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Patrick Springer, Published March 13 2013

Oil’s 2011 impact in North Dakota measured at $30 billion

FARGO – The nearly 60,000 jobs generated by North Dakota’s petroleum industry accounted for 9 percent of the state’s workforce in 2011, according to a study released Wednesday.

Oil and gas contributed more than $30.4 billion to North Dakota’s economy in 2011 – reflecting an almost seven-fold increase from the $4.4 billion in total economic contributions estimated for 2005.

The figures were from a study by North Dakota State University researchers for an economic impact study commissioned by the North Dakota Petroleum Council, which represents the industry.

The study found that every $1 in spending by the oil and gas industry in North Dakota generated additional business activity of $1.59 in the state, the so-called economic “multiplier effect.”

“The economic contribution of the oil and gas industry to North Dakota is big,” said Nancy Hodur, one of the researchers who compiled the study. “You can see it with your own eyes.”

Much of that growth is obvious in cities like Williston, the hub of the booming Bakken Formation.

But expanding business activity has been widespread, notably in the areas of manufacturing, construction and professional services, including architects and engineers.

TrueNorth Steel, based in Fargo, saw its number of employees increase from 340 to 580 in recent years, mostly due to demand for steel tanks in oil fields – at a time when many steel manufacturers in the country decreased their work forces by 30 percent to 60 percent, said Dan Kadrmas, TrueNorth’s president.

“The Bakken has had a significant impact on us,” Kadrmas said. “It’s allowed us to grow.”

TrueNorth’s cavernous shop was used as the backdrop for Wednesday’s announcement of the economic impacts of petroleum, with large steel tanks, some bound for oil fields, flanking speakers.

Among the new study’s key findings for 2011:

•Direct impacts of oil and gas were $11.7 billion, with another $18.7 billion in secondary impacts.

•Direct employment totaled 40,856 full-time jobs, with secondary employment of 18,700 full-time jobs. Direct employment accounts for 9 percent of North Dakota’s workforce. Industry jobs in 2005 totaled 5,051.

•Petroleum contributed $11.6 billion to personal income in North Dakota, including $798.1 million in private royalties and $322 million in lease bonuses. Household income in 2005 from oil was $1.9 billion.

•Oil and gas generated $2.65 billion in government revenues, including $1.3 billion in gross production and severance taxes and $303 million in royalties to federal, state and tribal governments. Government revenues in 2005 were $378 million.

•The oil and gas industry generated $7.4 billion in retail sales statewide.

As big as those economic impacts are, they can grow significantly along with the industry, said Ron Ness, president of the North Dakota Petroleum Council.

“There’s still an incredible opportunity here,” he said. “There are still so many inputs that come from out-of-state. We’ve sort of ‘maxed out’ in-state.”

Brad Brekkedahl, a city commissioner in Williston, said leaders there traveled to eastern North Dakota to encourage businesses to look west when the boom started to take off in 2005-06. Today, 110 businesses in Grand Forks sell goods or services in North Dakota’s Oil Patch, Ness said.

Opportunities for growth abound for businesses around the state, Hodur said.

“The rest of the story is we’ve got a tremendous economic development opportunity going forward,” she said.

The rapid growth comes with challenges in providing adequate public works and services, but it was only a few years ago that leaders in western North Dakota were grappling with managing decline, Hodur said.

“North Dakota’s in a pretty enviable position right now,” she said. “Most states would be happy to trade places.”

Kadrmas of TrueNorth Steel agrees.

“There’s no other market I’d rather be in,” he said.


Readers can reach Forum reporter Patrick Springer at (701) 241-5522