Naggingly low natural gas prices apparently haven't dimmed prospects in the Bakken Shale in North Dakota and Montana, where the booming play is driving a surge in hiring, housing starts, infrastructure projects and more.
Housing, including apartments and hotel rooms, has become "extremely limited in the oil patch," according to Job Service North Dakota (JSND), which recently reported the state's unemployment rate at 3.0% in March, down 0.4% from March 2011 and the lowest of any state in the country.
Jobs directly related to the oil patch, including energy exploration and support, have increased significantly in the years since activity began ramping up in the Bakken, JSND research analyst Michael Ziesch told NGI. There were 5,312 such jobs in North Dakota three years ago, 8,962 in 2010 and 13,902 in the first nine months of 2011. 4Q2011 data hasn't been finalized yet, but winter "was a nonissue this year in North Dakota," so the job numbers might not soften as much as they traditionally do during the state's notorious winters.
And the number of jobs indirectly related to the oil patch, including trucking and construction, have probably risen by similar margins due to the growth of operations in the Bakken. "It's really hit its stride," Ziesch said.
In Stark County in western North Dakota, Accommodate International is moving forward with plans to build a 3,000-unit campus in the city of Dickinson to house Bakken workers. The Austin-based company's plans were approved last Wednesday by the Dickinson Planning and Zoning Commission, according to The Dickinson Press, but still need final approval from the Dickinson City Commission -- which could come as early as June 4 -- before Accomodate can break ground. If the project is approved, Accommodate could have 1,000 rooms available by the end of this year and plans to have the camp fully operational by the end of 2013.
The boom in Bakken Shale operations is having -- and will continue to have for many years -- major impacts on Dickinson, according to City Administrator Shawn Kessel.
When the U.S. Census Bureau counted in April 2009, there were 17,787 people living in Dickinson; the population today is estimated at more than 23,000, Kessel told NGI. "We've gained 5,000, or about a third of our city's population, in about three years," he said. "We've hired some firms to tell us what they think our buildout will be, and right now they're telling us that we should plan for an end population of 40,000-45,000 people, and that the vast majority of those people are going to be here within the next 10 years."
The implications for Dickinson and communities like it across the Bakken, which include the need to pay for and build housing, roads, schools, hospitals and everything else that the population boom will require, are daunting, Kessell said.
"For a small town, that's a task...we're a city that has about 125 full time staff and we have openings that represent about 10% of that as we speak. If you sent me five police officers, two dispatchers, three street guys and three sewer guys, I'd hire them all on the spot, as long as they were qualified and had good personalities. And we have 25 more openings that are seasonal that we just can't fill." Wage inflation in the area is "tremendous," he said. "If you sent me 300 unskilled laborers that had their CDLs [commercial driver's license], I'd put them all to work, and they'd all make between $80,000 and $100,000 a year."
Dickinson is the fourth-fastest growing small city in the United States, while Williston, which is located about 60 miles north of Dickinson -- in the heart of the Bakken -- is the fastest growing small city in the country. Minot, ND, is number eight on the list. All of that growth is due in large part to the state's burgeoning energy industry, according to Kessel.
"That's 90% of the reason," he said. "Most people understand that there's a lot of drilling and a lot of oil activity, but what they probably don't understand is that we probably have the largest construction project in the nation divvied out amongst all of the cities because of all the homes, all the apartments, all the retail shops, all the commercial, all the industrial, all the road systems, the water systems, the sewer systems -- it's just huge." Dickinson is faced with the prospect of building a $35 million wastewater treatment plant, a $12 million public works building, an $8 million public safety center and a new city hall. "Just those four buildings alone represent a huge investment for a community of our size," he said.
School systems in towns across the state, even on the oil patch's fringe, are seeing an increase in student numbers after years of shrinking enrollments, the Bismarck Tribune recently reported.
North Dakota, which had no drilling rigs operating in 1999, is now the second biggest oil producer in the nation, trailing only Texas. Natural gas production totals in March were 19.2 Bcf, up from 17.4 Bcf for February. Oil production in February was 16.1 million b/d, according to the latest statistics released by Bruce Hicks, assistant state mineral resources director. The state has been setting new oil and gas production records almost every month.
And the economic impacts of the shale surge aren't limited to North Dakota. In Montana, the Billings Gazette reports that housing starts and home prices are on the rise, thanks to demand from oilfield workers flocking to the Bakken.
Sen. Max Baucus (D-MT) recently launched the Eastern Montana Energy Workforce Development Initiative, a program designed to train Montanans at the state's colleges so they can land energy related jobs in the Bakken.
"This is truly a Montana solution for Montana jobs -- there's no reason why energy companies and related industries should not be hiring workers trained and educated right here in the state," Baucus said. "This initiative sends the message far and wide that Montana is proactively working to rewrite the cycle of boom and bust."
The Bakken/Sanish/Three Forks play has seen the third largest increase in activity over the last year of all unconventional plays. According to NGI's Shale Daily Unconventional Rig Count, 218 oil and gas rigs were actively drilling in the play for the week ending May 18. That marks a 25% increase over the 174 rigs from one year ago.
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