Building the Roughrider State

The Bakken Continues to Develop

North Dakota’s powerhouse economy, fueled by the millions of barrels of oil gushing out of the Bakken formation, is capturing the attention of the world.

What is less obvious is the construction that has both spurred and resulted from the oil boom — and which is sorely needed to keep the locomotive careening headlong into the future.

Commercial construction and development are “booming,” says Gaylon Baker, Executive Vice President of Stark Development Corp., a nonprofit economic development organization that serves the city and county. “It’s been like this for the past three or four years,” because of, no surprise, the oil boom.

“You know what — we never saw the recession in the first place,” Baker recounts, “because our banks didn’t over-leverage themselves. We have a good, strong manufacturing base here that sells mostly to the upper Midwest, and we have a good hospital and small college. Those things carried us. We never had a recession.”

What’s being developed in Stark, Baker says, is mostly additional manufacturing space, along with significant new housing developments and a large number of new apartment buildings. “We’ve also got a number of new retail stores coming in, some of them are big-box, and some are just individual.” There are also – again, little surprise — oil companies that are either in exploration and development or the oil field service groups, as well as several engineering and architecture firms coming in.

Construction will naturally come to a halt during the winter months, Baker points out. “You don’t see a whole lot of new things going into the frozen ground.” There are, however, a number of infrastructure improvements going on at present, including the construction of a new sewage treatment plant. Also ahead are new water-treatment facilities along with new streets, water and sewer systems.

Additionally, a diesel refinery has been proposed for the area. Earlier this year, the Stark County Commission approved a permit to build the $325 million diesel refinery near Dickinson. Between Dickinson and South Heart, 274 acres of land has been approved by the commission for a zone change. The rezoning will convert the land from agricultural to industrial for the facility’s construction. A subsidiary of Bismarck-based MDU Resources Group Inc. is reportedly planning for the refinery to be completed in 2014. The refinery is expected to produce as much as 10,000 barrels of diesel per day.

If there is an impediment to continued growth, Baker says, it’s an insufficient workforce. “We have 1.7 percent unemployment. We have job openings across the scale, in whatever line of work you’re in, and we need more people for those jobs.” He adds that the prognosis for 2013 and beyond is “nothing but good.”

“Locally, here it’s going very well,” says Tom Rolfstad, director of Williston Development, a non-profit organization which provides relocation and expansion services to new and existing primary sector businesses.. “As far as the rest of the state, I think they’re doing okay. Certainly, the Western half of the state is doing very well.”

Williston Development continues to funnel investment money into the community with a variety of initiatives, or what he calls “a little bit of every kind of project that comes along.” For instance, the Value Place Extended Stay Hotel recently opened in the Bakken Industrial Park in Williston. The 248-room complex has the convenience of a hotel with the added features of an apartment. Every room offers a complete kitchen in addition to the standard hotel’s bed, bathroom, television and desk. The Value Place is a project of the Nakota Development Company, which expects to break ground on a Value Place Hotel in Dickinson later this fall.

Explosive growth at Sloulin Field International Airport in Williston – from 6,000 enplanements in 2003 to an estimated 6,000 per month in 2013, according to aviation officials – means added infrastructure to accommodate it. Among the changes coming: a new hold room, additional parking lots, e-ticket kiosks and a possible relocation of the airport itself.

In addition, according to Williston Development, Savage Companies plans to construct, own and operate a large multi-user rail terminal in Trenton. Trenton Railport will be served by the BNSF Railway. The terminal will be designed to bring large-scale rail service to the Bakken Formation with oil-field related materials such as tubular, frac sand and other strategic materials, including the capability to load and ship unit trains of crude oil.

“Obviously, we’re still in the early stages of recovering from our flood of last year, picking up the pieces from the disaster,” says Jason Zimmerman, Flood Recovery Coordinator for the Souris Basin Planning Council in Minot, a regional council of governments whose job is to address the development needs in the counties of North Dakota Planning Region II (Bottineau, Burke, McHenry, Mountrail, Pierce, Renville and Ward counties). “But it certainly has not slowed development. Probably the biggest thing that has impeded development, either commercial or residential, has been trunk line infrastructure – water, utilities — and getting that built out quickly enough.” Little by little, he adds, “we’re starting to put those pieces of the puzzle together and get shovels in the ground and pipes laid.”

Opportunites in the East

North Dakota’s skyrocketing fortunes feel “almost like a bubble in regards to the expansion we’re seeing across the whole state,” says Jeff Sandene, Chief Operating Officer for Sanford Health System’s Fargo Region.

“You’ve got a couple of things happening, which are perfect opportunities,” says Sandene. “One is the environment of interest rates. This is the time in our cycle when you can borrow money, we have historic low bond rates, and we are doing it.” With the boom, however, comes higher labor costs, which he concedes is “a concern.” But help has come from companies outside North Dakota “who want to come to our area and actually be part of the construction project. Some of our contractors are teaming up with other contractors to keep the work local, but also to supplement the work with other folks in other parts of the country. It’s been an interesting dynamic, but I think it’s probably one of the best times that we could have predicted to build because of the low interest rates at this time.”

At the end of July, Sanford Health broke ground on the largest private construction project in the history of the Dakotas, the new Sanford Fargo Medical Center. Set to open in 2016, the $541-million project is one of the largest in the nation to begin construction this year. Kelby Krabbenhoft, Sanford Health’s President and CEO, called the project “a four-year phenomena of activity, jobs, economic impact and momentum for the entire region. When you look at the entire picture, Sanford is investing $200 million per year for the next five years in construction projects across our footprint, for a total $1 billion investment.”

The new campus will bring unprecedented medical care and investment into North Dakota, South Dakota and Minnesota. The center will be located on the south side of I-94 and serve over 4,200 patients every day. The 10-story project will include 460 hospital beds, 12 heart catheterization labs and interventional rooms, 32 operating rooms and 51 emergency department bays. The facility will cover 1.3 million sq. ft., roughly 29.8 acres, and include 737 bathrooms, 347 clinic exam rooms and 77 clinic procedure rooms.

By 2018, the new medical center will include more than 260 practicing physicians working in 48 different specialties. Sanford currently employs more than 7,500 staff in Fargo/Moorhead, and the medical center will create an additional 2,000 full-time, permanent positions.

The economic stimulus created by the project is considerable: approximately 600 construction workers from the area will be employed as local and regional contractors for the project. Upon completion of the new medical center, Sanford Health will continue to remodel the existing downtown campus and expand the Roger Maris Cancer Center. The downtown campus will occupy over 600,000 sq. ft. with 220 private rooms, and is expected to employ 2,000 staff members. Services at the downtown campus will include behavioral health, palliative care, physical rehabilitation and eating disorders.

Also in July, Sanford Health officially merged with Medcenter One. The combined entity now features more than 1,200 physicians and 25,000 employees in seven states. Sanford Health will invest $200 million over the next 10 years to enhance health care services in Bismarck-Mandan and throughout Western North Dakota, including a new super clinic in Dickinson, the gateway to the region’s bustling oil fields. The clinic will feature all the current services provided in Dickinson along with space for additional physicians, a walk-in clinic, an ambulatory surgery center and diagnostic services.

Multiple Projects

The state also has multiple projects moving forward. For example, earlier this year Roers Development, Inc. announced that several large retailers and hotels had confirmed tenancy in Dickinson’s newest retail center, West Ridge Center. The center is located in the northwest corner of exit 59 in Dickinson. Hilton Garden Inn Hotel, HomStay Suites, Home 2 Suites, Cash Wise Foods, Cash Wise Liquor, Menards, AT&T, Dollar Tree, Petco, Gate City Bank, Value Place and Shoe Carnival have reportedly all committed to occupy the retail area.

Another major initiative, Minot is working with the Economic Development Administration on a grant to help fund infrastructure upgrades in a 25-block area downtown.

In September, Minot leadership asked the Economic Development Administration for close to $22 million for upgrading water mains, storm sewer lines, sanitary sewer lines and paving inside that 25 blocks area, which comprises a sizable chunk of downtown Minot. City leaders were told that they could likely expect a portion of that request, but not the complete funding.

Businesses in the downtown area are being asked to kick in approximately $3.2 million in upgraded storm sewer and light infrastructure over the next decade. “Obviously it’s right in the heart of the city of Minot,” Zimmerman points out, “so that’s a big undertaking right now that’s pending.”

The suddenness of the growth clearly presents its own challenges, notes Zimmerman. “It’s getting that infrastructure upgraded and in place. It’s working simultaneously on the pipes and everything going in the ground in the retail development, and contractors coming right behind them. We’ve had to upgrade the rest of the citywide system, in particular the sewer capacity, to handle” the inevitable needs.

The coming of winter brings many construction projects to a halt. “It typically shuts things down,” says Zimmerman. “There is very little under- or in-ground work that you can do after we get a good frost line established.” Last year, he recalls, builders in the state were pretty fortunate. “We had a mild winter with very little snow, so you saw a lot of projects going forward: if they had their in-ground or under-ground [work] taken care of they were working through the winter on structures.”

Indeed, many contractors are understandably flocking to the state to take advantage of its prosperity. As Zimmerman notes, “You’re seeing a lot [of contractors] coming in from as near as Bismarck, but also some larger contractors from Fargo are in the market.” Still more have been arriving from Minnesota and South Dakota, “especially from markets that are very slow, in particular the Minneapolis market.”

Construction and Development Abound

Around the state, commercial construction and development is happening in abundance. For example:

Oil Refinery: North Dakota’s Three Affiliated Tribes are expected to get control of land for construction of a proposed new oil refinery. The plan is for the tribe to devote 469 acres near Makoti to construct the refinery and produce feed for its herd of buffalo. The acreage is in the northeastern section of the Fort Berthold Indian Reservation, the Western part of the state. The refinery, according to the report, process approximately 13,000 barrels of oil a day for diesel fuel, propane and naptha.

Corporate Expansion: Gov. Jack Dalrymple’s office recently announced the completion of a $22-million expansion at Fargo-based John Deere Electronic Solutions (JDES). The expansion creates as many as 60 new jobs. “This expansion represents additional jobs and opportunities for North Dakota, but it is also a reflection of our positive business climate and of our strong and diversified economy,” Dalrymple said.

“JDES is also a good example of the opportunities we can create by supporting entrepreneurship at our research universities. A cornerstone tenant at the North Dakota State University Research and Technology Park, JDES provides internships, research and jobs for talented students who apply their knowledge and skills in meaningful ways,” Dalrymple added.

JDES has completed construction of a 90,000 square-foot building that will provide additional office space for its growing engineering staff, test labs and enable the company to expand its power electronics capabilities, the governor’s office said. The new building will increase the company’s Fargo footprint to more than 300,000 square feet. JDES employs more than 1,000 people in Fargo.

Fertilizer Plant: In mid-September, the governor announced that CHS Inc., the nation’s largest farmer-owned cooperative, is taking steps toward constructing a nitrogen fertilizer plant in North Dakota at a cost of more than $1 billion. The plant will convert natural gas into fertilizers, providing the region’s farmers with enhanced supplies of nutrients essential to raising corn and other crops. CHS has selected a 200-acre site for the fertilizer plant near Spiritwood. The project is expected to cost between $1.1 billion and $1.4 billion. Preliminary plans call for building a plant that will produce 2,200 tons of ammonia fertilizer daily. It will be distributed as anhydrous ammonia, urea and UAN liquid fertilizer to farm supply retailers and farmers in the Dakotas and parts of Minnesota, Montana and Canada. The proposed plant, the governor’s office said, will take advantage of abundant regional natural gas feedstock. It will employ between 100 and 150 people, with a tentative start-up in the second half of 2016.

Brewery: The Edwinton Brewing Co. recently became North Dakota’s first commercial craft brewery, with a launch party at Bismarck’s Peacock Alley Bar & Grill.

Airport Complex: Recently, construction began at the site of the new Bowman County airport complex, roughly four miles east of Bowman. The $12-million project is expected to replace the current Bowman Municipal Airport, which dates back to 1944. The project is anticipated to be complete in 2015, when it will help siphon off air traffic from some of the oil patch’s other, often overworked, airports. It will reportedly include more hangers and a larger, county-owned facility for housing aircrafts.

It is hoped that the new airport will be a center for that area of North Dakota. With a more technologically advanced system and the ability to accomodate larger planes, the project is generating a lot of buzz. The dirt-moving and grading stage is expected to be finished by July 2013.

This is a period of intense economic development and growth that few states have experienced. As Sanford Health’s Sandene puts it, “The expansion in the State of North Dakota is historic.”

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