The City of Williston and western North Dakota has seen exponential growth the past five years due mainly to the harvesting of minerals beneath our prairies that still produce trainloads of grain and crops to feed our nation. In April 2013, the U.S. Geological Survey estimated that there are more than seven billion barrels of recoverable oil in the 200,000 square miles that make up the Bakken basin, covering North Dakota, Montana, Saskatchewan and Manitoba.
As far as I know, that oil isn’t going anywhere. To the best of my knowledge, it’s not slow dripping to the center of the Earth through a leak in the formations underlying our country’s midsection. My point is that regardless of the price of a barrel of oil, the resource will remain in the same place it was formed more than 2.5 million years ago.
Since June 17, 2014, the price of a barrel of WTI crude oil has dropped from $107/BBL, to $53/BBL today. Many in Williston remember the mid-1980s, when the price dropped so significantly that oil companies and the labor force vacated the area in search of bigger profits and more stable revenues. So what’s the difference this time? Why are state and local officials not panicking?
In the words of an MVP NFL quarterback — R-E-L-A-X.
There are many studies, reports, and speculations that predict the price of oil will increase. There are just as many pundits who claim prices will stay this level for a year or more. Read another headline and you’ll find that after nearly 50 years, OPEC’s monopolistic grip on world oil markets is in serious jeopardy (CNN Money, 2/10/2015). If you find 20 articles on the current state of the oil markets, you’ll sure to find 20 opinions and theories.
The oil and gas producers in western North Dakota know what their “break even” price is for a barrel of oil. Even that number changes from company to company, even from well to well. It’s true that the number of drilling rigs is down, mainly in the outlying areas (outside the four county “sweet spot” of Williams, MacKenzie, Montrail and Dunn Counties), and some companies are cutting back on the number of total hours workers are logging. It’s also true that these instances of “belt-tightening” are different for each producer and oil service company.
The economics of extraction and transporting product will drive just how fast we’ll continue to grow. Williston’s Economic Development director Shawn Wenko summed it up at a meeting recently. He said Williston will go from “insane growth to just a little crazy”. What does this mean for our city?
It means that we’re still behind in serving the labor force, the families and businesses that call Williston their home. Retail and city services are still needed. The airport still needs to expand and move. The new high school still needs to be built. Housing needs and infrastructure are still a major priority.
The pressing need to catch up to the growth that has already occurred has been heard in the North Dakota State Legislature. A $1.2 billion “surge funding” bill is making its way through the process this spring. The funding is intended to help local governments most impacted by the crush of population and economic activity in western North Dakota. Local governments have increased their debt load and local sales taxes to the point where there are no other solutions but to turn to the State for assistance.
While talking heads on cable news shows debate the blame for the drop in oil prices, and predict how and when they will go back up, those of us in the middle of the issue continue to press on.
I talk to companies and business owners every day, and yes, we are aware of the price fluctuations in crude oil. But most people I interact with are taking Aaron Rogers’ advice. The price of oil will go up, and it will go down, just like your retirement fund. You can’t control it, but you can plan properly.
The transition from “boomtown” to “hometown” continues. Come find out for yourself. We’ll still be here.