Oil bust was actually good for a town called 'Shale City'

By Bailey Schulz on 3/12/2018

NEW YORK (Bloomberg) -- As the price of oil goes, so goes Williston, North Dakota. Now, though, the community located deep in the state’s Bakken shale play is working to break free from the industry’s boom-and-bust cycles.

When oil sold for $100/bbl, Williston -- one among many oil towns dotting the nation’s shale basins -- grew faster than its infrastructure and services could handle. There was a housing shortage, a too-small police force and endless traffic tie-ups.

Then the bust hit, with oil prices falling below $30, and Williston lost around 4,000 residents in just a year as the industry responded with massive layoffs. Bad news? Not according to some. Even as the population fell, school enrollment and birth rates rose, adding incentives to improve infrastructure and services as Williston veered away from a population heavy with transient workers to one with a more settled populace.

The goal: Keep existing businesses happy while prepping for what was seen as an inevitable oil revival, according to Shawn Wenko, executive director of Williston Economic Development. "We shifted from a boom to a business model," he said. “And today, you see that mindset is paying off."

Since 2015, as oil prices floundered, Williston has added new roads, including a truck route around the city, two new fire stations, expanded the landfill, opened a new waste water treatment plant and started work on an airport relocation and expansion project. And school officials are studying whether to quickly add another 15 rooms to the high school as enrollment rates continue to grow. Public school enrollment jumped 49% in the past five years.

In essence, the community was able to take a deep breath and get reorganized during the industry slowdown, Wenko said. The timing is key. With oil prices now above $60/bbl and the Dakota Access Pipeline in service, explorers are rediscovering the value of the Bakken as prices for oil development in Texas and New Mexico have skyrocketed.

“We definitely noticed an up-tick of activity” starting in the third quarter of 2017, Wenko said. “There’s a tremendous amount of people coming back through the doors.”

When Williston lost population, those that remained behind represented a new demographic whose jobs weren’t necessarily tied to oil. They stayed even as economic times got tougher, basically because they liked the community. Meanwhile, town officials used the three-year oil rout to gear up up community services, said David Tuan, the city administrator.

“Williston was definitely a boom and bust city,” Tuan said. “But what happened with this last period, over the past three to four years, was that we didn’t really see a bust. We just saw a slow decline. It was a very convenient period when we were able to get a lot of work done.”

The cycle for oil was all too familiar for Williston residents. The town’s population had risen to an estimated 35,000 in 2015 from just 13,000 people in 2009, overwhelming community resources in many different ways, according to Laura Ward of Bison Management Team, which owns an apartment complex in Williston.

“Traffic was backed up ridiculously,” Ward said. “You could sit at a light for four cycles and still not make it.”

Essential institutions like law enforcement fell behind. The volunteer fire department had only one station, and the police department had difficulties drawing new employees when jobs in the oil industry brought in as much as $150,000 a year. For newcomers, housing options were scarce, with the cost of rent topping what was being paid in New York, and wait lists for apartments stretching up to a year.

“During that time, people were renting out their garages,” getting between $800 and $1,200 a month for a single room, according to Ward. Some who couldn’t find affordable housing “lived in tents in the park,” she said.

Now, the revival is starting to pump up the population once again.

“We are seeing more companies coming in that we have not seen for a while looking for employees,” said Cindy Sanford, the workforce center manager at Job Service North Dakota’s Williston office. Williams County, which contains Williston, saw employment rates jump 7.8% between 2016 and 2017 and over 900 job openings in January.

Oil field-related jobs take up over half of the openings, but Sanford said companies are also looking to hire in just about any field, from health care and education to mechanical and retail.

Still, high occupancy rates for rentals are coming back, according to Bison Management’s Ward. A year ago, occupancy in Williston apartments was in the 60 to 70% range, she said. Today, it’s about 90%. Houses, too, are starting to become scarce in Williston, according to Mitzi Bestall of Re/Max Bakken Realty.

“I have four months of inventory left,” she said. “After that, we’ll have a shortage.”

Tuan, the community’s administrator, says the town is now looking at about 3% growth annually. But he feels the changes made within Williston over the last three years, while oil prices floundered, have made a difference in the ability to handle the growth moving forward.

"It’s very interesting to look back and feel how the town has changed," Tuan said. “It feels more like a bigger city still in its growth stages rather than a small city that’s stretched.”

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