Widespread optimism seen in North Dakota tempered by workforce and housing challenges

Print Friendly, PDF & Email

The following speed read comes by way of Dentons50 partner Rob Lindberg of Laventure LLC–editor.

Many oil and gas operators invested heavily as the North Dakota oil industry frenzy swept the country early in the decade. Through the downturn, experts were banking on the price of oil recovering enough that drilling rigs, sales taxes revenues would begin to bring back that activity that is so crucial to the state’s economic stability. A third of the way through 2018, that optimism felt in the Bakken region is now supported by data.

Well drilling and well completions are once again in full force. Drilling rig counts may approach near 80 by the end of the year; an increase of about 33 percent from last year. With more drilling rigs comes the need for more frac crews, more oil service companies, more workforce and housing.

In government terms, the uptick of activity in the Bakken also means sales tax numbers are on the rise. The North Dakota Tax Commission reports that both the mining and oil extractor sector and the wholesale trade sector’s saw major increases from 2016 to 2017. “This is a result of the increased activity in the oil region,” Tax Commissioner Ryan Rauschenberger said.

North Dakota’s largest cities saw the following changes in sales tax, when compared with the 2016 annual report (both Dickinson and Williston are in Western North Dakota):

  • Bismarck – 3.9 percent decrease
  • Dickinson – 14.67 percent increase
  • Fargo – 5.45 percent decrease
  • Grand Forks – 1.76 percent decrease
  • Minot – 3.74 percent decrease
  • Williston – 24.45 percent increase

With this activity comes challenges including securing a quality workforce to meet the demands of the industry. In January of this year, there were 1,750 job vacancies in the oil and gas industry in the four core oil producing counties. These numbers are just those reported to Job Service ND. Couple that with an unemployment rate of less than one percent, the need and demand for workforce is stronger than during the initial boom.

Another challenge facing the economy is housing investment, particularly in single family homes. Companies that can attract workers to fill vacancies are looking for permanent workers; many of those with families and looking for higher quality of life. This translates into single family homes. As the rest of the country has seen an increase in economic activity, drawing a quality workforce to the Bakken remains an obstacle for companies that operate in North Dakota.

The US Senate seat held by Democrat Heidi Heitkamp is regarded as one the Republicans can capture in 2018. She will face North Dakota Congressman Kevin Cramer who is considered the strongest Republican candidate to unseat Heitkamp, and we expect this race will be closely watched by national pundits.