Rapid City Conference Highlights Opportunities in Bakken

RAPID CITY, S.D. ­­- Development of the Bakken oil patch is a long-term play, and it’s not too late for businesses to participate in the booming economic growth in western North Dakota, according to former Gov. Ed Schafer.

Schafer, who was North Dakota’s chief executive from 1992 to 2000, serves on the Board of Directors of Continental Resources Inc., the most active oil exploration and production company working the Bakken Formation.

Schafer was the featured speaker at a day-long conference Dec. 11 at the Hilton Garden Inn in Rapid City. The summit focused on business opportunities in the Bakken. About 175 people attended. Schafer also spoke to a standing-room-only audience at a conference reception Dec. 10.

The Bakken Formation extends from western North Dakota into eastern Montana and southern Canada. Government agencies and businesses in the hub of activity near Williston, N.D., are investing in infrastructure, a strong indication they are convinced that development of oil reserves in the Bakken will not be short-lived, Schafer said.

“We’ve got a long way to go to get this oil out of the ground,” Schafer said. “It’s not too late to get involved. It’s certainly going to be a long-term play.”

Schafer and other experts cited resource estimates and production statistics suggesting that the development of oil resources in the Bakken will continue for 25 years or longer.

Paul Hegg, President and CEO of Hegg Companies Inc., said his Sioux Falls-based company is making Bakken-related business decisions on the expectation that oil production will continue for at least two decades.

“Our premise is that it will be a 20-year play,” Hegg said. “Ten years is too short. Thirty years might be too long.”

Hegg Companies was one of the sponsors of the conference in Rapid City. Paul Hegg said he was pleased with the attendance and the high level of expertise speakers presented for people who attended.

“Experts in several fields outlined staggering needs and huge business opportunities in the Bakken. It was a great summit,” Hegg said.

Speakers pointed out, for example, that housing for the region’s growing population remains in short-supply, some stores have trouble stocking shelves fast enough, and many companies have extreme difficulty finding workers.

Here are some highlights from some of the other experts who spoke at the conference:

  • Joseph Mahon, a regional economist with the Federal Reserve Bank of Minneapolis, said the oil boom that began in 2006 is five times larger than a smaller boom in the area that occurred in the 1980s. “Rapid growth appears to have given way to stable but high activity,” he said.
  • Derric Iles, State Geologist in South Dakota, pointed out that in images from outer space, lights from the Bakken area shine bigger and brighter than the lights in Twin Cities and other urban areas in the Upper Midwest. Oil reserves in South Dakota are under-explored, Iles said. Production in South Dakota might increase, but because of differences in geology, it will never match North Dakota’s soaring production levels.
  • Branden Bestgen, Executive Director of the South Dakota Gas and Oil Association, said that during historic gold rushes, the people who really made money were those who sold shovels and other equipment and supplies. Now, South Dakota is well positioned to help serve business and worker needs in the Bakken. “I have never seen an opportunity available like it is now, if you’re willing to do it,” he said.
  • 2013 is likely to be a significant year in terms of possible federal regulations on oil and gas exploration, said Chris Faulkner, CEO of Brietling Oil and Gas of Dallas, Texas. Hydraulic fracturing, or fracking, “has been a game-changing tool” in terms of making oil production economical, Faulkner said. Fracking involves injecting pressurized fluid into rock formations to create pathways for oil to gather for extraction. “Regulation is not a bad thing,” Faulkner said. “Good regulations can help everyone know the rules and expectations,” he stated.
  • Shawn Kessel, City Administrator for Dickinson, N.D., noted that in 2011, North Dakota had three of the 10 fastest-growing cities in the United States: Williston (first), Dickinson (fourth) and Bismarck (eighth). All of the cities are located in or near the heart of the oil patch. Dickinson, which has a population of approximately 25,000, is expected to double in size by 2020. Currently, there are 1,500 open jobs in the community.
  • Rapid City is among the cities benefitting from the oil activity hundreds of miles away. Until this year, Rapid City had not had an application for an industrial building permit since 2008. Now multiple requests are pending. WL Plastics Corp., one of the companies planning to expand to Rapid City, makes polyethylene pipe that is used in energy markets such as the Bakken. Its new plant is expected to open in June and employ 40 to 50 people, Mayor Sam Kooiker said. He is excited about the coming business and credits the oil boom for WL’s expansion.

Hegg Companies Inc., which is based in Sioux Falls, S.D., is an established provider of services that include commercial brokerage, hospitality management and development, property management, development, and investment. For more information about company services, contact Lori Olson at (605) 336-2111 or at lolson@heggcompanies.com.

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