Can a North Dakota Oil-Boom Town Survive Success?

Boom is always better than bust, but explosive growth presents its own set of formidable challenges.
by | June 5, 2014
An oil truck sits in a dirt lot near a new housing development in Watford City, N.D. The housing development is part of the town's growth explosion from the Bakken oil boom. For years, the town's population hovered around 1,500. Now it's at about 7,000, a number that's expected to more than double in years to come. Associated Press/ Martha Irvine

Taking U.S. 85 north from Interstate-94, nearly everything you see -- from two-pole power-transmission lines and microwave cell towers to a spreading forest of oil wells -- was nowhere on the scene five years ago.

Everything looks new, yet strangely inadequate. New housing is small, primitive and shockingly expensive: A new two-bedroom apartment rents for upwards of $3,500 a month. Tiny living quarters, dominantly organized into makeshift villages dubbed "man camps" (the boom has attracted mostly young men), are priced like hotels, while hotels themselves are in constantly short supply.

Cattle, long a staple on the high prairie, still roam in abundance, though now they navigate around cell towers and oil rigs. But what really shakes up longtime northwestern North Dakotans is the relentless, mobility-choking traffic. Nine out of 10 vehicles on the highways are trucks, most of them tractor-trailer rigs, oil tankers and construction trucks. Regular pickup trucks look small, and sedans are hard to find in the long lines slowly snaking their way toward their destinations.

Western North Dakota's seen boom times before -- in the 1950s and again in the '80s -- which gives people here a wary feeling. They remember the fizzle that followed the flash. Carie Boster, in charge of economic development for nearby Dunn County, says people don't even like the word "boom" now because it makes them think next of "bust."

But geologist Kathy Neset believes this boom will last. She points out that current technology, gee-whiz that it is, is extracting only about 6 percent of the shale oil down there, and that's enough for 30 years. Plus, in contrast to past booms, this drilling is aimed at something close to a sure thing, with a success rate bordering on 99 percent.

Yet not so long ago few in Watford City were counting on the Bakken Formation's funnel of oil and gas, trapped in shale rock two miles under the surface, to deliver another boom. Gene Veeder, Watford City's economic development director, recalls wryly that years ago the city built the Long X Trading Post and Visitor Center at the intersection of U.S. 85 and State Highway 200 to "drive some traffic to Main Street." Now, traffic's so thick that pedestrians don't have a chance of crossing a street without a red light. There's a gas station with a "closed" sign on it because no one will stop with little hope of getting back on the road.

This is what meteoric growth looks like, up close. It produces immense gains in wealth: Williams County, just to the north of here, boasts a per-capita income of twice the state's average and nearly three times the U.S. average. So many people are swarming to good-paying jobs that North Dakota as a whole leads the nation in population growth, with rates three times the U.S. average since the boom took hold. Lots of younger people are coming. Some old-timers, seeing too much change, are leaving.

Fast growth cooks up a stew of challenges. Brent Sanford, Watford City's mayor, gets warmed up talking about catching up on housing, dealing with schools bursting through building capacity, paving roads and getting water pipes extended to where people need them. Twenty-five percent of Watford City's high-school students are considered homeless.

If, as Neset claims, the oil and gas industry is set for a long roll, there is an obvious list of things that can go wrong. State Sen. Tim Mathern, a Democrat from Fargo, says that while he's pleased to see the west side of the state more than hold its own now, he worries that "government's mindset is way too limited, if not stuck in the 20th century." "We're building new roads engineered to last only ten years," he points out. Meanwhile, he's quick to add, "much of this new wealth makes its way back to Wall Street."

He noted that the state has established a Legacy Fund into which goes about 30 percent of extraction taxes and from which the state expects to invest in areas feeling the impact from oil- and gas-industry growth. But the fund cannot be touched until 2017.

So, resources aside, what's on that list of things that could go wrong?

• Communities in their haste could approve substandard housing supported by fragile and short-lived roads and pipes. Already there's pressure to build wherever there's land and a ready developer. Done that way, housing that might have formed real neighborhoods will be scattered all over the hills and valleys.

• As Sen. Mathern suggested, installing roads or pipes at a low standard means doing it over too soon in a financially uncertain future.

• Expansion of school facilities could replicate the mistakes of the 20th century -- particularly putting schools out in somebody's cornfield. In Williston, 46 miles and a couple of long hours north, I asked the superintendent of schools why the new high school was set to be built miles outside the community. "Well," she said, "the landowner is giving us 34 acres."

• Highway bypasses (two are already under construction for Watford City) could suck the life out of a still-vibrant main street and downtown district. That depends on zoning, said Mayor Sanford, "and we never had any zoning until a year ago."

These are issues for any growing community, of course, but they're of particular consequence for Watford City and other places reaping the sudden riches of oil and gas bonanzas. What will Watford City look like in five years, or 10 years? Stay tuned.


VOICES is curated by the Governing Institute, which seeks out practitioners and observers whose perspective and insight add to the public conversation about state and local government. For more information or to submit an article to be considered for publication, please contact editor John Martin.

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