A new normal

Western North Dakota communities use oil downturn to catch up

BY MARNIE LAHTINEN

The recent downturn in oil prices means a ‘new normal’ for western North Dakota, as communities there adjust to a slower pace of life. A barrel of crude is worth roughly half of what it was in June 2014 — the American benchmark is currently around $50 a barrel — and oil companies are adjusting to lower demand and reduced earnings. The industry has slowed exploration and production, and oil workers have lost jobs as companies consolidate and reallocate resources. Yet, despite this turndown, western North Dakota oil-boom cities are maintaining robust job and housing markets while addressing ongoing infrastructure demands.

Domestic crude production in the United States nearly doubled over the past six years and western North Dakota was a major contributor to that growth. In the spring of 2014, North Dakota’s production reached the 1 million barrel per day mark. Record revenues flowed into state coffers and North Dakota enjoyed some of the lowest unemployment rates in the country. The decrease in oil prices over the last year has changed the types and number of job opportunities — but in a surprising way.

“Oil companies are responding to this focused economic event, so there’s been a shift in the types of jobs that are here … and there’s actually more of them,” says Gaylon Baker, executive vice president at Stark Development Corporation in Dickinson. “There are 1,800 job openings in southwest North Dakota right now that need to be filled.”

Now, it is the residual projects of the oil boom which require workers. Williston is relocating its airport to the tune of $254 million. A pipeline project is in the works to transport Bakken crude out of the state to major American refining markets. Cindy Sanford, manager at the Williston branch of Job Service North Dakota, says those two projects alone will require at least 600 laborers.

“We still need truck drivers, mechanics, teachers … almost any other job you can think of,” Sanford says. “Williston is still catching up, the job market is still strong and we have a shortage of skilled people.” In fact, a growing concern is how western North Dakota can retain qualified workers.

Affordable housing is a key component to employee retention. “The apartment vacancy rate is finally at a level where you can get an apartment at a reasonable rate,” Baker says. “A lot of the crowding together has gone away as [transient workers] leave the area …. instead of six to an apartment, we now have two to three in an apartment, and that’s alright.”

Infrastructure needs are acute for western North Dakota communities that quickly and drastically increased in size: Dickinson grew from 18,000 to 28,000 residents in just four years. “Cities out here have analyzed what they can do — and what they should do — and priorities are in order,” Baker says. “The surge funding [from the state] wasn’t enough to address the infrastructure needs we have … so items that are lower on the priority list will not happen.”

“Oil was the catalyst to get people here, and as towns grew with oil production, everything else grew exponentially, too,” says Brett Erdmann, president and CEO of New Leaf Hospitality, which owns and operates hotels in the Bakken. “A lot of costs were inflated … but now businesses and cities have become more efficient at what they’re doing, and how they’re doing it.”

Erdmann admits that while there is some anxiety about the future, it’s the more serious and dedicated businesses — those with a “long-term proposition in the area” — that are sticking around. So while business owners and investors adjust their revenue and income projections, they are also taking this time to get in front of some of the projects they have been working on, Erdmann says. “Those of us who are here for the long term are figuring out how to negotiate the new speed,” he says. “It was 100 miles per hour, now it’s 50 miles per hour. … Let’s find a way to maintain 75 miles per hour.”

“The price of oil will come back gradually,” Baker says.“We’re going to be fine out here … and all of this activity has created (quite) a story.” PB

Marnie Lahtinen Contributing writer marnielahtinen@gmail.com