South Dakota angling for a piece of oil pie
RAPID CITY, S.D. -- While it's unlikely that South Dakota will see the oil boom at the scale of western North Dakota, it's very likely that the state will increasingly profit from oil in the future.
Speakers at the "Opportunities in the Bakken" summit held Tuesday in Rapid City said they expect both more oil production in South Dakota and other economic activity to support drilling in North Dakota.
One expert told conference attendees packing a hotel conference room that South Dakota should not aspire to the explosion of activity going on up north.
"North Dakota is Walmart. South Dakota is Ace Hardware," said Tim Fisher, founder of Bakken Energy Services. "Stop comparing and start preparing. Take a look at the tools you have and get ready to get there."
South Dakota businesses angling for a piece of the oil pie -- from road builders to pipe makers -- should throw parochial rivalries aside and band together before large companies swoop in and overwhelm them, Fisher said.
"Start working together. Build this. You know it's coming," he said. "South Dakota is oil country. The action is going to be here."
With oil production at 1 percent that of its neighbor, South Dakota would have a long way to go to catch up. An average of $6 million in private capital is invested in North Dakota oil ventures every day, said Branden Bestgen, executive director of the South Dakota Oil and Gas Association.
But after conference attendees saw a satellite image of the North Dakota oil field lights burning more brightly than Billings, Mont., and taking up more space than Minneapolis, Bestgen concluded that North Dakota oil spells South Dakota opportunity, and the money will find the opportunity.
For example, Bestgen said he looked into investing in a "man camp" to house North Dakota oil workers. When he started looking, the land was selling for a few hundred dollars per acre. The price quickly multiplied to $30,000 per acre.
"Then it started selling by the foot," he said. He decided things were moving too quickly for him to feel comfortable, and he dropped the idea.
Things are likely to move quickly for other support services too, speakers said. South Dakota should do all it can to take advantage of its transportation infrastructure, low tax rates, quality of life and the availability of services.
"When the gold rush came, the people who made the money were the people who sold shovels and provided the industry with what it needed," Bestgen said, noting that the tourist hub of the Black Hills is three to four hours from the oil fields.
At the same time, state officials have been moving quickly to encourage oil and gas exploration in South Dakota. State Geologist Derric Iles said the state's year-old website, the South Dakota Oil and Gas Initiative, delivers data in a cutting-edge, multi-layered interface.
"The South Dakota Oil and Gas Initiative is designed to make it as easy as possible for industry to decide that South Dakota is the best place to invest," Iles said. "We provide with the click of a mouse every shred of relevant information in state government files."
South Dakota lacks the oil-laden geology of North Dakota's Bakken formation, but related formations stretch south of the border. Currently, just two -- the Red River formation and the Minnelusa formation -- are producing oil in Harding County and the southern Black Hills.
But the Red River formation extends into Perkins and Corson counties, Iles said, and several similar formations could be expected to produce oil in the state.
With the average exploration well costing more than $4 million, South Dakota's oil expansion will be measured but seems inevitable, Iles said.
"South Dakota is underexplored," he said.