Key cities in North Dakota’s Oil Patch are poised for additional growth as oil prices recover and will require more funding to meet the needs of a growing population, according to a new study.
The growth, though, is expected to be at a more modest pace compared with recent years, said the study presented to state legislators Monday.
The study, by Grand Forks firm AE2S Nexus, projects impacts to western North Dakota cities through 2023 under a moderate oil recovery, assuming the price of West Texas Intermediate oil will increase from $50 a barrel early this year to nearly $70 a barrel by 2020.
Cities of Dickinson, Williston, Watford City, Tioga, Stanley and Killdeer participated in the study, which was sponsored the Western Dakota Energy Association.
The population of Watford City is projected to grow the fastest, with an annual growth rate of 5.7 percent, to a population in 2023 of more than 9,700 people. Other cities’ annual growth rates are projected to range from 2.8 percent to 4.5 percent during that time period.
Shawn Gaddie, general manager with AE2S Nexus, said a 1 percent annual growth rate is considered healthy and communities begin struggling to keep up at 2 or 3 percent. During the peak of the oil boom years, some Bakken cities grew by as much as 10 to 15 percent each year, the study showed.
Recent investments in highway bypasses, wastewater treatment facilities and other infrastructure have laid the foundation for Bakken communities to continue growing, Gaddie said.
As oil prices recover, city revenues are projected to increase significantly, with the gross production tax on oil and sales tax as leading sources of revenue.
However, the demand for additional infrastructure and city services is expected to outpace the growth in revenues, the study showed.
Watford City is projected to have a funding gap of $330 million by 2023. The gap is projected to be $181 million for Williston and $117 million for Dickinson, the study showed.
Several Bakken cities already have taken on significant debt to keep up with recent rapid growth, so new funding strategies will need to be identified, the study said.
Sen. Brad Bekkedahl, R-Williston, said it’s important for legislators around the state to recognize that there’s still growth occurring in the Oil Patch, even during the recent lull in oil activity.
“The oil communities have not gone out of business. There’s still activity,” said Bekkedahl, also a Williston city commissioner.
Shawn Kessel, city administrator for Dickinson, said his city continued to see impacts from energy development during the slowdown and has already seen an uptick in activity in 2017.
“We’re going to have to be a lot more diligent with prioritizing our infrastructure needs,” Kessel said.