of expert even with various disclaimers and by copying other similar confidence artists working hard to take your money. documents, these hopeful entrepreneurs often break a Raising money or investing in a venture is not genernumber of securities laws. Just because you write in a doc- ally easy, but it must be done legally, and with diligence. PB ument which is intended for use only by knowledgeable Matthew D. Mohr and qualified people, it doesn’t mean you have a legally CEO, Dacotah Paper Co. appropriate document. mmohr@dacotahpaper.com

M

|MANAGEMENT MATTERS|

The sound of business

BY JOHN GIRARD ave you ever wondered about the “sound” of your business? In the 1950s and ’60s it seemed almost every business had a catchy jingle that consumers associated with its goods and services. In fact, the genesis of the jingle may well have been from our region. One of the first and best-known jingles, “Have You Tried Wheaties?” premiered on Christmas Eve 1926 in the Twin Cities. The success of the Wheaties jingle may well have saved the brand that so many of us know and love.

The art of the jingle has lost favor over the years, but one sector — technology — has quietly (pun intended) reintroduced the idea of associating captivating sounds with brands. Every Mac user is very aware of the chime of his/her computer starting — it’s a “good news” sound as it means all is well. Intel’s renowned five-note jingle “Intel Inside” is similarly recognizable to millions of PC users.

H

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Prairie Business Magazine July 2014

Skype users around the world welcome the well-known “whoosh” as a sign that they are about to make a free call and THX’s “Deep Note” prompts audiophiles to prepare for an amazing listening experience. There are many other examples: AT&T, Nokia and Xbox to name a few.

Perhaps it is time for you to consider the sound of your business. Could a mini-musical fanfare influence the behaviors and feelings of your potential customers? Even if you are not convinced your brand needs a sound check, the development exercise will force you to rethink how you can define yourself and differentiate your brand from the competition. Time's a-wastin' … tick, tock. PB John Girard Professor of Management, Minot State University Founder, Sagology John@JohnGirard.net Twitter: @JohnGirard

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|FINANCE|

Could you retire now?

BY MOLLY O’SHAUGHNESSY

comfortable and secure retirement is every worker’s dream, yet for many people, thinking about it can be overwhelming. Retirement is a goal to be relished, and the key is to be prepared. Answering these questions can help you figure that out.

A

How do you want to spend your retirement?

If you haven’t started to think about it yet, now is the time to figure out how you would like to spend your days in retirement. Will you be travelling? Playing golf? Volunteering your time? Maybe start your own business? Having a clear vision will assist in calculating the finances you will need to live comfortably while enjoying your days in retirement.

Have you created a retirement plan?

With advances in technology and medicine, Americans are living longer. According to the U.S. Social Security Administration website, the average life expectancy for a man turning 65 today is 83, and for a woman it is 85. This is an optimal time to meet with a financial advisor who can assist in building a diversified portfolio designed to help provide for long-term growth while keeping pace with inflation. Do not forget to budget for increasing health care costs.

Will you outlive your assets?

Social Security is your first line of defense against outliving your savings as your payments will

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Prairie Business Magazine July 2014

continue for the rest of your life. However, you may want to consider delaying taking payments until age 70 to receive 76 percent more than if you collect at age 62. Paying off your mortgage prior to retiring will eliminate one of your largest monthly bills and allow you to tap into your equity in cases of emergency. Talk with your advisor about what percent of your savings you can withdraw annually during retirement. Disciplined investors may be able to gradually draw down their savings in a way that will likely last as long as they live.

Achieving the dream of a comfortable, secure retirement is much easier when you plan your finances. Engage your spouse to envision how you each plan on spending your later years and how you will finance your activities. Deciding together now will make you both happier in the long run. PB Molly O’Shaughnessy Financial Advisor Merrill Lynch Molly.oshaughnessy@ml.com Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith and other subsidiaries of Bank of America Corp. MLPF&S is a registered broker-dealer, Member SIPC, and wholly owned subsidiary of Bank of America Corp.

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|ECONOMIC DEVELOPMENT|

Feeding the leaders

BY JIM GARTIN

s economic development corporations, like the Greater Fargo Moorhead Economic Development Corp., focus on ways to support economic prosperity, it’s important to understand the importance of growth from within. Local business expansions and new business startups are major drivers of wealth creation and job growth.

Fostering a healthy business environment that supports and encourages entrepreneurship and risk taking is critical for long-term economic success.

On behalf of the GFMEDC, I had the pleasure of leading an educational session for the Fargo Moorhead West Fargo Chamber of Commerce in May on "Cultivating an Entrepreneurial Community.” Joining me on the panel were Greg Tehven from Emerging Prairie, Brittany Sickler from the U.S. Small Business Administration and John Cosgriff from North Dakota State University’s Technology Incubator.

The presentation focused on the importance of having a robust entrepreneurial community, and the ways various agencies and organizations help create and sustain this pivotal ecosystem.

Our discussion was driven by Brad Feld’s book “Startup Communities: Building an Entrepreneurial Ecosystem” and focused on three key areas: 1. What a startup community could potentially look like.

2. The different types of groups involved in the entrepreneurial community as described in Feld’s book.

3. How a strong entrepreneurial ecosystem impacts you as a community member or business leader.

Feld's main premise is that in order to establish and sustain an entrepreneurial community, the process "must be led by entrepreneurs.” Feld refers to the entrepreneurs as leaders. "The boots on the ground and the key decision-makers are the entrepreneurs,” he wrote.

Other organizations like economic development organizations, chambers of commerce, universities, lenders and service providers are defined by Feld as

A

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Prairie Business Magazine July 2014

“feeders.” These organizations provide support, sponsorships, funding, educational programs, connections and overall act as cheerleaders for the leaders (entrepreneurs).

In the end, feeders have to leave their institutional egos at the door and focus on the process and overall benefit that a strong entrepreneurial ecosystem can provide. Easier said than done, but necessary for a strong outcome.

Feld continues to outline four additional points important to building a successful entrepreneurial ecosystem.

The first is that the process is a long and arduous task, maybe up to a 20-year window. Second, he states that it’s important to support failure as well as success.

Feld uses the analogy “it's a marathon not a sprint” in describing the process in Boulder, Colo., the community his book is premised on. His third and fourth points focus on inclusiveness and community engagement. It is open to everyone to participate, support or contribute energy. Finally, activities and programs surrounding the community must be substantive.

In conclusion, a strong entrepreneurial community will provide long-term sustainable new growth for any community. It has become harder and harder for communities to go out and attract new companies to move or create satellite offices. Large incentives are usually required for new attraction programs with no assurances of value for dollars spent.

Entrepreneurs are the home team and usually stay in their original location as they grow and prosper. This region is covered with entrepreneurial startups whose names are household business icons: Bobcat, Case New Holland, Amity Technologies, Microsoft (Great Plains Software), John Deere Electronic Solutions (Phoenix International), Sundog, Appareo Systems, Intelligent InSites and Myriad Mobile to name just a few. PB Jim Gartin President Greater Fargo Moorhead Economic Development Corp. jgartin@gfmedc.com Twitter: @careerfm

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|HEALTH CARE REFORM|

Health care reform, health savings accounts and you

BY DAVID MARTIN

resident Barack Obama signed the Patient Protection and Affordable Care Act (ACA) into law in March 2010. The U.S. Supreme Court upheld the law in June 2012, and implementation continues today. While current health care reform efforts began in 1994 in the Clinton Administration and continued in 2004 in the Bush II Administration, the ACA has been called the most significant health care reform since Medicare and Medicaid were signed into law by President Lyndon Johnson in 1965.

Understanding the major provisions of the ACA is important to understanding the current emerging marketplace for health care, health insurance, affordability and choice for individuals and employers alike. Beginning this year, key ACA provisions include guaranteed issue and the individual mandate, consumer subsidies, and the employer mandate. Helpful resources include health insurance companies and brokers, tax advisors and preparers, and employee benefits specialists.

In general, the ACA requires individuals to have or obtain health insurance coverage or pay a penalty, and requires businesses with more than 50 full-time-equivalent employees to offer affordable health insurance as a benefit or pay a penalty. The law sets standards for essential health insurance coverage benefits, provides premium and cost-sharing assistance to low-income individuals, and provides certain tax benefits for small businesses that offer health insurance to their employees.

Because of continually rising costs for health care, health insurance and related expenses for individuals and employers, Congress created Flexible Spending Accounts (FSAs) in 1974, Health Reimbursement Accounts (HRAs) in 1996 and Health Savings Accounts (HSAs) in 2004. All three offer certain tax advantages to individuals and employers, but FSAs and HRAs are technically “owned” by employers, while HSAs are “owned” by eligible individuals who open health savings accounts.

P

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Prairie Business Magazine July 2014

Some financial planning experts believe that every U.S. taxpayer should have an HSA to help save money for retirement health care expenses, even maximizing their HSA contributions before contributing to other retirement vehicles, and with good reason. The American Association of Retired Persons noted in 2013 that 65-yearolds retiring last year may need $120,000 each to cover future medical costs during their remaining lifetime.

Some of these experts see HSAs as medical IRAs on steroids because of the IRS-approved triple-tax advantages they offer to taxpayers who open, fund and grow an HSA. Since their introduction a decade ago, forwardthinking employers have continued to adopt highdeductible health insurance plans and related tax-advantaged HSAs as a cornerstone of their employee benefits program and corporate cost-savings strategy, and in the context of consumer-driven health care. National publications like Forbes and Money magazines, The Kiplinger Letter and the Wall Street Journal have all noted the potential benefit to employers and individuals, and eligible high-deductible health plans (HDHPs) have been included in health insurance exchanges.

As health care reform and consumer-driven health care continue to evolve in the United States, with overall spending related to health care now 18 percent of gross domestic product (up from 13 percent in 1994), both greater choice and responsibility are being placed in the hands of consumers, hopefully motivating them to make good decisions regarding their health care and its cost, and possibly saving them some money if they fund and use HSAs or other tax-favored health plans.

David Martin Vice President – HAS Choice Financial Group d.k.martin@choicefinancialgroup.com

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Prairie News

Industry News & Trends

Wahpeton, N.D.-based Wil-Rich produces a line of tillage equipment and other agricultural equipment. PHOTO: WIL-RICH

Wil-Rich celebrates 50th anniversary This year marks 50 years of business for Wahpeton, N.D.-based Wil-Rich, a manufacturer of farm tillage equipment. The company, which started as a two-person business that produced truck hoists, has weathered several changes of hands throughout its half-century of existence and evolved into a world-leading agricultural equipment manufacturer, focusing on a heritage of designing products that meet and exceed farmers’ requirements. Since 2001, the company has been owned by a

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Prairie Business Magazine July 2014

group of entrepreneurs including Mike Bullinger, Howard and Brian Dahl and Victor Klosterman. Klosterman serves as the company’s general manager. The company’s equipment line includes spring and fall tillage equipment, seeding and planting equipment and heavy-duty disc harrows. The equipment is sold throughout North America as well as in Russia, Ukraine, China and other countries.

|PRAIRIE NEWS| VPP releases action plan The Valley Prosperity Partnership, a group consisting of business and higher education leaders and other stakeholders from throughout the Red River Valley, recently released an action plan outlining six priorities aimed at continuing the region’s economic prosperity.

Workforce recruitment and retention topped the list of priorities, followed by water supply and management, research expansion, infrastructure investments, entrepreneurial support and improving perceptions of the region. The group expects the report to serve as a guide for continued partnerships and action on its findings. To view the report in its entirety, visit valleyprosperitypartnership.com.

The VPP was formed in 2012 following a $100,000 investment by William C. Marcil, chairman of Forum Communications Co. Twentyfive other companies from throughout the valley each agreed to commit $25,000 to become VPP steering committee members. The committee is co-chaired by Steve Burian, CEO of Grand Forks, N.D.-based AE2S, and Tammy Miller, CEO of Fargo-based Border States Electric.

recently expanded to serve businesses in Williston and throughout western North Dakota. Keith Olson will be responsible for working with clients in the area. He has served as the regional director of the Williston Region Small Business Development Center since 2003.

His wife, Michelle, has 10 years of accounting experience and will work directly with clients on a one-on-one basis.

Strider Sports opens nature trail, new headquarters Rapid City, S.D.-based no-pedal bicycle manufacturer Strider Sports International recently opened a nature trail in Rapid City, S.D., developed specifically for users of its product.

The trail was built by Strider staff with approval from the Rapid City Parks and Recreation department and caters to families with children between the ages of 2 and 5, although children of all ages are allowed on the trail.

The company also held a ribbon cutting ceremony for its new 26,000-square-foot corporate office and distribution center in Rapid City

on June 6. The company expanded to a larger facility to accommodate its recent growth.

State board approves UND School of Entrepreneurship The North Dakota State Board of Higher Education has approved the establishment of the University of North Dakota School of Entrepreneurship. The school, part of the UND College of Business and Public Administration, will nurture faculty and students’ entrepreneurial actions, innovation, visionary leadership, networks and interdisciplinary learning, according to UND. The university’s vision is to build the highest-quality entrepreneurship school as part of a new, technology-focused business and public administration college.

Bruce Gjovig, leader of the UND Center for Innovation, will be the school’s outreach and practitioner arm. Dennis Elbert, longtime dean of the business college, will step down from that role to become a member of the UND Entrepreneurship faculty.

Energy services, transport firms form new entity SBG Energy Services and Reynolds Transportation LLC have merged the trucking company into a newly formed entity, SBG Reynolds Transportation LLC, a wholly owned subsidiary of SBG. The new company will be managed by Reynolds Transportation owners Harry and Diana Reynolds and all 20 of the trucking firm’s employees have been retained for the new company. The merger was driven by a rail yard expansion project in Richardton, N.D. SBG Energy Services now owns nearly 200 semi-trucks providing oil and gas industry services in North Dakota, Montana and Wyoming.

The company is part of Grand Forks, N.D.-based Edgewood Group LLC.

Business services group expands to Williston Heutmaker Business Advisors, a Minnesota-based provider of business services including financial, human resources and payroll services to small- and medium-sized businesses,

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|PRAIRIE NEWS|

Integreon executives gather for the groundbreaking of the company's expanded Fargo facility. From left: Julie Laufenberg, global head, talent management: Tony Breidenbach, U.S. director of client services, document services; Penny Retzer, Fargo general manager and global head, document services; Kay Hogtvedt, Fargo director of administration; Kalie Olson, Fargo director of operations. PHOTO: INTEGREON

Integreon breaks ground on new Fargo facility Integreon, a provider of legal, document, research and business support solutions for large corporations and law firms, recently broke ground on a new facility in Fargo, N.D., which will provide space for the company’s 300 Fargo employees.

Integreon was founded in Fargo in 2001. The company currently employs more than 2,000 people at 12 delivery centers located around the world. The Fargo facility specializes in on-shore document services work and document services business unit support.

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Prairie Business Magazine July 2014

|PRAIRIE NEWS| Fargo company gets export award Fargo, N.D.-based CH Trade LLC, a company focused on developing export opportunities for businesses, recently received the President’s “E” Award for Export Service from the U.S. Department of Commerce. The award is the highest recognition a company may receive for making a significant contribution to the expansion of U.S. exports. CH Trade’s clients include Jamestown, N.D.-based DuraTech Industries International Inc., Dickinson, N.D.-based Medora Corp., Moorhead, Minn.-based Cormax and Grand Forks, N.D.-based Field of View.

Marco named best employer for young professionals Marco Inc. was recently selected by the Fargo Moorhead West Fargo Chamber of Commerce as the best place to work for young professionals. The award recognizes businesses for their commitment to recruiting and retaining young professionals. Marco was one of several companies recognized in various categories during the chamber’s ChamberChoice 2014 awards luncheon, held May 21 in Fargo, N.D. Marco was also selected as a BismarckMandan (N.D.) Top 10 Young Professional Workplace by the Young Professionals Network.

Luxury apartments open in Williston North Gate, a 300-unit, market-rate apartment home community in Williston, N.D., has begun pre-leasing its units and expects the first tenants to move in this month. The development, a partnership between The Sterling Group and Braxton Development, consists of 13 buildings with one-, two- and three-bedroom floor plans ranging in square footage from 685 to 1,305 square feet. Rent prices for the units range from $2,150 to $3,850 per month.

St. Alexius expands to Minot St. Alexius Medical Center in Bismarck, N.D., plans to build an approximately 67,500square-foot medical plaza in Minot, N.D. The facility will feature 40 primary care and 20 specialty care exam rooms and will provide imaging, physical therapy and lab services. A same-day surgical center and retail pharmacy will also be located at the facility.

The facility is expected to cost $19 million

and is projected to open in 2015.

ND seeks more dairy farms

Web development, telecomm companies partner

The North Dakota Dairy Coalition, crop commodity groups and dairy industry members gathered recently to discuss efforts to rebuild the state’s dairy industry. The number of dairy farms in North Dakota has fallen to fewer than 100, according to the North Dakota Department of Agriculture, but the state has three dairy processing plants that rely heavily on locally produced milk.

Grand Forks, N.D.-based IT and web development firm Insight Technologies, Ellendale, N.D.-based Dickey Rural Networks and Carrington, N.D.-based Dakota Central Telecommunications have entered into an investor partnership agreement to leverage the collective industry capabilities and expertise to provide advanced technology services to the companies’ customers.

“Our goal, along with DCT is to be a quiet partner in Insight’s mission and to be part of their exciting future,” Robert Johnson, DRN CEO and general manager says in a news release.

Eide Bailly adds Washington State firm McDirmid, Mikkelsen and Secrest, the largest local certified public accounting firm in Spokane, Wash., has joined Eide Bailly. It is Eide Bailly’s first location in Washington State and brings the firm’s total staff to 1,350 in 22 offices in 10 states. Andrew McDirmid, MMS partner, will serve as the partner-in-charge of the Spokane office.

Integrity Windows wins quality award Integrity from Marvin Windows and Doors was named “Best Quality Fiberglass Window Brand” in a recent BUILDER Magazine study.

The study surveyed more than 10,000 builders, developers and general contractors on their awareness and use of various brands in 69 different categories. Integrity Windows and Doors is based in Fargo, N.D.

Anticipation high for Sanford Center opening More than 500 club seats for the Denny Sanford PREMIER Center in Sioux Falls, S.D., sold out within two weeks, according to the center. The sale price per seat was about $600 per year, amounting to total first year revenue of about $283,000. The seats offer a premium location in the lower bowl and include access to a private lounge, first right of refusal to all events, wider seats and in-seat wait service.

Suites and loge boxes were made available last year and sold out within a few days, according to the center.

Black Hills groups form collaborative marketing arm Twenty-one Black Hills organizations have joined into a single entity called the Rushmore Region Alliance, focused on promoting the region to site selectors, companies and entrepreneurs. The alliance will also target existing Black Hills businesses that may be expanding but are not aware of the resources available to them.

The collaboration is the result of discussions held three years ago by members of the Black Hills Business Council. Other organizations, including the Rapid City Economic Development Partnership, Spearfish Economic Development and the Black Hills Council of Local Governments are also involved. Black Hills Vision funded the project.

For more information, visit rushmoreregion.com.

Ag cleaning, processing plant to open in ND Cummings Ag is expected to open a 10,000square-foot facility in Cummings, N.D., located between Grand Forks and Fargo along Interstate 29, to provide cleaning and processing services to area farmers and bean companies. The facility is expected to open this summer and will have the capability to clean and process barley with ergot, grains, dry edible beans, field peas, lentil beans and soybeans.

“We’re building this facility with a single purpose — to put our customers in control of the bean and grain selling process by giving them access to the very best cleaning and processing equipment on the market,” co-owner Tracy Bjerke says in a news release.

A grant from the North Dakota Department of Commerce Agricultural Products Utilization Commission contributed to the establishment of the facility.

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19

|PRAIRIE PEOPLE|

Jake Fischer

Fischer first to participate in SD rural attorney program

NDSCS president appointed coalition chairman

Jake Fischer, attorney at Swier Law Firm, was recently recognized by the Unified Judicial System and the State Bar of South Dakota for being the first attorney to participate in the Rural Attorney Recruitment Program.

The program was approved by the state legislature in 2013 to address the current and projected shortage of lawyers practicing in small communities and rural areas of the state. Qualifying attorneys are provided an incentive payment in exchange for five continuous years of practice in an eligible rural county. Participation in the program is capped at 16 attorneys.

Fischer relocated from Minneapolis to Corsica, where he leads Swier Law Firm’s agricultural law practice group.

John Richman, president of North Dakota State College of Science, has been appointed chairman of the board for the National Coalition of Certification Centers (NC3), a network of education providers and corporations that supports, advances and validates new and emerging technology skills in the transportation, aviation and energy industry sectors. He previously served as both the vice chair and trustee.

The 11-member board includes industry and education leaders representing a range of geographic, economic and education perspectives.

NC3 is headquartered at Gateway Technical College in Kenosha, Wis. NDSCS has worked with NC3 since its establishment in 2009 and is one of 32 leadership schools. Leadership schools collaborate to develop instructional material, provide trainthe-trainer opportunities and mentor other educational members.

John Richman

Moran named USD provost, academic affairs VP

Andrew Adams

Kelan Oster

Laura Undem

Eide Bailly hires 3 Certified public accounting and business advisory firm Eide Bailly LLP recently added three associates at its Fargo, N.D., office.

Andrew Adams is an audit senior associate.

He previously worked for Eide Bailly for more than three years at its Bismarck, N.D., office.

Kelan Oster is a bank regulatory compliance associate who also previously worked for Eide Bailly’s Bismarck office.

Laura Undem is an audit associate. She previously interned with Eide Bailly in 2012 and 2013.

Starion Financial hires CIO/COO

Stacy Hall

20

Stacy Hall has joined Starion Financial as chief information officer and chief operations officer. He is responsible for the overall administration of the bank’s technology, accounting and operations teams. He provides vision and insight into the development of the business strategy for the operation and technology of the bank, demonstrates leadership and expertise for technology initiatives and assists in attaining established operational goals.

Prairie Business Magazine July 2014

James Moran III

James Moran III has been named provost and vice president for academic affairs at the University of South Dakota. He previously served as vice chancellor for academic and student affairs with the Pennsylvania State System of Higher Education for more than four years. Prior to that, he was senior associate vice chancellor and associate vice chancellor for academic and student affairs with the Pennsylvania State System of Higher Education.

NDSCS promotes Vangsness Frisch to lead new division North Dakota State College of Science recently promoted Jane Vangsness Frisch to associate vice president for the newly created student success, career services and institutional effectiveness division. The new division will provide students with academic advising, academic and career counseling, tutoring and assistance with the intent to bolster student success in and out of Jane Vangsness Frisch the classroom.

Vangsness Frisch joined NDSCS in 2013 and served previously as the director of student success and career services.

|PRAIRIE PEOPLE|

Reinaldo Tonkoski

Wei Sun

Paul Sukut

SDSU faculty receive Microsoft research award

Basin Electric names Sukut CEO, Johnson CFO

Reinaldo Tonkoski and Wei Sun, assistant professors in electrical engineering at South Dakota State University, have been awarded a one-year, $40,000 Software Engineering Innovation Foundation grant from Microsoft to develop a unique way to manage power for data centers. They are developing a microgrid to use locally produced power to reduce energy costs, yet maintain reliability by also being able to switch back to the main grid when needed.

The project is one of 12 chosen from more than 100 proposals to receive grant funding.

Basin Electric Power Cooperative’s board of directors recently selected Paul Sukut as CEO and general manager. He will also serve as president and CEO of Basin Electric subsidiary Dakota Gasification Co. Sukut had been serving as interim CEO and general manager since January. He previously served as the cooperative’s chief financial officer.

Sukut appointed Steve Johnson senior vice president and chief financial officer. Johnson had been serving as interim CFO since January.

Miller receives achievement award

Pauly named Wells Fargo business relationship manager

Brett Pauly

Brett Pauly has been named business relationship manager for Wells Fargo in Grand Forks, N.D. In this role, he will work with business customers to help meet their commercial deposit, cash management and credit needs.

Pauly joined Wells Fargo in 2013 as a business banking trainee and previously held management positions in telecommunications and retail banking. He holds a bachelor’s degree in business administration and management from Minnesota State University-Moorhead.

Tammy Miller

Brad Greenway received the 2014 Governor’s Ag Ambassador award at the annual South Dakota Governor’s Agricultural Summit, held June 27 in Deadwood, S.D. He is a shareholder of Bluestem Family Farms, a 3,400 sow swine farrowing operation. He was appointed to the National Pork Board in 2009 and 2012 and continues to serve as a member. He also serves as treasurer for the U.S. Farmers and Ranchers Alliance and has participated in numerous international trips as an advocate for South Dakota and U.S. agriculture.

Border States Electric CEO Tammy Miller has received the National Association of Electrical Distributors’ Arthur W. Hooper Achievement Award, the group’s highest honor. The award is presented to an individual who has had an exceptional career in distribution. Miller is the first woman to receive the award.

In a statement, Miller says she shared the award with the employee-owners of Border States and her husband of 26 years, Craig Palmer.

Etzell retires from Lake Region Healthcare cancer center

Greenway receives ag ambassador award

Brad Greenway

Steve Johnson

Paul Etzell

Dr. Paul Etzell, medical director at Lake Region Healthcare’s Cancer Care and Research Center, has retired. He originally announced his retirement several years ago, but continued to work in the oncology department to achieve his dream of establishing a world-class cancer center in Fergus Falls, Minn. He was instrumental in the development of the center, which opened in 2010.

Etzell joined the Lake Region Healthcare medical staff in 1997. He previously practiced at MeritCare in Fargo and served as medical director of the Roger Maris Cancer Center. He will continue to serve on the board of directors for the Lake Regional Healthcare Foundation post-retirement.

www.prairiebizmag.com

21

|BUSINESS DEVELOPMENT|

A handier way to pay Rapid City serves as testing ground for revolutionary pay-by-touch system

BY KRIS BEVILL

ore than a dozen Rapid City, S.D., businesses now allow customers to pay for their purchases using something everyone has and never forgets at home — their fingers. The eateries, retail shops and health care service providers are among the first in the world to test a payment system called Nexus Smart Pay which uses a payment terminal that looks similar to existing credit card terminals, except this one identifies users through a fingerprint scan.

The biometric-payment system, believed to

M A biometric payment system developed called Nexus Smart Pay allows consumers to pay for purchases with a scan of their fingerprint. The system is being trialed in Rapid City, S.D. PHOTO: NEXUS USA

22

Prairie Business Magazine July 2014

be the first of its kind, is being rolled out by Nexus USA, a subsidiary of Spain-based authentication technology developer Hanscan ID Management.

More than 700 people in the Rapid City area have set up accounts to use the Smart Pay system so far and new merchants are signing on every week, according to Chris Edwards, business development director.

“Most people are pretty fascinated by the whole concept of being able to pay for stuff with your finger,” he says. “And the proposition for the consumer is that it’s ultra-convenient in addition to

|BUSINESS DEVELOPMENT|

it being highly secure by virtue of the fact that there’s nothing to lose — you can’t lose your currency, your payment card, people can’t steal your finger nor can they steal your fingerprint and recreate it.”

Additional security is also a benefit to businesses, says Marsha Hengen, owner of Great Harvest Bread. She has been offering the pay-bytouch system to her customers since April 1.

“To me, [security] is the biggest thing in today’s environment,” she says. “So many times, people don’t sign their credit cards and you try to check them all or ask for ID, but that doesn’t happen all the time. This is a little bit more secure, for us and the customer.” Plus, she says, “We just think it’s very cool technology and a great opportunity to support another local business.”

About 30 million Euros have been invested in developing the technology, according to Edwards.

www.prairiebizmag.com

23

|BUSINESS DEVELOPMENT|

Hanscan CEO Hans Timmermans tests a recently installed Nexus Smart Pay terminal at Rocky Mountain Chocolate Factory in Rapid City, S.D. PHOTO: NEXUS USA

24

Hanscan began developing the core security technology about eight years ago, but the Smart Pay system in use now has been under development for only about two years.

According to Edwards, the company had developed the payment terminal for another use, but after being asked by a merchant to utilize it as way to monitor loyalty program transactions, the project took on a life of its own and quickly showed unexpected global potential. After publicly launching a pilot project at the South Dakota School of Mines and Technology last January, the company was inundated with calls from payments industry giants and large banks from around the world, all keen to replace today’s plastic card system.

“We know that we have the tiger by the tail if we can make it work,” he says. “And we’re so far along in the development now that it’s not a matter of ‘if,’ it’s a matter of ‘when.’ Our challenge is to make it work while we’ve still got critical mass and before anyone else comes along to make a similar mouse trap.”

Edwards says Nexus has a leg up on potential competitors because its system doesn’t require participation

Prairie Business Magazine July 2014

from third-party processors, enabling it to offer merchants lower payment processing fees than credit card options. It also has been able to successfully address some of the scalability issues that have previously prevented biometrics systems from being used for this type of application. Edwards says the company retains none of its users’ bio-data and user-provided information retained for debit processing is encrypted as it travels through the system, making it less vulnerable to hacker attacks than the process commonly used for card systems.

Mary Beth Seamands, director of sales and marketing at Isis Hospitality LLC, says the security factor and the convenience of the system are what attracted her company to the concept. Isis Hospitality began offering the Nexus system as a payment option to customers at Seattle’s Best Coffee nearly a year ago and recently added the option at Paddy O’Neill’s Irish Pub and Vertex SkyBar. “The convenience provided our guests was paramount in the decision to move forward with Nexus Smart Pay,” she says. “As more of our lives revolve around technology, implementing a system that offers such convenience, but

|BUSINESS DEVELOPMENT|

4 in ONE Disinfectant & Sani!zer

also the security of biometrics, is a great asset to our company and guests.”

Rapid City is ground zero for the system’s roll-out, but Edwards says the service area will soon include nearby Spearfish, S.D. After perfecting the system locally, the company intends to expand to major metropolitan areas this fall, likely targeting Colorado cities like Denver and Boulder first. Ultimately, the company would like its biometric system to replace the existing plastic card system, a monumental task which would require a partnership with a major provider such as Visa, MasterCard or American Express.

Edwards expects that time may be coming soon.

“From a logic standpoint, I think our future has somebody like that in its crosshairs, but that remains to be seen.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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25

|ECONOMIC GROWTH|

Secretary of State - # of New Filings per Month 2000

•

1900 1800 1700

1500 1400 1300

•

1200

•

1100 1000

••

900 800

•

700 600 500

• •• •

•

••

•• •

•

• •• • •

•

•• • •

••

•

•

• •

•

• •

• •

• ••

•

•• • •

••

• •

• • •

•

•

Jul-09 Aug-09 Sept-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sept-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sept-11 Oct-11 Nov-11 Dec-12 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sept-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sept-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14

400

•

•

1600

Registration data highlights ND’s economic growth Monthly registrations triple in 5 years

BY KRIS BEVILL

26

Prairie Business Magazine July 2014

f you’ve registered a business in North Dakota anytime in the past few years, chances are good you’ve had a lengthy wait in line. Since 2011, the number of business registrations filed each month with the North Dakota Secretary of State’s office has often been double, sometimes triple, the number historically processed by the state, a telling sign of the Roughrider State’s recent run-up in economic activity and sustained high level of interest from businesses. The “new normal” rate of registration activity is about 130 percent greater than it was just a few short years ago, according to the data, and it shows no real signs of slowing down.

Secretary of State Al Jaeger describes the last few years as “a challenging time” for his office, mostly because the timing of the rush — in the middle of a legislative biennium — forced the office to accommodate an unheard-of increase in workloads with no option to add staff.

“My first reaction is to say it’s been challenging,” he says. “Activity is very high with the registrations that are coming in, [but] my staff is very dedicated and conscientious and doing the best they can.”

About 30 full-time staff members fill the demands of the secretary of state’s office, assisted by half-dozen part-time workers. The state approved staff additions during the most recent legislative session, so there are more hands on deck now than in previous years — enough that the office has outgrown its space in the Capitol Building and will likely request an expansion during the next biennium. But Jaeger notes that the training process takes time for new hires when they are handling sensitive matters such as business registrations, so they are still somewhat short-staffed and taking longer to fill requests than they’d like.

I

|ECONOMIC GROWTH| The current timeline for approval of new filings is about four weeks, which, while double the historical two-week turnaround time, is a significant improvement over the six-week timeline experienced in 2012 at what was arguably the high-mark of the state’s recent economic boom. In May 2012, approximately 1,850 new business filings were received by the office — 400 more than were filed the month prior and triple the amount filed in May 2010.

It was during that time that the workload became so great that Jaeger made the somewhat controversial decision to close the office to cus-

tomers for three hours every day so that staff members could dedicate their attention to processing their workloads. “While it may seem contradictory, it was done to increase customer service and increase staff productivity by allowing them to have uninterrupted time to work on files,” he says. “And, it worked well. While I received some criticism, it proved to be a wise decision for which I received confirmation and understanding from many people.”

The office resumed normal business hours in September 2012 although it has continued to wage an uphill battle to keep up with registration

filings. The office now typically receives more than 1,000 registrations each month.

For businesses filing registrations with the office, Jaeger offers three suggestions to aid the process: Ensure paperwork is in order, plan ahead and be patient.

“We have full-time people putting in overtime and everybody’s really working to provide the service they need,” he says. “Unfortunately, we’re in situations where a lot of people want it yesterday, and we can’t provide that.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

North Dakota Business Registrations - July 1, 2013 - June 30, 2014 Jul 13

Aug 13

Sep 13

Oct 13

Nov 13

Dec 13

Jan 14

Feb 14

Mar 14

Apr 14

Business Corporations

61

52

63

81

70

58

98

69

81

81

Limited Liability Companies

369

282

299

342

361

307

348

269

409

307

Farm Corporations

1

0

0

1

1

0

0

0

0

0

Farm Limited Liability Companies

3

0

1

2

0

1

5

12

7

8

Professional Corporations

2

3

2

3

1

1

8

5

3

2

Professional Limited Liability Companies

6

6

4

3

4

4

3

3

3

3

Foreign Corporations

172

166

98

139

137

95

111

114

165

112

Foreign Professional Corporations

6

6

4

7

2

0

6

4

4

4

SOURCE: NORTH DAKOTA SECRETARY OF STATE'S OFFICE

LLCs comprise majority of new ND business registrations Changes on horizon for ND LLC structure Limited liability companies (LLCs) are the most popular structure for businesses filing registrations in North Dakota, according to data compiled by the Secretary of State’s office. In March, more than 400 LLC registrations were filed, compared to about 100 foreign corporations and only about 50 business corporation registrations.

Bill Guy, senior member of the trusts and estates group at Fredrickson and Byron’s Fargo law office, helped to create North Dakota’s LLC statute in 1993 and says there are several differences between LLCs and other business structures, such as S-corporations, that may make LLCs the favorable choice, the most significant being that they can be taxed as a partnership without having to

navigate some of the “tax traps” associated with Scorps., according to Guy. “Many, many advisors will advise an LLC to a client rather than an Scorp. for those reasons,” he says.

North Dakota’s LLC structure was initially modeled after Minnesota’s structure and typically follows its eastern neighbor’s lead on such matters, Guy says. Minnesota recently adopted the Uniform LLC Act, which is modeled after Delaware’s LLC structure and is slowly being adopted throughout the country, and Guy expects North Dakota will eventually follow suit as well.

“Minnesota has enormous resources in terms of money and manpower that they put into determining whether they want to follow every aspect of a uniform act,” he says. “We

found they do a good job of that analysis. And, there’s a lot of connection between Minnesota and North Dakota on business matters.”

Guys says the Delaware model differs slightly from North Dakota’s current LLC structure in that it more closely resembles a partnership, with members and managers rather than a board of directors, board of governors and managers. The change may be less desirable for the state’s small businesses, but Guy doesn’t expect it to adversely affect those entities. “Delaware probably puts more effort into its statutes than anybody,” he says. “If you’re a corporation and you want the state law that governs your entity to be widely recognized around the country, you go to Delaware.”

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27

|MACHINE TO MACHINE|

Rise of the Machine (to Machine) Foresight leads to local tech firm’s success in one of world’s fastest growing industries

BY KRIS BEVILL lex Warner was a typical North Dakota kid. He grew up on a sizable farm and attended North Dakota State University, where he received a degree in agronomy. But then something happened. He “caught the tech bug,” and shifted his focus from farming toward the emerging world of computers and technology. He studied technology at St. Cloud State University in Minnesota and cut his teeth at various Minneapolis-area technology companies before returning to Fargo with his wife to continue building a career in the technology industry. He worked at a local firm until 2003 when he took a risk and launched his own company, Pedigree Technologies, from the basement of his twin home. He had become very interested in a new application for technology — called machine-to-machine technology — and he had a hunch that the potential applications of it would be huge.

A

Talk to the Machine

Pedigree Technologies founder and CEO Alex Warner at the company’s headquarters in Fargo, N.D. PHOTO: JOHN BROSE

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Prairie Business Magazine July 2014

Machine-to-machine technology, or M2M, is basically a process in which data is generated from a piece of equipment, transmitted over a network and interpreted by a user at the other end. M2M can be used to monitor the temperature of a freezer and alert a supervisor if the temperature dips below a certain level, for example, track a rental vehicle to determine its whereabouts or gauge how long a truck’s remaining fuel will last in the field.

The opportunities for its applications are truly unlimited and the industry is growing rapidly. A report issued last year from the Carbon War Room, “Machine to Machine Technologies: Unlocking the potential of a $1 trillion industry,” predicted that the M2M industry will maintain a 23 percent growth rate over the next decade, with huge application

|MACHINE TO MACHINE|

potential in the energy, transportation, built environment and agriculture sectors.

According to the report, there will likely be 12.5 billion M2M devices globally by 2020, up from 1.3 billion devices in 2013.

Warner couldn’t have predicted the industry he was becoming a part of would one day become a trillion-dollar opportunity but he spent most of his first year of business connecting with other people, many of whom were located in tech-centric areas like Silicon Valley or Boston, who also recognized the potential for machine-tomachine technology to at least become a significant force in the tech world. In 2004, he added a few employees and developed prototypes for large regional companies including Crystal Sugar, before attracting the attention of the U.S. Navy, which encouraged the company to apply for a contract to capture data from unmanned aerial systems and other machines.

The military work helped to solidify the company’s engineering and laid a solid foundation for a strong company, but the growth of Pedigree Technologies and the machine-to-machine industry in general did not really take off until 2009, spurred by the realization of major network providers including Verizon, Sprint and AT&T that M2M represented an entire new market for their companies. “They kind of turned their ships and we started to partner heavy with them,” Warner says.

The company went commercial in 2009 and has since experienced tripledigit sales growth and expanded from about a dozen staff members to nearly 70, most of who work at the company’s Fargo headquarters. It was named the secondfastest growing company in North Dakota last year and one of the fastest growing companies in the country, earning it a ranking on the Inc 500|5000 list for the past two years.

Warner says his company has been able to grow quickly in a rapidly expanding and competitive industry because it offers comprehensive technology to its customers and remains focused on helping them do business better. “Our business focus with

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|MACHINE TO MACHINE|

Machine-to-machine technology utilizes small sensors and equipment, like the device shown here for monitoring rail cars, to transmit data over a network to the customer. PHOTO: JOHN BROSE

our systems software is to use it to help companies streamline their operation and run a very efficient operation,” he says. “If you know where people are, your equipment and what your inventory levels are, and you can get all of that information in one spot... you can coordinate your operations in real time. We work very hard to make sure the customer is getting the value they need in order to get the operational responses and the efficiency gains they’re looking for.” And while many of its competitors are singularly focused on one application, monitoring only trucks or trailers, for example, Pedigree Technologies has developed a system capable of monitoring all aspects of a operation, or any number of aspects depending upon the customer’s needs.

The oil and gas industry is Pedigree Technologies’ biggest customer, but it also serves many customers in the construction, agriculture and rental equipment sectors. Warner says the company’s experience building technology for the military transferred well into the oil and gas sector because both have complex operations.

Pedigree Technologies is heavily entrenched in shale plays throughout the U.S. and is exploring future opportunities at shale plays elsewhere in the world, serving many mid-size and large customers.

However, because the company’s technology is cloud-based, Warner says it is cost effective for small businesses as well.

The unlimited potential of M2M has begun to pique the interest of many tech-savvy organizations, and Warner says his company often receives interesting inquiries for potential new applications. In one instance, a nonprofit organization employed the company’s technology through a battery-operated device used to monitor clothing drop boxes. When the device senses that the box is full,

30

Prairie Business Magazine July 2014

it sends an alert for the driver to retrieve the goods, saving time and money by eliminating the need for a driver to periodically check the status of the box.

Pedigree Technologies has also used its technology to monitor portable bathrooms, tracking their location and whether they need to be serviced.

Warner says that while these types of applications represent potential new markets, the company takes a cautious approach when evaluating its participation. “We have to be very careful because, like any good entrepreneur, you want to look at these good opportunities but focus in on our core competencies and servicing our customers in the markets we’re in is where the discipline is required in order to create a very good business,” he says.

“You can’t chase after every shiny object.”

Partnerships and Challenges There are three components of M2M — software, hardware and networks — so partnerships among the providers of those components are integral to the implementation of the technology.

Companies like Pedigree Technologies provide the software and need to partner with hardware and network providers, including the major network providers as well as satellite providers, in order to make the system work. Warner says his company also has emerging partnerships with re-sellers of technology. “Everyone has to be tightly integrated and working in concert in order to deliver the solution,” Warner says. “Our technical partners are key and some of them are also business partners because we work on opportunities with them, which is a win-win.”

In one recent example, Pedigree Technologies partnered with a company which produces sensors that monitor the levels of product in tanker trailers. By applying Pedigree Technologies' system, users are able to capture the sensor’s data, as well as the location of the trailer, and transfer that information to electronic tickets. “In that instance, we have a sensor company, we partnered with Verizon, [and] we partnered with a tanker OEM that will install it on their tanker trailers,” he says.

One issue facing the M2M industry is that the devices being deployed to capture data are generating mountains of data — oftentimes too much data. “It’s an abnormal amount of data and will continue to be an abnormal amount of data,” Warner admits.

Data overload presents a real challenge for many companies, but Warner says his company has focused on straining out the

|MACHINE TO MACHINE| unnecessary data points to provide customers with only the information they want and need.

“That’s the real trick,” he says. “That’s where all our intellectual property is.”

As the M2M industry continues to rapidly expand to meet its potential over the next few years, Warner expects his company will continue to grow along with it from its headquarters in North Dakota. He has no plans to relocate, despite having to confront worker shortages, and expects to continue adding staff this year and into the future.

“We’re very positive,” he says. “The growth continues to be at a high percentage and I don’t see it stopping. Do I want to tell you that in the next five years we’re going to be Google? My ego’s not that big. But there’s definitely potential and we do not see the market slowing down. We only see it getting bigger.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

“

The new facility will educate the health professionals and biomedical scientists the state needs to provide healthcare and improve the health of North Dakotans for generations to come.”

Dean Joshua Wynne, UND SMHS

THE FUTURE BEGINS 2016 Last month, healthcare delivery for generations of North Dakotans took a historic step forward with the groundbreaking for the new University of North Dakota School of Medicine and Health Sciences (SMHS) building. Designed by JLG Architects, Perkins+Will and Steinberg Architects, the $122.54 million SMHS building is structured around interdisciplinary collaboration and stateof-the-art technological innovations in order to train and retain more practitioners, improve the efficiency of the state’s healthcare delivery system, and reduce disease burden.

jlgarchitects.com

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31

|DISRUPTIVE TECHNOLOGIES|

Prairie-Based Disruption Small firms throughout the region aim to develop disruptive technologies

BY ROB SWENSON

mall, nimble companies throughout the Upper Midwest are scrambling to create the next big thing.

Entrepreneurial firms scattered around the Dakotas and other states in the region are among those trying to develop “disruptive technologies” – innovative products with the potential to significantly change lives and businesses.

Identifying disruptive technologies can be challenging because the impact cannot be fully assessed until products come out. But a lot of potentially game-changing processes and devices are being researched and developed in businesses, universities and medical facilities.

Brian Gramm, founder and CEO of Peppermint Energy in Sioux Falls, S.D., has been traveling around the Upper Midwest in recent weeks, raising money for his latest business venture, and he’s impressed by what he’s seen and heard from other entrepreneurs.

“I’m really encouraged by what we, as a region, are bringing as truly disruptive technologies,” Gramm says. “I think we stack up pretty well to other areas in the country that get most of the publicity.”

His company has moved from product development into the early stages of growth. Peppermint Energy makes and markets what Gramm calls “a utility in a box.” The company has developed portable, solar generators and has started deploying them in under-developed countries around the world.

The company has 10 employees, but a subcontractor builds the portable solar generators.

Peppermint’s initial product, the Forty2, looks like an oversized laptop computer. Its name was inspired by “The Hitchhiker’s Guide to the Galaxy,” a multimedia creation in which a supercomputer mysteriously identifies the number 42 as the answer to the ultimate question of life.

Opening a Forty2 exposes solar panels that generate power.

S

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Prairie Business Magazine July 2014

The renewable form of energy is stored in a battery that also is part of the unit. The device can be used anywhere to power a small refrigerator, fans and lighting 24 hours a day, seven days a week.

“We’re talking about life-changing technology that we take for granted. It’s the ability to refrigerate medicine,” Gramm says.

The devices are being used in more than 20 countries, including New Guinea, Republic of the Philippines and Sierra Leone.

There are many other emerging or technology businesses in the region that also have the potential to be disruptive in their fields. Among them are: • Nanofiber Separations in Rapid City, S.D. Nanofiber Separations makes tiny, cotton-like fibers out of cellulose. The

|DISRUPTIVE TECHNOLOGIES|

Sioux Falls, S.D.-based Peppermint Energy is developing portable solar-powered generators geared primarily for use in underdeveloped nations. PHOTO: PEPPERMINT ENERGY

fibers are treated to become sticky. Then they can be targeted for use to screen impurities such as viruses or lead from water, air, feedstock or pharmaceuticals. The company recently won two awards, including a $709,849 Small Business Innovation Research grant from the National Science Foundation.

• Myriad Mobile in Fargo, N.D. Myriad is a growing company that develops mobile applications for clients. For example, it helped the North Dakota State University Extension Service develop the Winter Survival Kit, an app designed to help motorists stranded in winter weather. The company has opened a branch office in Minneapolis and has sales representatives in several major cities.

• Sanford Applied Biosciences, formerly Hematech Inc., in Sioux Falls. The company uses cattle to produce antibodies to help people fight human diseases. For example, it is working with the Naval Medical Research Center to combat the MERS-Cov infection, which was first reported in Saudi Arabia in 2012 and recently was found in the United States.

• Prairie AquaTech in Brookings, S.D., is developing high-protein feed for fish and animals. The company uses microbial processes to convert soybean meal and distiller’s grain – a byproduct of ethanol production – into highly concentrated protein feed for animals. Ultimately, the fed animals are consumed by humans.

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33

|DISRUPTIVE TECHNOLOGIES|

Yong Zhao, a research scientist at the South Dakota School of Mines and Technology, monitors an electrospinning apparatus used to make smallscale nanofiber mats needed for testing by Nanofiber Separations. PHOTO: AMY HODGE/SOUTH DAKOTA SCHOOL OF MINES AND TECHNOLOGY

Broad Range of Categories The phrase “disruptive technologies” refers generally to advances in equipment or processes that have the potential to substantially change and improve the way people live or work. The term was coined

by Harvard Business School Professor Clayton Christensen in his 1997 book, “The Innovator’s Dilemma.”

Christensen categorized new technologies as either disruptive or sustaining. Sustaining technology refers to incremental improvements in existing methods and products. Disruptive technology is new and might not even have an immediate use. Businesses tend to operate more on sustaining technologies than disruptive technologies, which are a greater departure from normal.

In a 2013 report, the McKinsey Global Institute, the research arm of McKinsey & Co., identified different types of technology that could drive transformations in coming years.

“Today, we see many rapidly evolving, potentially transformative technologies on the horizon – spanning information technologies, biological sciences, material science, energy and other fields,” the institute reported. The company identified 12 general categories of poten-

34

Prairie Business Magazine July 2014

tially disruptive technologies. They are: • Mobile Internet • Automation of knowledge work • The Internet of Things • Cloud technology • Advanced robotics • Autonomous and near-autonomous vehicles • Next-generation genomics • Energy storage • 3D printing • Advanced materials • Advanced oil and gas exploration and recovery • Renewable energy Nanofiber Separations definitely fits the category of a disruptive technology, says Todd Menkhaus, cofounder of the business and an associate professor of chemical and biological engineering at the South Dakota School of Mines & Technology.

Hao Fong, a professor of chemistry and materials science at SDSMT, is the other cofounder of the venture. Craig Arnold was

|DISRUPTIVE TECHNOLOGIES| brought onboard in March to serve as the company’s CEO. “We’re really changing the paradigm in the way filtration separation can be accomplished,” Menkhaus says.

Nanofiber Separations’ process could lower the cost of drugs and health care procedures.

In addition to the NSF grant it won, Nanofiber Separations recently was awarded $20,000 as the top winner in the 2014 Governor’s Giant Vision Business Award contest sponsored by the South Dakota Chamber of Commerce and Industry.

Last year, another venture affiliated with SDSMT, CalxAqua, won first place in the Giant Vision competition. CalxAqua is working to improve the way arsenic and heavy metals are removed from water.

A good indicator of the market potential for emerging products is whether companies are knocking on your door, asking about it, says Joseph Wright, associate vice president for research – economic development, at SDSMT. That’s happening with Nanofiber Separations, Wright says.

Nationally, to offset reductions in federal research money and to hold down their own spending, companies seem to be relying more on products being developed at research institutions, Wright says.

“That’s a trend I don’t see changing in the near future,” he says. “Universities are getting smarter at creating mechanisms to move a little bit more at the speed of business.”

Advantages of Midwest Wright and others point out that states such as the Dakotas generally have strong, pro-business tax and regulatory environments. That encourages entrepreneurs to start or expand businesses in the Dakotas.

Nurturing a creative business environment can help, too.

The presence of Microsoft Corp.’s branch campus in Fargo is among the factors that helped technology development in North Dakota, says Jake Joraanstad, cofounder and CEO of Myriad Mobile, a young but expanding company that makes mobile apps.

Universities and government agencies in the Fargo area have helped Myriad get established and grow, Joraanstad says.

Fargo-based Myriad has 52 employees, a branch office in Minneapolis and sales people in Chicago, Denver, Kansas City, Atlanta and Los Angeles. Its business focuses on helping other companies improve their business processes. “We build the software that helps companies be disruptive in their industries,” Joraanstad says.

Midwestern businesses are especially well positioned to be disruptive in fields related to life sciences and agriculture, says Mark Luecke, managing director and CEO of South Dakota Innovation Partners, a venture capital firm that specializes in early stage investments in research businesses.

“I think we’re very disruptive in terms of research, and I think it’s led by research on the I-29 Innovation Highway,” Luecke says, referring to Interstate 29, which runs from Kansas

City, Mo., to the Canadian border and connects with a highway that goes to Winnipeg.

I-29 connects a series of state universities, health care systems and research businesses in the Dakotas, Iowa and Missouri. The highway also helps connect similar businesses and institutions in nearby states in the region.

Prairie AquaTech is among the emerging research companies along I-29 that is affiliated with Innovation Partners. “Prairie AquaTech really has an opportunity to change the way the world looks at prairie food production,” Luecke says.

Sanford Health, a regional health care powerhouse based in Fargo and Sioux Falls, acquired Hematech Inc. in 2013. The firm, now known as Sanford Applied Biosciences, has been working with cattle for 14 years to produce human antibodies to fight diseases such as the flu, cancer autoimmune disorders and inflammation.

“None are in the market yet. They are all in various stages of development and working their way to approval. That takes years,” says Eddie Sullivan, vice president of business development and government relations for Sanford Applied Biosciences.

The history of MERS-Cov infection demonstrates how the fight against diseases is constantly evolving. MERS-Cov started as a virus that affected camels. By 2012 it had mutated to the point that it was potentially fatal to people.

“The whole point of this technology is to be able to respond rapidly to emerging infectious diseases,” Sullivan says.

Several businesses with disruptive potential have temporarily resided or received training in the South Dakota Technology Business Center, a nonprofit incubator that business organizations in Sioux Falls started a decade ago. Tenants receive access to development help, high-tech connectivity and flexible terms for business space.

“Innovation is happening,” says Rich Naser, executive director of the center. “It’s hard for me to know which of these will be disruptive technologies, but with all the activity going on in the region, there’s certainly the potential for some of them to be disruptive.”

Rob Swenson Contributing writer RobSwensonMediaServices@gmail.com

www.prairiebizmag.com

35

|HEALTH CARE|

Get Well Wellness strategies, policy updates to be discussed at health care summit

BY KRIS BEVILL ore than 500 people are expected to attend the upcoming 2014 Health Care Summit, hosted by the Fargo Moorhead West Fargo Chamber of Commerce at the Holiday Inn in Fargo, N.D., on July 22. The one-day event will feature a keynote presentation from Betsy McCaughey, former lieutenant governor of New York and health policy expert, as well as updates on the latest changes to the Affordable Care Act and information specific to large and small employers.

Craig Whitney, president and CEO of the FMWF Chamber, says the group hosted a health care summit soon after the passage of the ACA in 2010 and felt the time was right to provide another informational opportunity on the complex topic. “We think it’s going to provide a lot of information that will be beneficial to our members and the people who attend,” he says.

M

A Spectrum Aeromed employee participates in biometric screening, offered annually onsite as part of the company’s worksite wellness program.

PHOTO: SPECTRUM AEROMED

36

Prairie Business Magazine July 2014

Ross Manson, principal at Eide Bailly LLP, helped to develop content for the event and will moderate several of the day’s sessions. He says the summit has been designed to give specific points of advice to businesses preparing for the new year of regulations in 2015.

While businesses may have appreciated the delays granted for several components of the ACA this year, Manson says he hasn’t noticed many of them taking advantage of the extra time to prepare. “I think they’re missing out on an opportunity to be more on the leading side versus being a bit more reactionary further down the road when they have to make a decision,” he says. Panels at the summit will provide strategy planning advice for large and small businesses as well as provide updates on mandates and grandfather clauses related to health care regulations.

Aside from addressing the regiments of regula-

|HEALTH CARE| tion compliance, the summit will also highlight wellness strategies as a components. “CCEC’s strategy made a change to focus on a consumer-drivgrowing trend among businesses seeking ways to improve the health of en program, which included a high-deductible health insurance plan, health their employees and reverse the continual upward climb of health savings account and additional wellness initiatives,” she says. “This change insurance premiums. was made not only to help us manage health care expenses but also encourTammy Enright, director of marketing and office manager at Spectrum age employees to manage their personal health care. Our goal was not to just Aeromed, will be among the panelists sharing their experiences in impleshift increased health care costs to employees but to make employees responmenting wellness initiatives. She admits the company’s wellness strategy was sible for their own lifestyle choices and encourage employees to take action slow to catch on when it was initially implemented four years ago, but the to make changes if needed.” commitment of CEO Dean Atchison and other management members to Incentives vary and range from reimbursements for fitness center and the program helped it to catch on among employees and become an integral weight loss programs to interest-free loans for home fitness equipment. part of the company. “Now we’re at the point where these guys are really Otterson says that while those types of financial incentives help to encourcompetitive and they’ve got their pedometers and are out there [on the proage healthy behavior, they alone cannot be expected to launch and sustain a duction floor] comparing,” she says. “It’s gotten so that if you’re not particisuccessful wellness program. “Even with financial incentives, [our] employpating, you’re kind of the odd one out.” ees were skeptical and participation rates were low at first,” she says. “The key Spectrum developed its program in-house with the help of Healthy to success is providing information and being patient. Participation increasNorth Dakota’s Worksite Wellness program. An employee survey was cones each year in each area of the wellness program and incentives. ducted to gauge their top needs and was complimented by a biometric surManagement support and participation is also important — it’s a ‘walk the vey, which measured the actual health of workers and identified focus areas walk’ type of concept.” for improvement based on the group’s overall results. A committee was also For more information on the upcoming health summit, visit formed representing all types of workers at the company, from manufacturfmwfchamber.com. PB Kris Bevill ing positions to administration, and tasked with planning events and activiEditor, Prairie Business ties that serve both the perceived and real needs of the company’s workers.

701-306-8561, kbevill@prairiebizmag.com Enright says the committee plans a full year of events in advance for easy implementation throughout the year and focuses on holding one large event each quarter. Events vary, but she says the key to participation is to provide incentives and to make all participants eligible to receive the reward, regardless of their final “score” in the event. The strategy has worked. All of the company’s 33 employees participate in the annual biometric screening and between 80 and 90 percent take part in the fitness challenges.

Aside from the health benefits, the company has also reduced its insurance costs as a direct result of the wellness program. After launching the program in 2011, the company’s insurance premiums increased by only 2 percent in 2012 as opposed to the 18-25 percent increases imposed on the company for each of the three years prior.

In 2013, Spectrum’s premiums actually decreased turning ideas into action by 7 percent. Of course, the trade is that there are some costs associated with implementing a welland action into results ness program, but Enright says the outcome is worth the investment.

“We’re creating a culture that shows we care about our employees and we care about their families,” she says. “That turns into a great recruiting tool, we have very low employee turnover, people come to work excited, they’re sick less.”

Linda Otterson, human resources manager at Cass County Electric Cooperative, says the cooperative’s wellness program began years ago 800.723.5353 with physicals, hearing tests, first aid training and www.netcenter.net other basic offerings, but has since grown into a Fargo | Grand Forks | Bismarck full-fledged program that includes incentives, reimbursements for certain expenses and other

TECHNOLOGY SOLUTIONS + STRATEGIES

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37

|TALK OF THE TOWN|

Prepping for prolonged growth Anticipated 6 percent annual growth rate prompts continual expansions in Dickinson

BY KRIS BEVILL ickinson, N.D., has been at or near the top of many national lists lately — some good, some not so good.

After experiencing a 5 percent annual growth rate the past few years, the U.S. Census recently ranked Dickinson the second fastest-growing micropolitan in the nation (Williston, N.D.’s more than 10 percent growth rate skyrocketed it to the top of the chart). The best-guess current population of Dickinson is now somewhere between 25,000 and 28,000 people, compared to fewer than 18,000 in 2010. A study conducted by researchers at North Dakota State University predicts Dickinson’s growth rate will continue at up to 6.5 percent through 2020.

As is the case in nearly every community throughout the region, the influx of new residents has led to a housing shortage, which contributed to the city’s least favorite new statistic — the nation’s fourth most expensive place to live, according to ApartmentGuide.com. The apartment rental website released data earlier this year claiming that the average rent for a 700square-foot one-bedroom apartment in Dickinson costs more than $1,700 per month. (Williston topped that list as well, with an average rent for a same-size apartment costing more than $2,300.)

Unemployment is virtually non-existent, hiking the local minimum wage to double that of the state’s official minimum wage. “Effectively, our

D

Dickinson, N.D., is expected to experience an annual growth rate of up to 6.5 percent through 2020, prompting continued expansion of the city. IMAGE: KLJ

38

Prairie Business Magazine July 2014

(continued on page 40)

DICKINSON NORTH DAKOTA Investing in Quality of Place has resulted in: -Booming job growth; -vibrant and diverse workforce; -abundant employment opportunities; -new hospital and clinics; -commercial development including major retailers -great education from kindergarten to university; and

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39

|TALK OF THE TOWN|

2014 Health Care Summit

(continued from page 38)

minimum wage in town is $14 an hour,” says Shawn Kessel, city administrator. He stresses, however, that workers are not always as hard to find as businesses may expect, depending on the skill sets they are seeking. “There’s a great many people coming to Dickinson every day and it’s just a matter of making sure they have skill sets that match up with the type of skill sets that employers need.”

The leaders of Dickinson are no strangers to oil booms and seem determined to make the most of this one, partly by keeping quality of life in mind as it grows. Its efforts contributed to the city’s proudest national statistic — Livability.com’s 2013 Best Small Town. The website notes the town’s “growing array of amenities” and recent population growth along with natural beauty including nearby Theodore Roosevelt National Park and Little Missouri National Grasslands as reasons why it ranked first on the list.

Development is a never-ending topic in Dickinson, both public and private. The city is implementing an aggressive capital improvement campaign, consisting of more than 40 projects representing more than $440 million, and the majority of those projects are already in construction or design phases.

The city has also hired a consultant firm to study a transportation corridor, utilities extension, land-use planning and annexation strategy for a 5,000-acre area west of town, which is expected to be the next area targeted for growth. “We believe that because of the Interstate [94], old Highway 10 and the fact that we’ve connected the Dakota Prairie refinery and city of South Heart to the city of Dickinson’s wastewater treatment plant, that is going to act as a development corridor,” Kessel says. “We’re trying to be out in front of that growth as much as we can.”

The Dakota Prairie refinery is expected to become operational later this year and will employee 100 full-time workers.

Other recent major development activity has centered on an area around Exit 59, which Kessel describes as a “pathway to our community that we can be proud of.” The area includes Roer’s Development’s West Ridge mixed-use development, which is home to the recently opened Menard’s store among other retailers and housing. A new middle school will potentially be located in that area, along with the recently opened Sanford Health “super clinic” and the soon-to-open CHI St. Joseph’s Health hospital.

Eventually, Dickinson’s Exit 59 area could also become home to an ambitious mixed-use development by a Singapore-based investment group known as Barons Vista LLC. The proposed 280-acre development would include a massive mall anchored by a 15-story lighthouse tower featuring a top-floor observation center and restaurant, a 30,000-square foot indoor “prairie,” and a hotel. Initial plans for the development also call for 700 homes and townhomes. In May, the city agreed to provide water and sewer services to the targeted area within the next two years, moving the project one step closer to fruition. Kessel admits the project is an aggressive one, but says the group has shown a commitment to the community and overcome initial skepticism. “There’s a great many developers who knock on your door and determining which ones are real and which ones aren’t … and figuring out who will go vertical and who just wants to flip territory is not easy to discern at first,” he says. In working with the group, Kessel says the city has moved from a place of healthy skepticism to one of cautious optimism.

The city will no doubt continue to have its fair share of door knockers as the community continues to expand at a historic pace with no real signs yet of leveling off. As proof, Kessel points out that sales tax revenue in Dickinson was up 15 percent from 2012 to 2013 and building permit activity also continues to increase. “We’re not seeing a slowdown at all in terms of impacts in the community.” PB

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41

40%

480,000

35%

420,000

30%

360,000

25%

300,000

20%

240,000

15%

180,000

10%

120,000

5%

60,000

0% 1985

1990

1995

2000

Percent Flared

2005

BY KRIS BEVILL

New regulations in North Dakota are aimed at reducing the rate of natural gas flaring from its current level of around 30 percent to no more than 10 percent by 2020.

IMAGE: NORTH DAKOTA INDUSTRIAL COMMISSION

42

Prairie Business Magazine July 2014

2015

2020

0

Volume Flared

Capturing a new market New regulations expected to increase demand for natural gas capture technologies

2010

orth Dakota Gov. Jack Dalrymple took on a firm tone during the recent Williston Basin Petroleum Conference when addressing the practice of flaring natural gas at the state’s oil wells, warning producers that the days of the state “going easy” on companies are over.

His comments were backed by the June 1 implementation of more stringent flaring regulations, which Dalrymple promised conference attendees the state would enforce as it attempts to reign in the wasteful practice and reduce the overall level of flared gas at North Dakota wells from around 30 percent to 15 percent within two years and no more than 10 percent by 2020.

Prior to the new regulations, producers were allowed to flare gas for up to a year at well sites and could petition the Industrial Commission for an extension of that allowance if they could prove that capturing the gas was economically detrimental to their operations. Now, pro-

N

Million Cubic Feet per Day

North Dakota Monthly Gas Flared

ducers must submit a gas capturing plan along with their drilling permit applications, proving that they have met with gas gathering companies, that they know the locations and capacities of surrounding gas gathering pipelines and processing plants, and explaining how they plan to apply specific alternate systems to reduce flaring at the well sites. Failure to comply with the new rules could result in the suspension or denial of new permit applications or the restriction of production at existing wells.

The gas capture plan requirement was initially set forth as a recommendation by the North Dakota Petroleum Council’s flaring task force. Tessa Sandstrom, NDPC communications manager, says some companies had been using a variation of the newly required plans prior to its implementation. Drillers who had not yet been strategizing how to capture flared gas will have catching up to do, as Sandstrom noted that the regulations require not only planning within the company, but communication with mid-stream gas gathering and processing companies as well.

“It will certainly add an additional burden for all parties but we are confident it will have a positive impact on the amount of gas captured,” she says.

Pipeline gathering systems and processing plants continue to be built and expanded throughout North Dakota’s oil patch, but they remain in short supply throughout much of the area, so alternative reduction methods will be needed to meet the state’s requirements. That need is already spurring the market for new technologies to be introduced. “Producers want to capture the gas more than anyone, when the right technologies come forward which we are beginning to see, they will take off quickly,” Sandstrom says.

New Jersey-based Primus Green Energy hopes its technology will be one that is chosen by North Dakota producers to curb flaring. The company is commercializing a patented three-stage thermocatalytic process that can be used to convert natural gas into drop-in replacement transportation fuels like gasoline or diesel fuel. The technology has been tested successfully at a mini-demonstration-scale facility in New Jersey and the company says it is now ready to begin deploying its technology in the Bakken and other oil plays.

One benefit of its technology over other options, according to the company, is that it offers a small-scale solution to flaring in that its units are comprised of scalable modules which can be trucked to well sites, assembled on-site, then disassembled and moved to a new location as desired. Vice President George Boyajian says the technology is also flexible and can be used to make a variety of products, which could be shipped via pipeline or truck along with the crude produced at

the site. The company is also offering producers an end-to-end gasto-liquids solution, making the process easier on drillers, he says.

“We will have all of the necessary components to turn that into a liquid product so that the owner doesn’t have to go out and have four or five different contractors,” he says. “The object of our business is to be a one-stop-shop for them.”

Primus’ process has not yet been tested in North Dakota, but Boyajian says the basic technology behind it is not new and has been used successfully in New Jersey, which endures a similar climate. A number of well-specific factors, including gas composition, desired end-product and infrastructure availability, make it difficult to estimate the cost of installing this technology, but he says it has been proven to produce 5 gallons of drop-in fuel per mmBTU of natural gas, which converts roughly to $12.50 of product for every $2 of natural gas.

Boyajian expects Primus will build and sell modules to drillers, but says the company is open to the option of partnerships or licensing the technology as well. The company has been developing its technology for some time, he says, so the roll-out of its commercial availability just as North Dakota producers are looking for alternatives to flaring is a combination of good timing and good fortune. “The timing couldn’t have been better for us.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

www.prairiebizmag.com

43

|FEDERAL DRILLING DATA|

510 505

Oil +5

barrels/day month over month

Monthly additions from one average rig

July June

barrels/day

500

WKRXVDQG FXELF IHHW GD\ 3,600

new-well oil production per rig

3,000

1,800

200

1,200

100

600 0 2008

2009

2010

2011

2012

t

Bakken

Haynesville

Eagle Ford

Niobrara

Marcellus

Permian

0 (25)

2013

(50) (75) (100)

2014

July-2013

(125)

July-2014

Indicated monthly change in oil production (Jul vs. Jun)

Indicated monthly change in gas production (Jul vs. Jun)

thousand barrels/day

million cubic feet/day July-2013

July-2013

July-2014

July-2014

500

60

400

50

300

40

200

30

100

20

0

10

-100

0

-200 -300

-10 Bakken

Eagle Ford

Haynesville

Marcellus

Niobrara

Bakken

Permian

Eagle Ford Haynesville

Marcellus

Niobrara

Permian

Natural gas production

Oil production

million cubic feet/day

thousand barrels/day July-2013

July-2013

July-2014

July-2014

16,000

2,400

14,000

2,000

12,000

1,600

10,000 8,000

1,200

6,000

800

4,000

400

2,000

0 Bakken

44

thousand cubic feet/day month over month

thousand cubic feet/day

2,400

300

0 2007

Gas +6

thousand barrels/day

QHZ ZHOO JDV SURGXFWLRQ SHU ULJ

400

June

518 512

Legacy oil production change

Bakken New-well oil/gas production

per rig

barrels/day 600

July

Eagle Ford

Haynesville

Prairie Business Magazine July 2014

Marcellus

Niobrara

Permian

0 Bakken

Eagle Ford Haynesville

Marcellus

Niobrara

Permian

SOURCE: U.S. DOE ENERGY INFORMATION ADMINISTRATION

MBI Energy Services

701-575-8242 | mbienergyservices.com

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47

|BY THE NUMBERS|

| SPONSORED BY

|

Oil Producing

Average Daily

Wells

Mar. ‘14

+1,818

Mar. ‘13

Mar. ‘14

+194,052

Mar. ‘13

10,457* 8,639

*All time monthly high

Average Rig

Total

Production (barrels)

Permits

Mar. ‘14

+32

Mar. ‘13

977,051* 782,999

250 218

Gas

per barrel

Mar. ‘14

-.53

Mar. ‘13

Mar. ‘14

+251,552

Mar. ‘13

$86.72 $87.25

1,086,189* 834,637

(% Flared)

Mar. ‘14

+4

Mar. ‘13

*All time monthly high

All time monthly high:

33% 29%

All time monthly high:

$136.29, July 2008

Mar. ‘13

186

Coal

Gas

(MCF/day)

+7

193

218, May 2012

370, Oct. 2012

Price

Mar. ‘14

All time monthly high:

All time monthly high:

*All time monthly high

Count

(Thousand Short Tons)

Mar. ‘14

+65

Mar. ‘13

2,245 2,180

All time monthly high:

36%, Sept. 2011

2,924, March 2004 *EIA Original Estimate data (data since 2002)

Interest Rates

Employment

7

Effective federal funds rate 10-year treasury constant maturity rate

6 5 Percent

4 3 2 1 0

Jan2000

Jan2002

Jan2005

Jan2007

Jan2010

Gas Captured/Sold March 2014

21%

Jan2012

Jan2015

UNEMPLOYMENT RATE Mar.-14 Mar.-13

EMPLOYMENT Mar.-14 Mar.-13

North Dakota

2.60%

3.00%

395,976

Bismarck MSA

3.1

3.3

60,664

59,666

Fargo MSA

3.3

3.9

118,431

115,803

Grand Forks MSA

4.2

4.5

52,020

51,745

Dickinson MiSA

1.7

1.8

22,133

20,366 10,484

Jamestown MiSA

3.2

4.0

10,751

Minot MiSA

3.5

3.7

35,551

34,713

Wahpeton MiSA

3.8

4.4

11,507

11,448

Williston MiSA

1.1

1.1

37,151

34,560

South Dakota

3.70%

3.90%

436,170

430,563

Rapid City MSA

4.2

4.4

64,680

63,648

Sioux Falls MSA

3.8

3.9

130,608

128,199

Aberdeen MiSA

3.7

3.5

22,474

22,542

Brookings MiSA

3.4

3.4

18,919

18,491

Huron MiSA

4.0

4.0

9,546

9,368

Mitchell MiSA

3.8

3.7

13,052

12,850

Pierre MiSA

3.3

3.2

11,938

11,536

Spearfish MiSA

4.3

4.4

12,522

11,982

Vermillion MiSA

3.8

3.7

7,274

7,221

Watertown MiSA

4.3

4.3

18,549

18,141

Yankton MiSA Minnesota

12%

67%

3.7

4.0

11,442

11,230

4.80%

5.20%

2,856,843

2,821,558

Duluth MSA

6.7

6.8

136,454

135,461

Minneapolis-St. Paul MSA

4.9

5.3

1,783,666

1,758,707

Alexandria MiSA

4.7

5.4

19,843

19,570

Bemidji MiSA

7.4

7.7

20,816

20,263

Brainerd MiSA

8.9

8.9

41,831

41,819

Fairmont MiSA

5.7

5.8

9,934

10,085

Fergus Falls MiSA

6.5

7.0

28,718

27,814

Gas captured and sold

Hutchinson MiSA

6.6

7.3

18,378

17,912

Marshall MiSA

4.9

5.1

14,267

13,993

Flared due to challenges or constraints on existing gathering systems

Red Wing MiSA

5.4

5.8

24,347

24,041

Willmar MiSA

5.9

5.9

23,418

22,996

Flared due to lack of pipeline connection

Winona MiSA

4.7

4.7

27,836

27,540

Worthington MiSA

4.3

4.3

10,941

10,811

SOURCE: N.D. PIPELINE AUTHORITY

Data provided by David Flynn, chair of the University of North Dakota Department of Economics. Reach him at david.flynn@business.und.edu.

48

387,308

Prairie Business Magazine July 2014

New Minot

Internationa

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One of the nation’s most promising investments isn’t a company, but a city.

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Because of energy’s impact on Minot, we have more than $350 million slated for improvements to roads, our airport, water and sewer mains, the landfill, buildings, and more. There’s no better region in the nation to put your investments. As a city, we're doing our part to keep pace, and continued state investment feeds an economic engine.

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