The Belle Fourche Chamber of Commerce hosted "It's Coming Down the Pipe," a town hall meeting on the booming oil industry in western North Dakota. The meeting was a bigger deal than I thought. Heading down National Street toward the Belle Fourche Community Center, I found parked cars lining the street two blocks away. As I squeezed the Bug in between a couple pickup trucks up the hill, I thought maybe there was a basketball game or something going on.
But when I walked into the auditorium, I found around 600 neighbors packed in to listen to a five-man panel from North Dakota discuss the impacts the Bakken oil boom has had on their roads, schools, economy, and culture.
Why so much interest? Belle Fourche is two hours from Bowman, North Dakota, which lies at the edge of the Bakken shale formation. But Belle Fourche is already feeling impacts from the Bakken boom: as moderator and Belle Fourche Chamber director Teresa Schanzenbach noted in her introduction to the program, many Belle Fourche workers are already heading up U.S. Highway 85 to work in the North Dakota oil fields, leaving the Belle Fourche Fire Department short on volunteers. The Belle Fourche audience clearly wanted to learn more about how to deal with current strains, but there appears to be some mingled hope and fear that the boom could spread, that the industry may find oil further south, and that Belle may see some black-gold boomtown pressures someday soon.
Five speakers came to provide their perspective on the oil industry and what communities need to do to prepare for this economic activity:
- Cal Klewin, executive director of the Theordore Roosevelt Expressway, the North Dakota–South Dakota branch of the Ports-to-Plains Alliance, an economic development lobbying group dedicated to getting bigger and better roads to span the Great Plains from Alberta to the Gulf of Mexico.
- Gene Veeder, executive director of the McKenzie County, ND, Job Development Authority and Tourism Bureau since 1994 and president of the Theordore Roosevelt Expressway. He was born in McKenzie County seat Watford City and is a third generation rancher in the county.
- Shawn Wenko, assistant director of the Williston Economic Development corporation. Wenko gets extra props for being a Black Hills State graduate and working in South Dakota promoting tourism for ten years.
- Paul Lucy, director of the Economic Development and Finance division of the North Dakota Department of Commerce. Lucy grew up in Powers Lake, ND, and worked in the oil fields.
- Scott Zainhovsky, engineer with the North Dakota Department of Transportation. Zainhovsky was North Dakota's Young Engineer of the Year in 2010.
Cal Klewin led off with his perspective on the infrastructure needs brought on by the Bakken oil boom. He said the Theodore Roosevelt Expressway lobbies for federal funds for more infrastructure to ensure that Washington doesn't leave rural America behind. Klewin didn't comment specifically on Rep. Kristi Noem's support for the "worst transportation bill ever," legislation that would destroy the Highway Trust Fund. He did say that we haven't had a transportation bill since 2009, and that local and state governments can't plan road construction without a solid federal bill that assures steady funding levels.
Klewin said the oil industry has definitely strained North Dakota's roads. Truck trafffic on Highway 85 is sometimes so heavy that motorists must wait a half-hour to enter the highway from county roads. The oil industry is certainly contributing to North Dakota's tax coffers, but Klewin said those dollars always come two or three years too slowly.
Klewin worked in Bowman, ND when the oil boom took off there. He said one of the great economic successes there was construction of a big truck stop at the 85–12 junction. That truck stop, said Klewin, now sees 50 to 90 trucks stopping over each night. The town fought to keep Highway 85 routed close to the town, although now it faces the possibility of a bypass route. Klewin said a big highway is the key link to growth, but that big highways bring big traffic. In other words, be careful what you wish for.
Klewin, like the following speakers, said the oil industry makes positive contributions to the local economy. He cautioned, however, that communities need to seek diversity in their economic portfolios.
Gene Veeder opened his comments by reading an e-mail that he received just an hour before the program. A woman in Ohio wrote saying she worked in sales for ten years and now needs work. She said the Ohio economy is dead, and she desperately wants to work. She'd love to land in sales or customer service, but she'll take anything to pay her family's bills. She asked Veeder for any advice he can offer on how to line up work in North Dakota.
Veeder said that e-mails like that show that finding willing workers is not the problem facing community planners; the problem is providing those workers the infrastructure and quality of life they need.
Reading from his county data sheet, Veeder said there are fifty oil rigs in McKenzie County, each estimated to create 120 direct and indirect jobs. That's about 6,000 jobs in a county that in 2000 had an official population of 5,737 and in 2010 reported an official population of 6,360.
The biggest challenge, said Veeder, is housing. He expressed a serious concern about preventing landlords from taking advantage of incoming workers. He said a 1,000-unit housing development was just finished in Watford City and that the county is currently talking with two developers about putting up similarly sized developments. Now think, Belle Fourche, Buffalo, and Lemmon: are your city and county budgets ready to double your water, sewer, and other public infrastructure and service needs in the span of a few years?
Veeder offered a list of pieces of advice for local officials who think they might be getting a piece of the Bakken action. Hopeful cities should stop selling off city-owned lots to low bidders now. He noted that lots in Watford City are now going for $40K to $70K. Hang onto that property, said Veeder, to allow for more planning options in the future, not to mention bigger payoffs. He also suggested that communities purchase land for future development.
Not everything can go to the highest bidder, though. Veeder said communities need to plan for affordable housing. Truck drivers may be clearing $80K, but towns still need teachers, cops, and service workers who won't be getting that big of a chunk of the oil pie but who still need a place to live. Communities also have to look for ways to keep long-time residents and folks on fixed incomes from being priced right out of their hometowns.
Along that same line, Veeder said communities have to plan for permanent housing. Retailers and schools will not expand on the basis of your local trailer parks or man camps.
Veeder emphasized the need to plan for expanded water usage. Bakken oil developments are a huge drain on groundwater, said Veeder. The oil companies are willing to pay for the big water systems they need for fracking and for their facilities. The trick for communities is to make sure those investments also pay for infrastructure that serves other commercial needs as well as all the new residential developments. Then when the oil industry is done with the area, Watford City and the rest of the Bakken boomtowns have long-term, industrial-scale water infrastructure that they can use to attract new businesses to replace Big Oil.
Along with pipes and roads, local communities need to be ready to invest in more cops. Veeder pointed out that along with the predictable trouble of bringing in thousands of young men aged 18 to 35, handing them big wages, and turning them loose in communities where they are likely separated from family and friends, oil boomtowns also need to be cognizant of the fact that many of the workers drawn to the oil fields are coming from desperate straits. They are willing to uproot and travel across the country to pay their bills. Many are coming off perhaps a year or two of unemployment elsewhere. They've been leading stressful lives, and they may still face the stress of getting out from under bad mortgages and clearing other debts. Stressed-out people tend to cause more stress for others, including for law enforcement. If your town gets in on the oil boom, you will have to hire more cops.
For all his cautions, Veeder insists, "I'm actually pretty upbeat about all of this." The oil boom is providing economic opportunities for farmers and ranchers to keep the young people around town and keep their operations going. He said that as long as people have jobs, good government planning can fix all of the other problems. If the boom comes, said Veeder, "Control it, own it, take advantage of it."
Shawn Wenko piled on the stats from Williston. He said that in 2004, Williston started prepping for 40% population growth. They surpassed that growth in two years. Currently there are 3,000 job openings in the Williston area and 0.9% unemployment. Anyone unemployed in Williston, said Wenko, is truly unemployed by choice.
Wenko says the average wage in Williston is $57K, with oil industry jobs averaging $82K (whoosh—there went five more volunteer firemen from Belle Fourche). Wenko says non-oil employers need to offer $15 and hour to get applicants for their openings.
Wenko said Williston say $720 million in taxable sales in the third quarter last year. Williston is only the ninth-largest city in North Dakota, but its sales tax collections were number one, beating Fargo and Bismarck. That's like Huron doing more business than Rapid City and Sioux Falls.
2100 new housing units were built in Williston last year, up from 1500 new units in 2010. The city is annexing hundreds of acres each year. City government added 26 full-time equivalents in 2011. City government employee expenditures have more than doubles since 2006 to over $8 million. If you want economic growth, you'll have to accept bigger local government.
Wenko says Williston is basing its long-term planning on the assumption that population will grow to 40,000. Some oil industry folks say they should think 60,000. Where Williston of the 1990s saw the usual brain drain of young people fleeing rural isolation for bigger city opportunities, Williston is now seeing lots of young people move back to take advantage of connections to get good housing and good jobs.
Wenko says Williston will need $540 million to build the infrastructure it needs to handle the population boom. The city just passed a one cent sales tax to fund parks and recreation. Those funds will go in part to building a $35-million, 145,000-square-foot recreation center that Wenko says his parks and rec people are touting as the best facility in North Dakota and perhaps in a three-state area. Williston is working on a comprehensive plan that includes $30 million for downtown revitalization: more green space, keeping city and county government downtown... Madison, LAIC, are you listening?
Williston drew nine new hotels last year, providing 800 more rooms for visitors, and more are coming. The city landed a Menards last year... although blogger Rob Port points out that Williston still felt the need to bribe Menards with $5.7 million in tax handouts.
Wenko said that other communities facing the possibility of the oil boom need to look beyond the media's preferred message of growing crime, social problems, and gold-rush mentality. He says folks need to stay positive, accept the inevitable changes, and look to the light at the end of the tunnel. I am unclear as to whether the tunnel down which Wenko is looking is the five- or ten-year tunnel it may take for the market and population growth to stabilize or the thirty-year tunnel, at the end of which Williston will look into the harsh light of the high plains sun glaring through the dust of oil trucks abandoning their dry wells and ask, "What do we do now?"
Paul Lucy talked about the oil boom's impact on Groton-sized Stanley, ND. The manager of the local Cenex co-op told folks at the recent annual meeting that the co-op sold more diesel in 2011 than it sold in the last 77 years combined. (The expanding Stanley Cenex is supporting 40 shifts a day selling food, fuel, and clothing.) Lucy noted that the Stanley school district had 580 students, then gained 85 students for the new school year.
The stresses on schools aren't just numbers of students, said Lucy, but also the type. He said Bowman started offering English classes for parents to help immigrants gain functional literacy in the new language. Such needs along with the sheer numbers necessitate more teachers with different skills, and those teachers are one more group you've got to pay competitive wages and house properly.
Lucy said community leaders need to remember that the oil companies and other businesses following them need your community's resources. Don't give away what you have, said Lucy. He spoke of one town that gave an oil company a discount on water when it probably could have tripled the rates and still made the deal. I don't think Lucy was advocating that we gouge the oil companies when they come. He was simply pointing out a market reality: when the demand is there, local governments don't need to play the usual game of tax breaks and other incentives to attract industry. The market will solve; communities can charge appropriate rates to help them pay for the enormous new demands for infrastructure and services.
Scott Zainhovsky spoke of the unique challenges the oil industry poses to roads. The industry moves around a lot, and moving one rig requires 40 to 50 loads hauled along the highway. Those rigs don't go to established industrial parks; they move all over the countryside, down whatever county gravel gets them to the big X the geologist says marks the spot. Oil rigs in the 1990s weighed 90,000 pounds; now the same rigs weigh 110,000 pounds. That constant and heavy movement means that state engineers can't just focus on building a few key roads to established sites; they have to maintain an entire network of roads that can stand the oil activity, while keeping enough resources to maintain statewide road system outside the Bakken boom zone.
Zainhovsky admitted that NDDOT was caught behind curve on planning for the oil boom. Heavy drilling took started in the Bakken in 2005, and NDDOT didn't really start paying serious attention to the increased road needs in northwestern North Dakota until spring 2008. But Zainhovsky spoke of a friend who works for an unnamed company in Calgary that is a big player in the Keystone XL pipeline. His friend's job was to forecast oil development across the industry. In 2008, his friend said the Bakken was small potatoes. Even big-money oil industry experts missed the looming Bakken boom.
Zainhovsky offered a quick and fascinating geology lesson. Pointing to the map at left (click to enlarge!), Zainhovsky said the Bakken shale oil formation is basically a really big bowl with a hump in the middle. That hump in northwestern North Dakota is where a lot of the drilling happening right now. It's higher ground, the oil is closer to the surface, it's easier pickin's. When the industry drains that oil, Zainhovsky says the next most promising land lies to the northwest. After that, southwestern North Dakota is the next best target. When exploration starts shifting that direction, says, Zainhovsky, that's when Belle Fourche (and Bison, and Buffalo, and Lemmon) had better buckle up.
Zainhovsky said North Dakota's state legislature made its first really big investment in addressing the increased road needs during the last session. The state dedicated $142 million to local road needs and $200 million for state highway improvements. South Dakota's total appropriations for transportation in 2012 were $581 million... $381 million of which were federal dollars.
Zainhovsky said that he is encouraged to see Belle Fourche already looking ahead at possible impacts from the expanding oil industry. He said every community in this position needs to take planning seriously. Communities need to consider every driveway and access point to county roads, since every intersection is a potential crash site. Towns and counties need to designate land use, lay out official road maps and classifications, and make clear what their long-term intentions are for the roads in their jurisdictions. Community officials need to let residents and businesses know which roads will remain small and residential and which roads will be expanded to four-laners or bigger.
The Q&A session was not nearly as long as it could have been or as long as some audience members may have hoped. But there was no way Schanzenbach could have posed every question in the big stack of yellow cards submitted by the audience.
The first question she gave to the panel was whether oil patch workers are bringing their families and whether Belle Fourche might be able to meet some of those residential needs. Veeder noted that one of his colleagues is retiring and moving to Rapid City because it's quieter. I met a former oil patch worker a couple months ago who moved here to Spearfish for the same reason. So even if current workers don't move to Belle and neighboring communities, perhaps the Black Hills stand to gain by providing a haven for folks who get fed up with the boom.
Veeder said that he sees a big trend in workers bringing their families to North Dakota still a year or two away. Among the workers and families who do come, he sees folks from Montana and Minnesota as the most likely to stay. His experience says that folks from south of the Mason-Dixon line really struggle to adjust and are less likely to stay. But for those who do stay, commuting from places in South Dakota may not be out of the question. He says some Watford City workers are already commuting from Bowman and Bismarck. Move that oil activity south, and it would be entirely conceivable that Belle Fourche could provide permanent housing for some oil patch workers.
But Klewin noted that in the current economic situation, a lot of families still can't afford to move. The breadwinner may be making high-five figures in the oil patch, but the family back home may be stuck with an upside-down mortgage in a housing market where nothing will sell.
An audience member asked if county zoning ordinances are helpful in dealing with the oil boom pressures. Veeder's answer: "Yes yes yes yes yes." He said McKenzie County was the last county in North Dakota to enact a zoning ordinance, which just went into effect on January 1. Such regulations won't stop business growth, he said. The companies will follow the rules communities set.
Wenko added that housing developers will build big developments outside of town, then apply for connection to town utilities. That complicates things, said Wenko. City and county officials have to look ahead to cooperating on zoning and infrastructure decisions. They also need to be prepared to increase their staff, or at least hours, as they will get walloped with applications.
Another audience member asked about how to control speeding trucks. Wenko led off by noting that Williston just banned trucks from parking on public streets. He said the city issued over 300 citations for trucks traveling off truck routes within the city in 2011. Compare that to the total of 25 truck-route violations handed out over the three preceding years. Cities have to be ready to build truck bypass routes.
Zainhovsky said that his latest December data show that only one recent traffic fatality was the fault of a truck driver, and that that fatality was from a one vehicle rollover. Zainhovsky thus contended that the traffic problems come not so much from speeding trucks as the change in traffic and road culture. When big lines of trucks are hauling rig gear or chemicals and driving carefully, they will slow down other traffic. Drivers caught behind such convoys get antsy and may take risks trying to pass such lines of trucks. Until the state can catch up with bypasses and wider roads, Zainhovsky said drivers need to learn to adjust to the new conditions.
Klewin agreed that impatient drivers are at least as much of a danger as the increased truck traffic itself. He noted (with the tongue-in-cheek dismay of an apparent graduate of the Noem-Janklow school of driving) that the state is stationing more highway patrol officers in western North Dakota. Veeder added that counties are having to spend significantly more on dust control on their gravel roads.
The final question dealt with funding pressures and allocations to the public schools. Veeder said that the Watford City schools saw a 38% increase in enrollment this year. That would be like 500 new kids all at once joining the 1350-some in the Belle Fourche district. Veeder said the biggest challenge here was recruiting teachers, since they couldn't find places to live.
Wenko added that Williston schools currently have 100 students classified as homeless. That's out of a current enrollment of 2650. The district did a facility study last year that predicted the district might see an increase of 300 students by 2013. An updated count of new housing units now suggests the district could see anywhere from 800 to 1200 new students enroll next fall.
The oil patch town hall drew hundreds of residents, as well as policymakers from around the area. Legislators like Senator Ryan Maher high-tailed it out of Pierre at the close of business Thursday to make the meeting (and Senator Maher still had to haul 120 miles back to Isabel that night to make a crackerbarrel Friday a.m.). Public Utilities Commissioner Chris Nelson also attended, thinking there might be some discussion of the pipeline needs that might arise along with a local oil boom. Much to both of our chagrins, we didn't even get to that issue. Rapid City Mayor Sam Kooiker, Rapid City Councilman Jordan Mason, Lawrence County Commissioner Terry Weisenberg, and an assortment of other elected officials also attended.
South Dakota state government is pushing its own oil and gas initiative to promote exploration and development of our petro-resources. Whether drillers will find anything like the Bakken wealth under South Dakotans' feet is anyone's guess. But if they do, Thursday evening's forum was an important starting point in the statewide discussion and planning that will have to take place to brace Belle Fourche and all of northwestern South Dakota for the stresses on roads, water, housing, and government that Watford City, Williston, and the rest of western North Dakota are seeing now.