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The end of North Dakota’s oil boom is here

The Williston Herald is reporting that the Bakken Club, a business which made national headlines by operating as an exclusive, members only club in a tiny western North Dakota town, has fallen on tough times. The club has been evicted by its landlord for allegedly failing to pay rent. The club’s owners, for their part, claim the landlord wasn’t keeping up the property they were renting.

Whatever the outcome, the struggles of the Bakken Club and its surreal business model relying on membership dues ranging as high as $25,000 per year are fraught with symbolism portending the end of North Dakota’s oil boom.

The crazy times are over. What remains for North Dakotans is to find out what the new normal is in the after-boom era.

It’s not like we didn’t know this was coming. The state’s growth in tax revenues, while still up a robust 14 percent biennium to date (according to the latest OMB numbers), isn’t exactly the boom of the last biennium.

In December of 2012 biennium-to-date general fund revenues were up nearly 64 percent.

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This trend is reflected in the state’s population growth as well. Although North Dakota made headlines as the “fastest growing state in the country,” yet again (still a heady thing given that North Dakota was still losing population just a few years ago), the rate of growth in population has also dropped off.

From 2012 to 2013 the growth in the state’s population was 3.9 percent. From 2013 to 2014 the growth was a much slower 2.2 percent.

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Oil prices have been dropping of late, and while some state leaders are still bullish, nobody quite knows where the floor is. Oil companies have begun cutting back on activity in the state; most recently Harold Hamm’s Continental Resources which announced a cut in operating rigs from over 50 down to 34.

I’ll not prophesy doom. I don’t think the facts justify anyone predicting that North Dakota is on the edge of a bust (of course, they don’t rule it out either).

A few years ago I was interviewing some officials from Williston including former Mayor Ward Koeser who said that they disliked the term “oil boom” because a boom implies a bust.

They would later embrace the “boom” nomenclature in their community’s branding, though not for much longer I’d wager.

They made a good point at the time, but booms don’t have to be followed by busts. What North Dakota had was definitely a boom.

It’s over now. That doesn’t mean the end of the world.

Oil prices will find a floor which, while not as high as boom-time prices, will still support a great deal of oil development in the state. That development will, in turn, continue to drive a great deal of prosperity and tax revenue for the state.

Western communities will continue to grow, hiring and construction will still be strong, but it’s all going to happen at a slower pace.

For some, weary of the break-neck pace of the last few years, that’s probably just fine.

The state does need to be cautious, though, especially heading into a new legislative session next month. We cannot go forward thinking the boom times are the new normal. The boom times aren’t even here anymore. They weren’t the new normal.

We’re about to find out what normal is, and hopefully we’ll be ready for it.

39 comments

  1. Whoever wrote this article has absolutely no idea what they are talking about, but that’s what you get when you have a college girl writing about something they have never even heard of or seen

    • I can assure you, Tyler, that I am not a “college girl.”

      And I would also point out that just because the boom is over doesn’t mean a bust is here. I think the explosive growth over the last few years is over, and will likely be replaced by a more moderate sort of growth.

      • I did NOT see that coming! That was awesome.

      • The “BUST” will only last until the price of oil goes up again – only than will you see that your opinion of the long tern Bakken Oil Boom is completely wrong. (the BOOM is not over – it is just onm pause for a bit)

      • I am not a college girl either, so what if I was? I live in a large apartment complex here in Williston and pay about $2500 a month. When I can home from visiting my family on the West Coast for Christmas, several of my neighbors moved without notice. Just up and moved away. WOW! I have been here 6 years and there was a waiting list. I sent a text to the manager and he moved back to the east coast. This is crazy, I think it’s the sign of things to come, What are they going to do with all these empty apartments? I hope they lower the rents! Glad I did not buy a house here for $400 hundred only to find myself with no job and house I only worth $100,000 that I can’t sell or give away!

  2. The closing of an over priced so called social club has nothing to due with the oil boom. I am not sure why the article was started with this.

    • Because it was symbolic. The Bakken Club has an absurd business time born of an abusrd time we called the oil boom.

      The boom is over. That doesn’t mean it’s bust time, but it doesn mean we’re going to fall back to earth a bit.

  3. I think you are right on with this article Rob.

    The Bakken Club was a ridiculous concept from the get go, they started failing the day they opened. It was a slow bleed until they finally got the eviction.

    The rapid decline in oil prices has been brutal to many of the companies as the bigger corporations have swallowed up the little guys. But the effect it has had on the drilling companies does not apply so much to the workover rigs that maintain the wells. The economy here is strong and I do believe it will continue to grow, only at a much slower pace. The wheel is still turning…

  4. Rob…..right out of the box the title and initial slant of your message didn’t sit well with me. For the last three + years we have had phenomenal driver of economic activity that has literally lifted much of the rest of the country with orders for steel, chemicals, vehicles, you name it we bought it. This has been a Mecca for folks to get get jobs to provide for their families when there were no other options available. Yes we have hit a major bump in the road and here comes the press with the parties over, we knew this would eventually happen, your retail sales and population were actually dropping, Mayor you were wrong it really was a boom and now you are heading towards a bust.
    Now having gotten through the typical press to sell papers sensationalism title and 3/4 of the article I actually do a agree with your hidden message.
    The best thing that can happen to Williston is to slow this engine down. We are not going to thrive and survive with $1900 /mo. 1 bedroom apartments, $3700/mo single wide mobile homes, over priced homes, exorbitant food prices and 15 year old $300 signing bonuses to fill cones.
    My family and I moved here from Florida and love the place and are here for the long haul. A key reason is this is and will continue to be a great place to live. There is a unique down to earth culture that you don’t have in many parts of the country. The same reason a Bakken Club was doomed before it started. Just because an exclusive, hidden club at the top of a skyscraper in Tulsa or Houston works doesn’t mean a hidden club with no signage next to the forced out donut store was going to fly in Williston.
    More deals were done over biscuits and gravy at Lonnies or pie at the Courthouse Cafe then anyplace that would force out our beloved Go Go Donuts.

    • And unfortunately, your “mecca”, “down to Earth culture” thrived, thrives, or will again thrive at the expense of permanently destroying a place that could be described similarly – the Silica Sand lands of Western Wisconsin, NE Iowa, and SE Minnesota. Some will cash out of their land for a one time mega payout leaving a once ancient un-glaciated treasure, a strip mined wasteland. Here’s to hoping the author of this article is 100% correct!

  5. You hit it right on the head, Rob. I’ve been there. I have friends who were there before the boom, live there now, and friends and family who went there to work, and I also know some folks who do recruiting. The people who live there and have been getting oil payments are all telling me that payments have been steadily decliining. People who have been making money hand ofver foot for slumlike dwellings are afraid they are going bust. Some who’s property was jacked up in value are now worrying that they might lose their properties because they blew the money they had coming in, which is now drying up. Those who work there are getting fewer hours and many have seen some of the newer hires getting laid off. Recruiters wo expanded to have people to cover the massive number of jobs are now scrambling to find employers and jobs elsewhere because no one is willing to pay the big bucks for bodies like they were. The only good news is that there is still a lot of work way up north in Canada and the great news about that is the criminal element which has been growing by leaps and bounds up in the Bakken can’t get passports to go up and do the same thing in Canada.

  6. I’ll be glad that the oil boom is over all the corruption hopefully will disappear pushing of the native people that lived in the city by jacking the rent up to 5,000 dollars a month I know I won’t be returning thank you for pushing me out North Dakota

    • It wasn’t the oilfields that directly raised the rent. The owners decided that if the people moving up there were going to make money, the they were going to take it from them.

  7. I too have seen some very careless spending behavior of oilfield people in west Tx. As a teacher, i do appreciate the revenue the production boom has provided the school district. I must say though, I have not seen the cash flow produce much positive change in the families of the community, Kids are still struggling. They may have more “stuff” but sadly they need their parents’ time and support. The oilfield is not creating better parenting.

    • It’s rough being away from family, but we don’t need criticism because we work on the road. I’d rather work 1200 miles from home then be home struggling to pay rent and put food on the table. I guess we could all go home have some more kids and draw welfare checks.
      I wouldn’t blame the oilfields for bad parenting and I don’t know why anybody would assume that more income makes you a better parent.

  8. I dont know where your thinking that the boom is over or that the growth of the oil industry is over but with the 5 years and going on 6 that I have spent helping build infrastructure in ND would suggest that the boom will last at least another 5 years. The oil Companies are making less money than they were but still need to finish the major projects they have started and finish the projects that support the major projects. Give it some time before you try to pull the proverbial pin on the Bakken. This is a short sighted article.

    • Agreed!! I believe that Rob’s opinions are more like his ‘hopes’

    • You should talk to some people from Louisiana if you want to know how bad and long a “bust” can be.

      If reason prevails, most of the filthy excuse for oil that is underground in ND will stay underground forever.

  9. This article should be titled,”The End of ND’s MEGA Boom is Here.” To call what has been taking place in North Dakota over the last decade or so, a typical run of the mill “Boom”, is laughable. What happened in North Dakota was (and still is) an anomaly. A Boom unlike any other Boom in modern history. It is a perfect storm of: Supply/Demand, Geography, Greed, and localized economic prosper during national Depression. Yes. The rest of America has been in a D-PRESSION, while ND has been thriving. Albeit, along the way we have sacrificed so much of what made ND such a great place, before horizontal drilling discovered the Bakken, it’s still the path that most of us chose in order to avoid being part of the rest of the nations economic woes.
    Mr. Rob, it’s adorable that you googled a few Graphs & Charts, and have taken such a Bold stance, but the fact is Oil & Gas is just like any other traded commodity. It has Peaks and Valleys. Just like we saw in 2008, and just like in 2008 the industry will come steaming back. Do I think, or even hope for that matter, that the North Dakota MEGA Boom will return to the Breakneck pace that we were seeing in 2012-13? Absolutely not. However, Mr Rob, to say that the ‘End is Here’, is a very naive and misguided statement. From someone that has been in the industry since the very beginning of North Dakotas ‘MEGA Boom’, I say Check Yourself Before You Wreck Yourself, Mr Rob

    • Maybe you should write an article on the oilfield next time Jesse. Based upon your highly educated suggestions that all stated but ND have been living in a depression, it seems like you have all the facts. I will be waiting to see what your article says. If not, step off and stop being such a harsh critic. Nobody likes a knowitall, especially an article writer.

  10. It’s over! people are packing up left and right, some insiders say up to 9,000 people will be laid off before March 1st. I call that a big bust. I hope the greed mongers who have been charging $2000 buck a month for their studio apt all go bankrupt. The city should have thought about diversity, zoning, and rent controls! Kind of late now. I do all my shopping in Bismarck and Fargo because everyone here double or triple for everything. Bet they wished they were not such greed mongers now. Yes I am a local boy too.

  11. Welcome to the oil field for those of you who don’t know your ignorant those of you who do keep on keeping on those of you who made hands won’t have problems moving on those of you who didn’t we’ll be paying your unemployment

    • J p. If you will be paying their unemployment? you MUST be an Employer up there huh? And if that is the case, your already paying for unemployment.
      Also, receiving unemployment benefits in ND is not an easy task!! How bout you get OFF whatever high horse you have climbed and come back down to earth. Being an Ass at times like these, just makes you more of one!!

  12. Ruh ro! Looks like Rob was right.

  13. I lived in Oklahoma and Texas in the 60’s and the 80s. There will be a bust. Ask Healdton, Wilson, and other oklahoma towns who busted in the 60s. Ask those who lived in Seminole Texas and Hobbs NM how bad it was in the 80s. Did the stock market go down in 1998 after the dotcom boom? Did GM and chrysler get bailed out in 2007? All bubbles burst. If Iran is allowed to dump oil into the world market forcing a bigger glut then the cost of oil will continue to go down. It is unfortunate that one generation fails to learn from the one before it.

  14. obviously anybody who cant accept the boom is over are delusional-boom bust cycles are the MAIN feature of historical events.shale oil has very high costs associated with getting it out of the ground,and it always will.All conventional oil fields are depleting,and oil shale isn’t going to compensate for that rate of depletion.oil shale forget it-the energy costs associated with that are astronomical.it wont be actual oil for another,ohh million years min

  15. sorry shale oil is what ur talking about oil shale is different biiig difff my bad

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