The boom’s ‘epicenter:' Oil Patch hub Watford City adjusts to burgeoning population, financial questions
WATFORD CITY — There are days, Brent Sanford said, when he struggles to wrap his head around everything happening in his hometown.
Ten years ago, Sanford returned to Watford City to take over his family’s automotive dealership. He soon found himself on the city council and was elected mayor in 2010 — right as oil and gas exploration in the Bakken shale formation was beginning to put a stranglehold on northwest North Dakota communities.
Today, Sanford and other Watford City leaders are facing challenges few small towns in America ever have to endure. All the while, he said, they’re trying to keep their once-quiet community from becoming just another “dirty oil town.”
The goal, Sanford and other city leaders said, is to keep pace with growth that has gripped Watford City because of the unprecedented oil boom — it enters the construction season with $240 million in infrastructure needs, ranging from streets to schools — while maintaining its appeal as a progressive and welcoming home where people want to put down roots.
But that is more challenging than anyone could have ever imagined.
“Everything is in flux, basically,” Sanford said.
Quadrupled population In a matter of four years, Watford City’s population has more than quadrupled.
It went from having 1,744 people during the 2010 census — a figure almost everyone here knows by heart — to an estimated 7,500 residents, give or take a thousand in any given month. City leaders expect at least 10,000 people, if not many more, to be living here by summer because of the onslaught of construction and seasonal oilfield work.
Watford City is preparing for a permanent population of at least 17,000 based on estimates provided by the state Department of Mineral Resources and North Dakota State University demographic researchers. But really, Sanford said, no one has any idea where the city’s population is really heading.
“I’ve heard ridiculous estimates from people from Texas that saw some of those cities grow that are too ridiculous to mention,” Sanford said, referring to oil boom towns that, like Watford City, exploded in size after the discovery of sustainable oil extraction.
One way or another, Watford City and McKenzie County are in the midst of what Sanford called “a crisis.”
Watford City is the seat of McKenzie County, which has become the heart of North Dakota oil production. In January, 40 percent of drilling permits issued in the state were in the county. It produced more than 8 million barrels of oil in December, according to the state’s Department of Mineral Resources. The agency estimated as much as 15 million barrels of oil a month could be produced in the county by 2017.
“It’s just the epicenter up here,” McKenzie County Economic Development Director Gene Veeder said. “So part of the challenge right now is to make sure we recognize the opportunity and make sure we don’t get overwhelmed by the challenges.”
Infrastructure needs Some challenges include building a new school and a new hospital, improving sewer and water, and helping private developers by providing adequate infrastructure.
The city will vote March 11 on a $27 million bond referendum to finance a new $50 million high school building project. Student enrollment has doubled since 2010 and buildings, which are in fine shape, are simply running out of space.
The city has about $240 million in infrastructure needs, Sanford said. It is developing a stretch of land around the town “basically the size of Minot” to keep up with the growth.
There is a plan to build two new water towers and a $17 million sewage treatment plant to replace old lagoons that are environmentally unsound based on the current population. Growth is outpacing street construction to the point where developers have to do their own off-site improvements, including building their own streets.
But that’s just the start.
McKenzie County and Watford City are looking to the state to help expand nearly every entity of their overworked local government.
A $2 million overhaul to city hall is nearly complete, but the new offices are already overflowing. Across the street, there’s a $1 million fire hall overhaul project. The city will need more police officers — it’s searching for a new police chief, too — and the county could use more sheriff’s deputies. The McKenzie County Courthouse is being renovated and is operating out of what residents are calling the “Courthouse man camp,” at the county fairgrounds on the city’s east edge.
“We would like to be able to stay ahead of the curve instead of getting run over and trampled before we have to keep begging and begging to get the right funding,” Sanford said.
Looking to the Legislature In the last legislative session, Watford City was awarded $10 million in oil-impact grants after requesting $190 million.
In 2012, an estimated $1.17 billion in annual gross production and extraction tax was generated from McKenzie County oil wells. The county’s annual return is about $80 million, according to the North Dakota State Treasurer’s office. That’s less than 7 percent allocated toward the county, for its schools, cities and townships.
“It’s just not going to where it’s supposed to go,” said Rep. David Drovdal, R-Arnegard, who graduated from Watford City High School and is a lifelong McKenzie County resident.
Oil production in the area isn’t slowing down either. McKenzie County had 68 of North Dakota’s 187 active drilling rigs at the end of the third week of February. Watford City also services southwest Mountrail County, and northern Billings and Dunn counties — all oil-production hotbeds.
Sanford and McKenzie County School District Superintendent Steve Holen are involved with the North Dakota Association of Oil and Gas Producing Counties, which has been asking for a special legislative session this summer. Last Monday, the North Dakota Legislature’s Democrat-NPL leaders called for a special session in May to address needs and allocate emergency funding to Oil Patch communities.
“We’re sticking our fingers in the dike, holding back the water, with $1 million and $2 million projects,” Sanford said. “... We’ve just got this monumental price tag that just blows your doors off. How are we going to come up with 240 million bucks?”
Drovdal said he believes a special session would be good for the Oil Patch. His district is the largest in the state, encompassing six of the western-most counties in North Dakota and part of Dunn County, all but one of which have been impacted by the oil boom.
“There’s a tremendous need out there that’s probably understood by a lot of the legislators,” Drovdal said. “But what it comes down to is divvying up the money. Every town and every city and every college seems to have their specific interest that they want to put first. With the lack of legislators in western North Dakota, it’s sometimes tough to keep it from being the last thing that’s passed. That’s kind of what happened last time.”
Enrollment boom If there is one place where Watford City wants to see more money flow, it’s into the county’s school system. The population boom has hit the McKenzie County School District as hard as any entity in the area.
Holen said if enrollment trends continue, Watford City will soon run out of space and be forced to use multiple portable classrooms.
The district’s biggest classes are kindergarten and first grade with more than 110 kids in each. Its K-5 enrollment of 567 is bigger than the entire district was in 2010.
Residents of the school district will vote next week on a $27 million bond referendum. The goal is to build a $50 million high school to house grades 7-12.
“It’s kind of just beginning and I think that’s what this county and area understand,” Holen said. “We’re still in the second inning of a long game.”
The proposed new 162,000 square-foot high school would be built on the northeast side of town and have a capacity for 800 students. Holen said it “matches where we’re going with our planning, with what we think the city’s growth is doing, with what we see our growth doing and what we’ve seen so far.”
If a new high school is built, grades four through sixth would be moved to the current high school. Kindergarten through third grade would stay in the elementary school expansion that was completed last fall for grades K-6 and is already overflowing.
When Holen came to Watford City in 2005, he said the school district was facing the question of whether it should make the current high school a K-12 building because of declining enrollment.
“It just so quickly changed,” he said. “Nobody really saw this coming.”
If the bond referendum passes, Watford City will still need about $23 million to finance the construction of the school. Some leaders would like to ask the state for help, but its doubtful that would come in any other form than grant money or low- or no-interest loans.
“As far as the school, it’s tough to appropriate for any one district because then pretty soon you’re going to end up doing it for all the districts throughout the state,” Drovdal said.
In addition to a new school, city officials are proposing a $50 million on-campus events center for high school activities and city functions that would house a basketball arena, two hockey rinks and a competition swimming pool. Football, baseball and softball fields are also in the new campus plans but are not set in stone.
Though an expensive event center seems like a bit of a stretch, at its current pace Watford City is set to become a Class A school by the end of the decade, putting it in the same division as Dickinson, Williston, Bismarck and Minot.
“The ability to retain and attract the workers that are needed for this thing for the next 50 years is not going to be there if we don’t have the right-sized facilities,” Sanford said.
Creating a community More and more each day, Watford City’s growth appears to be for real.
City Auditor Peni Peterson said she is beginning to see signs that the city is going beyond being one big man camp as families begin to make it their new home.
“A lot of the families that are moving here, that are truly want to live here — not just sit here a spell, make some money, get the kids in school and then we’re ditching,” Peterson said. “The ones that are truly wanting to be residents of Watford City, they’re jumping right in. Before, when it kind of first happened, you didn’t really see the family part of it. It was a lot of the men. They needed a place to eat and a place to sleep. Now you go to these groups and there’s a new mom with her kids and she’s ready to volunteer. We are getting some of that support now because they are moving here.”
Sandy Updegrave is one of those people. The Oregon native and her husband moved to Watford City in 2012, and brought their daughter and son-in-law. They came looking for work and a change of scenery. Updegrave said they found a community.
They still live in the RV they came to North Dakota in, but the family is doing well. Updegrave is the manager of Outlaws Bar & Grill, where her daughter bartends, and her husband and son-in-law are electricians.
“I love this little town,” she said. “It’s a nice little town. There’s not tons to do, but we’ve met some great people, some great friends. Lots of opportunities.”
‘The busiest ER in the state’ As more people like the Updegraves move into Watford City, the more services it’ll need.
McKenzie County Healthcare Systems plans to break ground on a new $57.3 million hospital and clinic this spring to replace its 62-year-old facility where one hospital board member said the emergency room is, “inundated.”
Dan Kelly, CEO of McKenzie County Healthcare Systems, said the hospital averaged 150 emergency-room visits a month prior to the boom. That number has increased to about 550 each month. They’ll add two new physicians this month and a temporary modular unit to the existing clinic.
“Beyond the increase in emergency room visits, we’re seeing a 20 percent increase in clinic visits year over year,” Kelly stated in an email. “We are at the point where, due to space limitations and our limited number of providers, we cannot accommodate additional patients.”
Larry Larsen, a second-generation pharmacist and a member of the McKenzie County Healthcare Systems board, said the oil industry can’t be in Watford City without suitable health care facilities.
“We’re probably the busiest ER in the state, per capita,” he said. “... We’re providing that service as a county, as a city, as a community. When is someone else going to step up to the plate and say, ‘OK, you have to have a hospital.’? The oil industry can’t be here without a hospital, without medical services.”
Veeder, who in January suffered a life-threatening dissected aorta and had to rely on emergency medical help, said a quality health care system is yet another aspect that newcomers look for when deciding whether or not to put down stakes in Watford City.
“We’re finding that — and an example would be somebody like me — if you don’t have health care, people who have health issues or concerns, or young families, they’ll leave,” Veeder said.
Finding a home They’ll also leave if they can’t find an affordable place to live.
Apartment rents are slowly falling from the ridiculous rates of the early boom, Sanford said, but very few units are even available. The summer construction season is slated to be hectic with apartments, twin homes and townhomes, and new housing developments all set to take shape.
“Our city planner, Curt Moen, said we’re going to be a plywood city this summer,” Sanford said with a smile. “They might not be filled out this summer, but they’re going to be spoken for.”
Housing hasn’t caught up to other developments in Watford City, and oil companies are beginning to notice.
Sanford said he received a call earlier this year from an official with Hess Corp., asking why the company couldn’t fill a $100,000 a year position at its Keene office northeast of Watford City.
“I said, ‘I wonder why? Where in the world are they going to live?’” Sanford said.
Holen said he expects school enrollment growth to continue and possibly increase once more long-term, affordable housing is established and more men working in the energy industry can feasibly bring their families to Watford City.
“We haven’t even got to the point of where the housing has caught up and the families are going to move,” Holen said. “So I think our largest growth is yet to come. More and more now, the wife is coming here for work (saying), ‘My husband has been here for two years.’”
Commercial growth More families means a greater demand for everyday services for the booming little city.
However, luring retailers and restaurants is challenging.
Peterson said the 2010 census figure is holding Watford City back from recruiting new commercial businesses. Still, she said a special census in 2015 isn’t likely unless Williston or Dickinson also do one.
“There’s a lot of commercial properties that won’t come into town based on our population,” she said. “We say, ‘No, come see it.’ You can’t just look at the 2010 number. You’ve got to see what we’re living.”
Veeder said more commercial development will come when permanent housing improvements allow more people to become permanent residents.
“The retail piece and service piece, that comes with the rooftops,” he said.
Oil and gas companies aren’t shy about making Watford City their home though.
OneOK is building a gas plant west of Watford City in addition to another northeast of town. Canary, one of the Bakken’s various oilfield service companies, opened its operations headquarters here late last year. Whiting, MBI Energy Services, QEP Resources, Nuverra and Tervita all have offices.
Sanford said a New York-based development company has purchased lots along Main Street downtown with plans to build a seven-story building with underground parking.
Not far away, Dakota West Credit Union is putting up a new three-story headquarters north of where First International Bank built a three-story headquarters and community space last decade.
“There are people here who are representing large-equity plays that are saying, ‘I believe in this place. I’m going to spend way too much money to buy these houses and have my foot on the ground, and it’s ground that I own,’ — in downtown Watford City,” Sanford said with a look of wonder.
Alleviating worries The road traveling north into Watford City is an eclectic and somewhat unsightly mix of campgrounds, crew camps and oilfield service companies. There’s an agricultural implement dealership, an Assembly of God church undergoing a huge expansion, two new hotels opened within the past year, and a 120,000-square-foot retail complex completed last year by Twin Cities-based Oppidan Investment Co. that features a CashWise supermarket.
City streets are congested and parking is a problem on Main Street. Traffic on two-lane Highway 85 that cuts through town is packed with traffic much of the day, especially in the late afternoon when semi and service trucks begin to back up on their way into Watford City from the south and east.
A bypass connecting northbound and westbound Highway 85 — sending truck traffic away from Watford City — is expected to be completed either later this year or in early 2015.
It can’t come soon enough. Another bypass connected Highway 85 to eastbound Highway 23 will begin an expansion further around the city this summer.
“That was a challenge we’ve overcome,” Veeder said. “One of the biggest challenges you’ve had in this community is adjusting that traffic. We don’t know what that’ll do for our Main Street, for example, but we knew we had to do something with our traffic.”
Like the bypass, most of Watford City’s projects are designed as long-term solutions.
Unfortunately, its city leaders are beginning to feel the strain of balancing the community’s seemingly neverending issues with their day jobs.
Sanford and others expect three of the five City Council members not to run for re-election this fall.
“The hardworking commissioners and city council people probably put in 40 hours a week,” Veeder said “They get a little reimbursement, but it’s minimal.”
Sanford said he’s running for mayor again “because I don’t think I have a choice.”
“I care about my hometown and I want to see the best happen to Watford City,” Sanford said. “I don’t want to see it get out of control. I don’t want to see it turn into a dirty oil town. That’s a tough fight right now, to try and keep it a welcoming community and place where people want to move to. That’s the goal, and the opportunity is right in front of us.”
Sanford said he and others have a vision of what Watford City could become in five to 10 years.
The hope, he said, is that the bypass projects alleviate the city’s “frantic” pace so families working in the oil industry can settle into new homes, send their children to a new school that isn’t overcrowded and work in a more diverse economy not entirely dependent on the oil industry. There’s also an effort to improve Watford City’s cleanliness “instead of just being covered in a layer of dirt all the time from the constant pounding around town of the trucks.”
As for Watford City’s population and size? City leaders hope population estimates are somewhat overblown and it’ll top out around 7,500 to 10,000 people.
“But I think that might be naive,” Sanford said. “I really feel that it might be headed for growing larger than that.”