Wednesday, February 22, 2012
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oil hard hatWhen it comes to The Bakken — someone has "to put a rope around the chaos...We need someone to put a saddle on this chaos and ride it for all it's worth."

Such were the words of one observer of the hectic activity in the area of Sidney, Montana and Williston ND, according to Kendall McCrae, an entrepreneur who is trying to help put a rope on it.

McCrae was one of a number of participants in a roundtable discussion focused on the phenomenon of the rapid development of oil and gas in eastern Montana. It was something of a listening session for US Senator Jon Tester, sponsored by the Billings Area Chamber of Commerce.

McCrae has launched a business called Synergy Station with the purpose of providing a means of communication through a website. Synergystation.com "is geared to be a bridge between needs and solutions...a platform to get information, which is otherwise, often, very hard to get amid "the chaos."

The oil and gas development "...isn't stopping at the border. It is coming this way," McCrae told a room packed with many people wondering just exactly what the impact will be on Billings.

Sen. Tester opened the discussion saying that he was "looking for opportunities" to cut spending in Washington DC and to create jobs. But also, in regard to what's happening in the development of oil and gas in the state, he wants to "provide proper protections and to make sure it's done safely."

Tester said that "the issue of fracing" and protecting water sources "is going to be critically important."

While energy development was seen as a huge economic boon, providing a wealth of opportunity for many of the business representatives in the roundtable discussion, comments from others were somewhat negative.

Stefani Hicswa, Miles Community College, complained about the ease of getting jobs, which lures potential students away. It's so easy to get good-paying jobs, that many young people prefer to get a job rather than get training or education, she said. "The average job seeker has no idea of the training opportunities," she said. "It's imperative that we facilitate a partnership with businesses so we have a well qualified community of workers," she stressed. She suggested the development of better connections between higher education, and the companies doing the hiring – "to get to know each other" – so 'higher education can get involved."

Dr. Marsha Riles, MSU College of Technologies, echoed Hicswa's concerns. Because of the job climate, "Our students can be stolen away and not complete their education." She urged support in developing and training the workforce.

Nancy Weaver of Lewistown, expressed concerns to Tester, about protecting a fresh water spring in the area "if the drilling should occur." She noted, also, that Lewistown has an aging population and the availability of jobs will keep younger people there. "Young people need to get an education and come back there," she said.

Mike Sanderson of Sanderson Stewart Engineers, Billings, said that his company has "made a strong move into the Williston area." His company provides engineering services needed for community development. "It's a challenging place to do business," he said. Of the things you hear, he said, "they are all true."

They do most of the work in Billings for the projects they have in The Bakken, he explained, making transportation to and from the area their biggest challenge. He urged that the Senator help in efforts to increase the number of available flights between Billings and Williston.

Sanderson said that by having most of their engineers located in Billings they have avoided the kind of turnover others experience in the Bakken where there's a bidding war for good engineers. While transportation expenses are higher, they have a more affordable workforce, he said.

"There are plenty of qualified engineers and they are glad to come to Bozeman and Billings," he said, "but locating in Williston is a harder sell."

Chamber of Commerce President John Brewer said that his organization is trying to establish Billings as "a hub for energy development." "What do we need to be prepared for to prevent the chaos?" is the question that needs to be posed, he said.

The development has had an impact on tourism in Billings, Brewer said. New employers and new employees are passing through Billings, and every one of them spends about $200 a day — or a quarter billion dollars a year in Billings.

Brewer said that hotel rooms were at a premium this summer. There are three new motels in Sidney and three new ones in Miles City because of the growth. There has been a 5.1 percent increase in occupancy rates in Montana, and in Billings occupancy has increased 10.3 percent. Hoteliers say that occupancy rates are currently at 90 percent compared to 60 and 70 percent two years ago; and the reason is because of oil "in one way or another," said Brewer.

As an example of what is happening, Brewer said that one corporation flies in 20 workers every two week to be trained in Billings, and then moves them to Williston.

Steve Arveschoug, Director of Big Sky Economic Development, said "we want to make sure we are planning far enough ahead to get ahead of some of the challenges. One of the current challenges, he said, is to have the infrastructure in place for companies who want to move quickly. That infrastructure would include the development of an industrial park such as that in Bismarck, he said.

Arveschoug said also that businesses located in Billings need unobstructed routes into The Bakken and Canada. He pointed to Bay Limited which has invested $8 million in Billings and needs to be able to permit loads to their customers. There needs to be a process developed that will not put the cost of developing that infrastructure on one company, he explained.

"We also need a comprehensive workforce development program," he said.

Steve Zabawa of Rimrock Auto in Billings said that the impact of energy development "has been amazing." He said 15 percent of their business is coming from the oil field activities. "International companies are buying all their trucks, here." The growth in his business has created 75 new jobs, he said.

He also noted that Sanjel has rented a facility from his company where they will be training their drivers.

Zabawa underscored the need for improved infrastructure in The Bakken. The roads are "hard on trucks," he said. He also said it would be helpful to the industry if Montana repealed it medical marijuana law. The state is getting "a bad rap from it," he said, going on to explain that in eliminating it, "we clean up employment issues."

Kendal Hartman of Montana Job Service reported that his agency is supplying a lot of the Bakken with workers. The oil companies come to Billings on a monthly basis and hire away ten to 24 workers – "and they are not unemployed; they are taking them from local companies."

"We are the hub for manufacturing for the Williston Basin and Canada," he said, and that is driving a need for welders. With a potential of 122 positions open, said Hartman, Bay Limited [one Billings' manufacturer] will have to go out of state to hire. Hartman said that only one out of every ten applicants his office sends to Bay Limited can pass their welding exam. The company hires and trains many of the applicants.

For all the demand for truck drivers, Hartman noted that there is only one entity in Billings training drivers to get their CDL licenses.

Hartman said that it is hard to find a business in Billings that hasn't been impacted by the development of the Bakken.

He went on to say that bringing employees from out-of-state is "quite an adjustment" for them, "it is easier to transition our own."

Bruce Parker, President of First Interstate Bank, said that there is a lot of work to do to get prepared for the challenge that's happening. "Too many people are still wondering if anything is going on."

The recession would have been worse for Billings "if it were not for what is going on around us. Everyone has been impacted and has generated revenue. We do a lot of indirect automobile financing – 20 to 25 percent of what we are financing is directly due to income from oil companies...from Rapid City to Kalispell."

Parker said, "The business is coming because of better paying jobs and higher standard of living." For the community, said Parker, this is "a huge opportunity but we have to do it right."

"Because of the impact, local housing is 95 percent occupied and rental rates are increasing some," said Parker.

"We have room to grow and get ready for what is coming our way," he added.

David McCullough of Dowl HKM said, "this presents an opportunity for small communities in Northeastern Montana." He pointed out that many of these communities need water and waste water systems. They already have a pent-up demand for housing.

Permitting and review processes faced by the communities as they attempt to meet their needs often takes a year, he pointed out.

He specifically identified the Ft. Peck Dry Prairie Water System as a project in need of more funding. He said it needs $36 million in funding, which is supposed to come from the federal government.

 

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