Oil boom benefits Grand Forks businesses
GRAND FORKS -- Grand Forks may seem like an odd place to hold a meeting of the state's oil-related businesses -- at least from a geographic standpoint.
After all, communities experiencing the boom in the state's Oil Patch firsthand are located on the other side of North Dakota, and about a five-hour drive away. But for many Grand Forks-area businesses, the old adage of "location, location, location" appears to be less important than workforce, education and housing.
The North Dakota Petroleum Council will hold its annual meeting at the Alerus Center this week, a signal that the oil industry is having a significant impact on the area from hundreds of miles away.
A spokeswoman for the council said this will be the first time the meeting is being held in the eastern part of the state. The 31 previous outings took place in Bismarck, Minot or Medora.
"(Grand Forks) has actually become a pretty big player in a lot of the activities taking place in the Bakken," said Tessa Sandstrom.
Among the businesses looking east is Steffes Corp., a manufacturer of products such as oilfield tanks and stairways that opened a plant on U.S. Highway 2 in the former Pribbs Steel building last year.
Paul Steffes, the Dickinson-based company's chief executive officer, said they have about 300 employees total, with 65 in Grand Forks. He indicated that number could grow by 150 to 300 in the next few years.
"It would at least be the number that's in the back of our minds," he said.
Other companies based in Grand Forks have grown west as well as back home. Advanced Engineering and Environmental Services, or AE2S, opened three new offices in the Oil Patch -- Minot, Dickinson and Watford City -- since the oil boom began. The company plans to move into a former clinic, a 15,000-square-foot space, in Williston next year.
"We've had an office in Williston since 1998, which was kind of our foothold into western North Dakota" said CEO Steve Burian. "And our presence there was very small."
Today, the engineering firm is playing many roles in the region, including services for small communities needing to improve their wastewater systems. It's also helping municipalities plan for future infrastructure needs based on potential population growth.
While the company is experiencing growth west, it still can't find enough people, Burian said, and occasionally need to "farm some of the work out" to other offices.
"We push as many people as we can into that western environment, but it takes time," Burian said. He added, however, that the oil boom has indirectly led to more administration and office staff in the Grand Forks corporate office.
While finding a place to live is by no means easy in Grand Forks, company executives say it's harder out west.
"We have a lot of people who want to go to work and we pay a very competitive wage," Steffes said. "Housing is, in my mind, the No. 1 obstacle."
The Grand Forks area's vacancy rate was 3.9 percent in July, about half of what real estate experts say is a healthy vacancy rate. In the Minot-Williston area, however, the vacancy rate for rentals was estimated at less than 1 percent, according to a U.S. Department of Housing and Urban Development report issued in May.
Houston-based Diverse Energy Systems, which bought a plant in Grafton a year and a half ago, took housing into its own hands. The company bought and renovated several buildings to convert into temporary housing for its workers, said Scott Muster, the company's marketing director.
The oil boom was one reason for the creation of UND's petroleum engineering program in 2010 -- the only one in the state.
At the outset, there were perhaps half of a dozen students enrolled, said Steve Benson, the department's chairman. This fall, there are almost 200.
Benson said the demand for skilled engineers is being partly driven by an aging workforce.
"The last wave of petroleum engineers came through in the early '80s," he said. During that time, many petroleum engineering programs were shuttered, he said. "So now all of those people are retiring, and you have sort of a resurgence of the industry and more of a need for petroleum engineers."
Area employers seem to be taking notice of the emerging workforce in Grand Forks.
Muster said DES provides a scholarship for students in Northland Community and Technical College's welding program, and Steffes said being able to access a pool of college graduates here could be a benefit. NCTC has campuses in the Minnesota communities of East Grand Forks and Thief River Falls.
"Certainly being located in the eastern part of the state with two universities... it's maybe going to be easier to get engineers," Steffes said.
Hoping to capitalize on a need for housing and workers, the Grand Forks City Council approved spending $75,000 in May 2012 to promote the area to Oil Patch companies.
"What we wanted was to relieve some of the pressure on those companies by expanding this way," City Council President Hal Gershman said.
That campaign, the Bakken Initiative, named after the oil-bearing geological formation, has been so successful that it recently withdrew its request for another $75,000 from the city, Gershman said. He said the city also raised $44,000 from businesses and other entities.
"We feel like we've accomplished most of what we wanted to do," he said.
Gershman said there at least 110 Grand Forks companies doing business in the Bakken.
"I think the workforce we have... I think it's strained here in Grand Forks, but I still think it's easier to find people than out west," he said.