North Dakota’s oil boom brings with it tremendous wealth and enormous problems — and both are coming to South Dakota, industry experts say.
South Dakota has oil wells in counties such as Butte and Harding. The state isn’t poised to compete with North Dakota — which is expected to soon become the second-biggest oil-producing state behind Texas — but experts say that crude-carrying areas should prepare to see some of the same prosperity and problems.
Among the pending difficulties: increased traffic, housing shortages and skyrocketing rents.
Those issues were laid out for about 600 people who filled the Belle Fourche Area Community Center’s auditorium late Thursday for a town hall meeting called “Coming Down the Pipe.” The event was designed for experts talk about the frenzy in North Dakota’s oil patch that is already trickling south.
“We want people to understand the effect of development and the stress it puts on the community,” said Lynn Hammerstrom, former president of First Interstate Bank who lives in Belle Fourche, a town in northwestern South Dakota with about 5,700 residents.
The standing-room-only crowd listened to a panel of oil industry, infrastructure and economics experts, who gathered to answer questions about what residents and community leaders should do as South Dakota inches toward tapping its oil potential.
“Make sure you focus. It’s all about planning,” said Gene Veeder, a panel speaker and executive director of McKenzie County Job Development Authority who said constructing single-family units and affordable housing should be a priority.
Veeder should know: North Dakota’s McKenzie County has seen rent prices steadily climb to averages of $1,500 to $2,000, he said.
“If you need 1,000 workers, you need to figure it out,” he said. “I love the oil industry, but communities can say, ‘We love you, but this is how we’re going to do it.’”
But panelists said South Dakotans should embrace the possibilities. Truck drivers bring business, and communities will need parking, restaurants, truck stops and highway expansion — all of which will translate to more jobs, they said.
Already, U.S. 85 in South Dakota was expanded to a four-lane highway in December 2010 to handle heavier traffic traveling to North Dakota’s oil patch.
Cal Klewin, executive director of the Theodore Roosevelt Expressway, described the truck stop on Highway 12 and U.S. 85 in Bowman, N.D., a town of fewer than 2,000 residents, where between 50 and 90 trucks stop each night.
Each morning, the buzz in town is about how many trucks had camped out the night before, Klewin said.
The trucks are carrying hay, pumps, tanks, pipes and equipment, and their route extends as far south as Houston all the way to the border with Canada.
Jim LeMar, a Rapid City construction worker, was among the concerned audience members. He experienced the boom in Gillette, Wyo., in the 1970s when oil, coal and uranium production exploded.
“This is huge in comparison,” he said of North Dakota’s boom. The state has outpaced predictions, last month surpassing a milestone of half a million barrels of oil a day. It now accounts for about 10 percent of total U.S. crude oil production, up from just 1 percent in 2007.
The oil patch has brought with it wealth and jobs as most other states have struggled.
LeMar said the construction industry already is hurting with too few people pounding nails.
“The construction industry can’t keep up. Most motels are booked three years straight, from the moment they opened,” he said.
Meeting attendees said that some of the boom downsides perhaps seem trivial, such as having to wait a half-hour for a fast-food meal, but they affect their daily lives.
Hammerstrom acknowledged that the possibilities are “exciting but scary, too. You don’t know what to expect until you live it.”
Shawn Wenko, a panelist and assistant director of the Economic Development Office in Williston, N.D., said the boom has brought jobs in all skill levels. Though oil is the No. 1 industry, agriculture and retail contribute to the economy, he said. Other job openings are in emergency services, medicine, education and dentistry.
“We’re seeing a boom of population while for generations or decades we saw a decline,” Wenko said. “The younger generation is now moving back. In northwest North Dakota, your graduates from there left in the 1990s because there were no opportunities. Now, they’re fighting to get back.”