WATFORD CITY — The North Dakota oil boom turned black gold into green for public and private interests over its high-flying run.
But now, leaders in oil patch cities that invested hundreds of millions of dollars to cope with the crush of boom activity are focused on answering questions about how to pay off the red ink of high municipal debts while anticipating future spending needs.
“The thing to remember are the challenges that happened when smaller communities had to build out infrastructure at a pace that couldn’t be supported,” said Gene Veeder, a member of the McKenzie County Board of Commissioners and Watford City’s head of economic development. “The big 100-year projects were all built within like five years here.”
Veeder lists off new additions to the area that have been common installations in other oil patch communities — new high school, new wastewater treatment plant, new roads, new law enforcement center — all basic services required by a sudden crush of new residents seeking their fortunes in the oilfield. Veeder said Watford City alone went from a population of approximately 1,600 to 8,000, though he says “the initial onslaught was as much as 12,000.”
Putting in the amenities to handle that spike didn’t come cheap, and the city now holds more than $149.6 million in debt that it hopes to pay off within the next 30 years.
The price per barrel of oil is a metric that drives traffic in the Bakken oilfields while determining revenue from the gross production tax taken by the state of North Dakota. High prices fueled the boom while funneling money back to the region that bore it. Now, the inverse has kept production running while cutting the dollars used by cities and counties to mitigate its negative effects.
To the north of Watford City, the community of Williston has found itself even more in debt. In that community, which served as the face of the oil boom for much of the country, Mayor Howard Klug estimates a current debt load of about $225 million. That’s not all of it though, as the city is now working to relocate its airport out of its existing spot in the middle of town. It’s a major project with a roughly $230 million price tag and a fairly quick expected turnaround period of two years from now.
Williston isn’t picking up all of the bill for that one though — Klug says the city’s share could come to $57 million, raising the debt total to somewhere about $280 million. Now, in response to falling revenue from production tax and local sales tax, Williston is closely watching its spending.
“Our budget is down significantly from what it was two years ago, but we’re still spending a lot of money on infrastructure,” Klug said. “We’re taking a hard look at where we are now and bringing the budget back to where it should be.”
When tallying up all the investments made between local, state and federal sources, Klug estimates a total of $500 million was spent as a result of the boom.
David Tuan, Williston city administrator, guesses the town’s population at roughly 32,000 or above, a number projected using metrics like sewage rates, public school enrollments and calls for service from emergency personnel. In 2005, census data pegged Williston’s population at about 12,000.
Klug hopes to have much of the city’s debt retired within the next decade. With that relatively short-term window for payoff, Tuan described the load as “manageable” — and the inevitable result of oil boom pressures.
“It is what it is; we had a shortage of funding,” Tuan said, rejecting the notion that the spending was unwarranted. “It was all done to serve the industry, and the industry is here to prop up the state’s economy. So I don’t see it as a frivolous thing that we chose to do. It was necessary, but it has lasting effects.”
You have free articles remaining.
Despite the lull in the pace of energy-related activity in the region, production continues to roll forward. As a result, Tuan says Williston is still on an upward growth trajectory, a point Veeder echoes when discussing his own city.
The Williston office of Job Service North Dakota continues to meet with newcomers drawn to the oil patch by the promise of lucrative work.
Cindy Sanford of Job Service said there are still about 1,000 job openings in the area. Many of those are in oil and gas, Sanford says, but the increasing diversity of the regional economy due to its recent growth has created more opportunities beyond the oilfields. And even now, when the once-copious overtime hours have dried up from boom-time levels, Sanford says her data indicates that the area’s median personal income is about $88,000.
“For people that were here during the boom, you might have one guy who was making $350,000 and now he’s only making $170,000,” she said, putting emphasis on “only.”
“That’s still a lot of money, and if you look at percentages across the U.S., how many people are making that much?”
Oil veterans might seek work elsewhere in fields deemed more profitable, but the allure of the Bakken is still strong for others. Daniel Licciardi, an 18-year-old from Boston, is one of that latter group.
Licciardi was in the Job Service office squaring away details ahead of an interview he had scheduled with an oilfield company. He’d only been in Williston for about two weeks and was eager to get on the job. He didn’t know much about the oil industry but was confident that he could learn it on the go.
“It’s always nervous, a new start, but sometimes you’ve got to do what you’ve got to do,” Licciardi said.
Workers such as Licciardi continue to arrive alone, but Sanford said that many of the people she sees now are coming to join spouses and other family members already working in the area. The influx, though gentler than it was during the boom, is accompanied by persistently high birth rates.
As growth continues, Veeder says Watford City has no plans at this point to keep adding major pieces to the infrastructure put in over the boom years. Even still, he names some loose ends that need tying up. He also anticipates a new elementary school could be necessary in the coming years as public school enrollments continue to climb. As in Williston, the low price of oil has considerably reduced public revenue in Watford City.
Veeder said the town is still poised to meet its debt obligations, but he expresses concern when he talks about the decrease in funding from production and sales taxes. All in all, he says the revenue streams amount to “half of what they were at the height of things.”
The location of the city in some of North Dakota’s most productive oil territory has so far meant that it’s been able to follow its repayment plan even as oil has hovered around $50 per barrel. But if the price falls even lower, Veeder seems unsure what bends that course will take.
“I’d say we’re doing well, but we’re also worried,” he said, adding quickly, “I don’t know if worried is the right word. I’ll say we have our eye on the ball, but we can’t get below where we’re at.”
From Williston, Klug has a more direct summary: “$70 oil would solve a lot of problems out here,” he said.