North Dakota oil town: Is it a bust or a slowdown?
Williston, North Dakota, has experienced a few oil booms and busts starting in the ’50s, when oil was first discovered there. During the last boom cycle, researchers estimate the town doubled in size to more than 30,000 people.
Some people in Williston disagree about what’s in store for the city, given a downturn in oil prices and drilling. Is it experiencing another bust? Or just a slowdown?
Williams County Commissioner Dan Kalil is among the pessimists.
“It’s very difficult in a boom-and-bust economy,” he says.
Kalil recalls how his dad, a banker, got stuck with loans that soured after oil field companies went belly up in the ’50s. Kalil says his dad and the bank president tried to sell oil field equipment for 10 cents on the dollar. Then there was another boom-bust cycle in the early ’80s. Kalil had to confront its aftermath directly as a city and county official.
“It took until just a few years ago for the city of Williston to pay off its debt from that boom, for pushing out infrastructure to developers who were going to come in and build and then didn’t show up,” he says.
In the last decade, new fracking technologies brought oil rigs roaring back to life in North Dakota. Kalil nervously watched developers descend once again.
“We attracted everyone who had failed in Sacramento, everyone who failed in Phoenix, everyone who failed in Las Vegas, everybody who had failed in Houston, everyone who failed in Florida,” he says. “And they all came here with unrealistic expectations. And it’s really frustrating for those of us left to clean up the mess.”
Kalil says Williston is now $300 million in debt for building up infrastructure like roads and a water-treatment plant to accommodate the boom-time growth. He fears the town has overreached and won’t recover quickly, as global demand for oil is expected to be muted over the next few years.
But others think Williston will snap back after what may be just a temporary slowdown.
Swiss-based firm Stropiq is moving forward with plans to build a $500 million development in Williston that would include retail, residences, hotels and a water park. The proposal cleared some big hurdles in Williams County planning and zoning committee meetings over the past few months.
“If we were to try to time each stage of it with oil price fluctuations, we’d never get any place,” says Stropiq’s Terry Olin.
When Stropiq announced the project last year, oil was trading at about $40 a barrel higher than it is today. And more than twice the current number of drilling rigs were operating in North Dakota — 185 compared to about 80 today.
“Whatever price oil is, it’s temporary, high or low,” Olin says. “We’re on one of 10 oil fields in history that’s ever surpassed a million barrels a day. Technology is now to the point where we can access oil under the Bakken [formation], and we’re not going to forget how.”
A number of experts agree that the oil industry in North Dakota is poised to rebound — eventually. Among them is Elliot Eisenberg, a real estate economist. He says it’s not unreasonable to plan a big project in North Dakota’s Bakken right now, unless you believe oil prices will never rise.
That said, he argues that developers today need a fair dose of patience, given the subdued outlook for oil.
“Investors with very long time horizons might say, ‘Look, labor costs are now lower, land prices are lower. We could actually build a project now and decide that, yeah, we’re prepared to sit on it two or three years and see what happens,’ ” he says.
Eisenberg says estimating the future population of Williston is, nevertheless, a difficult task. How many kids and spouses of oil field workers will settle in the area?
That question has already vexed the school district. And it could thwart big mall projects like Stropiq’s. So says Tom Rolfstad, Williston’s former director of economic development. He’s generally upbeat about the town’s future and thinks it’s just going through a slowdown, not a full-on bust. But Rolfstad acknowledges retail needs permanent residents to thrive, and many oil field workers around Williston are temporary.
“A lot of people rotate back somewhere else,” he says. “And they spend their money on their house back in whatever state they came from. So that maybe hurts us a little bit.”
Even if the oil boom regains its steam and Williston attracts more workers who will throw down roots, Williams County Commissioner Dan Kalil may not rest easily. While he fears Williston’s got another bust on its hands, he doesn’t exactly want another boom. It would mean gobs more people, traffic and crime.
“The one complaint that you hear over and over again about this oil boom is that our time has been stolen from us,” he laments. “This was a five-minute town. This was a town where in five minutes you could hit the gas station, the grocery store, the bank and be on your way. It was so easy to live here.”
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