New Frontiers: opportunities abound in North Dakota, even if you aren’t an oil person

Long after Horace Greeley urged his readers to “Go West, young man,” that siren call has not died. The difference this time is that it is directed at a very specific place: North Dakota and the booming Bakken field. Leslie Moore Mirra attended a New York conference on opportunities there recently, and wrote about it in this week’s Oilgram News column, New Frontiers.

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US Northeasterners weary from a still-wobbling economy found solace last week in North Dakota stories of shale-driven prosperity.

On the hustings for investors, North Dakota officials came to New York in search of investment dollars seeking opportunity.

“We need good restaurants, we need wastewater facilities…whatever business you’re in, we need it,” North Dakota geologist and independent consultant Kathy Neset told small business dealmakers and investor hopefuls.

North Dakota officials ticked off alluring numbers—school districts that once graduated 500 students now enroll 750 in kindergarten; the region’s gross domestic product has led the nation for two years. Small North Dakota banks now hold billions in deposits, more than they can handle. And on it goes. Judgey East Coasters might have forgiven the Williston Economic Development for blasting Queen’s 1970s cornball anthem “We are the Champions” in a slide show saluting North Dakota small business.

“It’s the only boom place in the country right now,” said New Jersey home builder Luke Meisenbacher, who attended the conference. Meisenbacher, who built deluxe homes in the go-go days before the 2008-2009 crash, said North Dakotans’ high-octane “energy” level approximates what once defined the New York City metropolitan area.

“You don’t realize how negative it is here till you’re out there,” Meisenbacher said. He is applying for a North Dakotan builder’s permit and will let his New Jersey ones expire. “I have no plans to ever build in New Jersey again,” he said.

There’s no quick fortune, warns New York home builder Burt Miller, who began building in North Dakota three years ago. “There’s a building lot shortage as much as a housing shortage,” he said. As soon as you cross into the state, the cost of goods jumps 25-30% higher, he said. The dearth of real estate appraisers and home inspectors can stall transactions, Miller said. Regional Dakotan banks are reluctant to loan to newcomers; few national banks are there.

“It’s a challenge at every turn but the returns are great enough so it’s worth it,” Miller told conference attendees.

“A lot of people like the frontier—they want to think they are carving into something new,” mused entrepreneur Brian Main, who splits time between North Dakota, Texas, and New York.

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Shoulder-length haired with a vague resemblance to UK magnate Richard Branson, Main is finding success providing services that oil producers and oilfield service companies need. He has built pod-like “instalodges” where work crews can bunk (many laborers live in ad hoc “man camps”) and repair facilities for workover rigs. He is reviewing “public-private partnerships” for essential water-related services—capital-hungry North Dakota “towns are not bondable,” he said.

Main has drummed up projects in Texas’s Eagle Ford, too, but thinks the undeveloped Bakken offers greater opportunity. “There’s a psychological thing about it,” he said. “It’s so new and there are so many more opportunities.”

“The hot dog vendors here on the street—they should pack up and go” west, Main said, referring to New York City’s ubiquitous street vendors. “There’s no place you can go wrong,” he said.

One plucky, self-made entrepreneur is finding riches from an 18-wheeler. Financed in part by private investors, Drew Gordon, 24, bought in August a $300,000 truck to move oil produced by Oasis Petroleum, Hess, and Marathon from Bakken wells to a Trenton, North Dakota, railroad facility owned by Savage Companies.

“They need a way to transport it,” Gordon said on conference sidelines, adding that the truck will pay for itself in a year. He left Florida for the Midcontinent after a personal real estate investment tanked in the Sunshine State.

His Nakota Trucking company is acquiring two more trucks by month’s end. Each truck, which can hold 215 barrels of oil, is equipped with a centrifuge to test the gravity and sediment level of producers’ oil, he said.

Gordon’s fleet falls under US Department of Transportation guidelines and each truck must carry some $5 million in oil spill insurance. “You have to put the cart before the horse,” he said. “If you don’t have everything ready to go, you’re not getting hired.”

Like others, Gordon sees the need for greater Bakken takeaway capacity. “We don’t have enough railroads and pipelines to get it out,” Gordon said. His business will still thrive in spite of new takeaway competition, he said: “There is always going to be a need for trucks. There’s no way they [pipelines] can spider web to all wells.”

If you buy officials’ pitches, the state’s oil boom is at a start—Neset thinks the Bakken holds three decades more of robust production, though she and officials acknowledge decline curves and “hope” they will improve. Other North Dakota shales such as the Tyler Formation, will emerge and may become as huge as the Bakken, Neset said at the conference.–Leslie Moore Mirra in New York


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