RAY, N.D. – Developer Tom Serie could fill two 12-plex apartment buildings here tomorrow.
But a major hurdle is keeping Serie from putting a shovel in the ground: The city doesn’t have enough sewer capacity.
“I’ve got subcontractors ready to go to work,” said Serie, developer with Guardian Inn Inc. from Luverne, Minn. “We’re anxious to start.”
Ray, which has grown from 592 residents in the 2010 Census count to about 1,000, has maxed out the capacity of its wastewater pond, said city engineer Lonni Fleck.
City leaders in Tioga, about 15 miles west of Ray, were faced with a similar dilemma. That’s when a developer proposed a privately funded wastewater treatment plant that would reuse Tioga’s water and sell it to the oil industry for hydraulic fracturing.
Jared Wright, a Bozeman, Mont., man who has been working in the Bakken for about three years, had proposed some workforce housing units for Tioga, but was told to limit the number of units because of the lack of wastewater infrastructure.
Wright started working on a possible solution.
“If I’ve got this problem, everybody probably has the same problem,” he said.
Wright formed a company called Aquasource and worked with St. Paul engineering firm CDM Smith on a plan to build the private treatment plant.
Tioga worked out an agreement with Aquasource to construct the $30 million plant at no cost to the city and the company will turn the plant over to the city in 25 years.
“We were a little gun-shy to take it on,” Tioga Mayor Nathan Germundson said. “It’s almost too good to be true.”
But the city’s only other choice was to expand its lagoon system, which not only would require a significant investment, it also would need approval from the Federal Aviation Administration because the site is adjacent to Tioga’s airport.
“This was our best option,” Germundson said of Aquasource.
The new plant will initially treat 1 million gallons per day and expand to 3 million gallons per day.
“That’s way more than we could ever think of using in a day,” said Germundson, who has seen Tioga’s population boom since the 2010 Census pegged it at 1,230.
Germundson estimates that after some new apartment buildings are occupied, the city will have about 3,600 people. Leaders are planning for a population of about 5,000 people, with a possibility of up to 7,500, he said.
“This system will allow Tioga to grow for the next 50 years,” Wright said.
Aquasource’s strategy is to profit from its investment through the sales of treated waste water back to the oil industry, which is thirsty for water to use in fracking.
Aquasource also is talking with other developers and crew camps in the area that could pay to use the new system.
The North Dakota Department of Health has approved the Tioga project, said Wayne Kern, the department’s director of municipal facilities.
“From our experience and from our knowledge of the project, it’s been properly planned and properly thought out,” he said.
Kern said this public-private partnership could be a model for other communities to follow.
“It does point out that it is possible for industry and communities to work together not only to meet the needs of industry but to meet the present and future needs of the city,” Kern said. “We’re excited that such a project has materialized.”
Ray might be one of those communities that is able to take advantage of the Aquasource model.
Ray projects it will have 1,750 residents in five years and 3,500 residents in 20 years, Fleck said.
To accommodate some of that growth, Serie proposes building two apartment buildings, a 66-unit hotel and a restaurant on the west side of town near the Cenex station.
But Serie and other developers who come before Ray city leaders are told that for now, the city’s sewer capacity is none.
“It is slowing up the development,” Fleck said.
City officials in Ray are discussing either upgrading the city’s system or working out an agreement with Aquasource.
Adding two additional ponds to Ray’s one-ponds lagoon system would cost about $3.1 million. The city received some assistance for wastewater treatment from a state oil impact grant, but it was $1.88 million, Fleck said.
“The high capital costs to do construction in this area is extremely difficult for a community the size of Ray,” Fleck said.
Aquasource is proposing to construct a pipeline to transport the city’s waste to the Tioga plant at no cost to the city of Ray.
City leaders are waiting for attorneys to draft proposed contracts.
“Sewer is the big issue out here for developers,” Wright said. “This will help the towns grow and then you can actually use the water.”