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About Amy Dalrymple

Amy Dalrymple is a Forum Communications Co. reporter stationed in Williston, N.D. She covers stories related to the state's oil boom. Dalrymple has worked as a full-time reporter with Forum Communications since 2003, most recently covering higher education for The Forum of Fargo-Moorhead.

Oil Patch economy settling into ‘new normal’

WILLISTON, N.D. – Drilling is down and hotel vacancies are up, but participants at a conference Wednesday said there are still reasons to be optimistic about Williston’s economy.

Peter Elzi, a consultant whose firm has done more than 70 market studies on Williston, said low oil prices will make 2015 and 2016 challenging years for the city. But the area has a lot of other economic activity, he said, such as a new airport in the works and construction of new schools and government buildings, along with pipeline and gas plant expansions.

“There’s still people coming here and there’s still activity,” said Elzi, a principal with THK Associates in Denver. “People forget the most valuable oil that an oil company owns is still in the ground. It’s a bank for them. It’s there when prices recover.”

Shawn Wenko, executive director for Williston Economic Development, which organized the conference, said 2015 has been a good year so far development, but it’s at a pace that’s a “new normal.”

“Everybody got used to what happened between 2010 and 2015, and that was a tremendous amount of growth, numbers that were off the charts,” Wenko said. “And that’s a trajectory that’s not sustainable.”

One area that expanded rapidly in Williston was the addition of new hotels, with 16 hotels that opened in the city since 2010, said Amy Krueger, executive director of the Williston Convention Visitor’s Bureau.

While hotel rooms were difficult to find in Williston a few years ago, hotels have been averaging about 55 percent full in 2015, Krueger said.

The national average for hotel occupancy is about 70 percent, said Elzi, who said he paid $286 to stay at Williston’s Hampton Inn this week.

Hotel prices in Williston have started to come down, to an average daily rate of $122, but are still about $20 to $30 higher on average than neighboring cities of Minot and Dickinson, Krueger said.

Job-seekers continue to walk into the Williston office of Job Service North Dakota, but not at the pace they did in 2012 and 2013, said director Cindy Sanford.

The Williston area now has 1.5 jobs for every person, compared with six to seven jobs available for each person in 2011 and 2012, Sanford said.

Companies are now less likely to provide employee housing or pay for workers to travel home, Sanford said. Employers have dramatically cut back on overtime, which is the biggest reason workers have left North Dakota, Sanford said.

“We have had people walk in and go ‘Can I file for unemployment because I’m only working 40 hours a week?’” she said.

But Job Service has started to see some of those workers come back, in part due to apartment rents that have dropped, Sanford said.

Williams County had 38,924 workers in March, a drop of about 5,000 jobs since November, according to Job Service statistics.

Even with job layoffs that have occurred, the Williston area had 1,100 job openings as of this week, including 190 jobs in the oil industry, Sanford said.

As oil prices recover, Elzi said it’s going to be difficult to attract workers back to Williston now that the economies in other areas of the country have improved.

“It’s a harder recruit to say, ‘Would you like to freeze to death in February in the Bakken?’ when you’re competing with some other parts of the country,” Elzi said. “So filling some of the jobs is going to be a little bit of a challenge for folks.”

 

Oil well blowout causes spill but no injuries in Dunn County

WATFORD CITY, N.D. – A well blowout caused oil and brine to contaminate several acres of land in Dunn County but the incident did not cause injuries or affect waterways, the North Dakota Department of Health said Monday.

The blowout occurred about 10:30 a.m. Saturday at a well site owned by XTO Energy about 18 miles southeast of Watford City, said Bill Suess, spill investigations program manager.

The blowout released an estimated 110 barrels, or 4,620 gallons, of brine and 550 barrels, or 23,100 gallons of oil. Most of the spill was contained on the well site, but some escaped and contaminated the rugged Badlands terrain, Suess said.

“It didn’t spread too far,” Suess said. “Most of it went straight up in the air and landed right back down on the well pad.”

No surface water was affected by the spill, and cleanup crews have placed containment booms in dry drainage areas to prevent contamination from spreading if it rains, Suess said.

“For a blowout of this size, it doesn’t look like it’s a really severe environmental impact,” he said. “We think we got a little lucky on this one.”

Crews were doing completion work on the well when the blowout occurred, XTO spokeswoman Suann Guthrie said. XTO’s response team, which includes special equipment and trained personnel, was immediately activated, and crews regained control of the well early Sunday morning, she said.

No one was hurt and the public was not put in danger, Guthrie said.

“Our main concern is for the safety of our employees, contractors and neighbors in the region,” she said.

Cleanup work is ongoing at the site, with 90 barrels, or 3,780 gallons, of brine recovered and 450 barrels, or 18,900 gallons, of oil recovered, the health department said.

An initial reported indicated that about 15 acres were affected by the spill, but a health department inspector at the scene estimated that to be about 10 acres, Suess said.

“We take our environmental responsibilities very seriously,” Guthrie said. “We will be examining the cause of the incident to work to prevent reoccurrence.”

A blowout is an uncontrolled flow of oil, gas, brine, or a mixture of these. Lynn Helms, director of the North Dakota Department of Mineral Resources, has said a blowout is the highest-risk failure in the oil and gas industry for both human health and safety as well as potential environmental impact.

Department of Mineral Resources inspectors also are investigating, but spokeswoman Alison Ritter said she couldn’t answer many questions on it because the well is on confidential status which limits what information can be disclosed for up to six months.

 

Faces of the Boom: Former oil industry manager finds job in post office

Pat Ritzke, who started a new career as a mail carrier after 33 years in the oil industry, sorts packages for his route in Williston, N.D., on Thursday, Aug. 20, 2015. Amy Dalrymple/Forum News Service

Pat Ritzke, who started a new career as a mail carrier after 33 years in the oil industry, sorts packages for his route in Williston, N.D., on Thursday, Aug. 20, 2015. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – A former oil industry manager who was laid off earlier this year is enjoying a perk of his new job with the U.S. Postal Service – less stress.

At 57, Pat Ritzke is starting a new career as a mail carrier he was laid off in February along with thousands of other North Dakota workers due to a slowdown in oil activity.

With the U.S. Postal Service still aggressively hiring in northwest North Dakota to catch up with the region’s growth, Ritzke was back to work in Williston by April.

“I never really considered leaving because there’s so many job opportunities here,” he said.

Most jobs Ritzke applied for were not oil-related because he was ready to get away from the stress after 33 years in the industry. Most recently, he held a management position with Halliburton with 70 employees below him.

“It’s 24/7. You’ve got crews out every day of the week. And anything can happen,” Ritzke said. “I hate to say it, but there’s times when your phone rings and you swear at it.”

Ritzke, a New Rockford native and North Dakota State University graduate, spent more than 20 years working in the field before moving to management, primarily performing perforating services, which uses explosive charges to make holes in the well casing to prepare the well for hydraulic fracturing.

He worked in Williston from 1986 to 1997 before getting transferred to other areas of the country. Ritzke eventually wanted to retire in North Dakota, so in 2010 he volunteered to leave Rock Springs, Wyo., and come back to the Bakken.

During his time in the oil business, Ritzke has seen a lot of up and down cycles – including having to lay off some workers – so he knew losing his job was always a possibility.

Compared to other workers who were laid off as oil prices fell, Ritzke said he had an advantage because he already owned his Williston home and didn’t have to worry about paying high rent prices.

Ritzke took a significant pay cut leaving the oil industry. But he’s already in a career position that includes benefits with the Postal Service, a move that happens more quickly in Williston because of the demand for postal workers.

His route – which includes his own house – is mostly residential and requires 44 blocks of walking.

“I enjoy getting out. Once you’re out on your route, you’re on your own just moving along,” Ritzke said. “It’s peaceful.”

Even though Ritzke sometimes works six days a week when the Williston post office is short-staffed, he’s grateful he now gets Sundays off. And his phone?

“It’s pretty quiet,” he said.

PSC wants more information about pipeline that would cross Lake Sakakawea

STANLEY, N.D – Public Service Commissioners want a pipeline company to consider an extra safety measure and provide more details about leak detection before they make a decision on a crude oil pipeline that would travel under Lake Sakakawea.

The commission held a five-hour public hearing Friday on the proposal from Sacagawea Pipeline Co. to build a 70-mile pipeline from McKenzie County to Mountrail County.

The $125 million project would travel beneath the lakebed of Lake Sakakawea for 7,000 feet, which requires boring underground for 11,000 feet – more than two miles.

Bob Valeu, a board member for the Friends of Lake Sakakawea organization, urged the company to use the latest technology to prevent leaks and have resources readily available in the event of a spill.

“Communication delays due to the lack of adequate resources or monitoring, we believe, should be unacceptable,” Valeu said on behalf of the nonprofit, which has several hundred members.

The pipeline would transport oil from a terminal south of Keene to a rail-loading terminal that Phillips 66 is constructing near Palermo, said Jason Stelzer, a manager with Paradigm Energy Partners, one of the companies involved with the proposal.

The pipeline would transport 140,000 barrels of oil per day, reducing truck traffic south of Lake Sakakawea in an area where a lot of oil is still being trucked, Stelzer said. In the future, it could potentially feed other pipelines, he said.

Sacagawea Pipeline Co. is a joint venture with Paradigm Energy Partners, which would build the pipeline, Phillips 66, which would operate the pipeline and the rail terminal, and Greywolf Midstream, an entity owned by Three Affiliated Tribes that’s an investor in the project.

The 16-inch steel pipeline would be at least 100 feet below the lakebed, with a wall thickness of a half-inch under the lake for extra protection, Stelzer said.

The horizontal directional drilling would be performed by Michels Corp., a company that recently set a world record when it drilled horizontally for more than 12,000 feet to install a pipeline under the Houston Ship Channel.

The pipeline would be monitored 24/7 for indicators of leaks including changes in pressure, flow rates and temperature from the Phillips 66 control center in Oklahoma, Stelzer said.

The pipeline would have nine block valves, including a valve on each side of the lake, that could be operated from the control center or manually by Phillips 66 personnel, who will be based in Palermo, he said.

Commission Chairwoman Julie Fedorchak asked the company to submit more information about spill response, including plans for a worst-case scenario.

After members of the public raised concerns about how quickly a potential spill could get into the lake near Reunion Bay due to the topography, Fedorchak asked the company to consider installing another block valve to minimize the size of a spill.

“If you would have a spill, there’s not much to stop it,” said Trudy Ruland, who lives and ranches in the area.

Ruland, a Mountrail County commissioner, also raised concerns about how long it would take personnel based in Palermo to get to Reunion Bay – 50 miles away – if there were a spill.

The Laborers’ District Council of North Dakota and Minnesota, which represents construction workers, intervened in the hearing and supported the project.

Evan Whiteford, a career pipeliner from Ray, testified that if done correctly, pipelines beneath water bodies are safe. Whiteford said he believes the proposal and the experience of the company doing the directional drilling will protect Lake Sakakawea, where he and his family boat, fish and swim.

“It’s a very valuable resource to my family and a lot of families in North Dakota,” Whiteford said. “I’m confident in this drill, I really am.”

The pipeline crosses the Fort Berthold Indian Reservation, with a portion of it on allotted lands.

Commissioner Brian Kalk said he doesn’t believe the commission has jurisdiction over allotted lands, and attorneys for the company and the commission plan to study the issue. It’s possible the commission would make a decision on the portions of the route outside of allotted lands, Kalk said.

The project is still under review by federal agencies, including the U.S. Army Corps of Engineers and the Bureau of Indian Affairs.

Once permits are received, construction would take six to eight months, depending on weather, Stelzer said.

Watford City bypass project named a finalist in national contest

WATFORD CITY, N.D. — The Watford City Southeast and Southwest bypass project has been named one of the top 10 projects for America’s Transportation Awards competition.

The project is in the running for the grand prize, which is selected by a panel of experts, and the people’s choice award, which will be decided by online votes.

The public can vote for their favorite project through Sept. 11 at http://nominate.americastransportationawards.org/Voting.aspx. Individuals can vote up to 10 times per day.

Each award includes a $10,000 prize that will be donated to a charity or scholarship fund. The American Association of State Highway Transportation Officials created the awards program to recognize projects that deliver value to communities.

“The impact of these bypasses in our community is enormous,” said Watford City Mayor Brent Sanford. “The completion of these projects has significantly raised the quality of life in our community, as residents are no longer consumed by the daily frustration brought on by traffic congestion.”

The North Dakota Department of Transportation worked with the community and local officials, engineering firm KLJ, and contractors Knife River and Phillips & Jordan to take truck traffic around the city rather than through town.

The Watford City Southwest Bypass is a 7.5-mile long, four-lane roadway that cost about $80 million. The Watford City Southeast Bypass is a 5.7-mile long, four-lane roadway that cost about $50 million.

“We appreciate the fact that a panel of national transportation peers recognized the excellent work of the NDDOT team and other transportation professionals,” said Grant Levi, NDDOT director. “The department is committed to working with communities to ensure that the roadways are safe and the community’s transportation system allows them to prosper.”

The project also received the Western Association of State Highway and Transportation Officials America’s Transportation award earlier this year in the quality of life/community development category.

 

Proposed Berthold oil refinery ‘a little more involved’

BERTHOLD, N.D. – A proposed refinery in northwest North Dakota would process up to 45,000 barrels of Bakken crude each day to produce gasoline, jet fuel, diesel and other products, according to a permit application.

Quantum Energy and Native Son Refining have applied to the North Dakota Department of Health for an air quality permit to construct a refinery northwest of Berthold, or about 25 miles northwest of Minot.

The application states the proposed refinery would produce gasoline, jet fuel, diesel, ultra-low sulfur fuel oil and other products.

Several refineries have been proposed for North Dakota, but this is the only permit application under review by the Department of Health, said Craig Thorstenson, with the Division of Air Quality.

Most other projects discussed have been similar to the Prairie Dakota Refinery that recently began operating west of Dickinson, which processes 20,000 barrels of Bakken crude per day and produces diesel.

The proposed Berthold refinery would process twice as much oil and produce more refined products.

“It’s a little more involved,” Thorstenson said.

The health department has issued air quality permits for refineries and other projects that didn’t get built, Thorstenson said. The department issued two permits for Dakota Oil Processing to construct a refinery in northwest North Dakota, but those have now expired, he said.

“It’s hard to say in any particular case if they’re going to go forward or not,” Thorstenson said.

A map submitted to the health department shows the refinery located across U.S. Highway 2 from Enbridge’s Berthold Station, which includes storage tanks connected to Enbridge pipelines and a rail-loading terminal.

The health department will ask for a more detailed layout of the facility, and may request additional information, Thorstenson said. An air quality permit review typically takes about six months, he said.

The project is proposed by a joint venture between Quantum Energy of Arizona and Native Son Refining, a subsidiary of Native Son Holdings of Texas.

On the company’s website, Quantum Energy describes itself as a “development stage publicly traded diversified holding company with an emphasis in oil field development.” Calls to Quantum Energy seeking comment were not returned Friday.

According to a news release from July, Quantum has signed two-year option agreements with landowners in Baker, Mont., Fairview, Mont., Stanley and Berthold for refinery sites. The company says it’s “making progress in firming up relationships with other strategic alliance partners, refinery design teams, engineering firms, major diesel off-take sources and potential funding sources as well as crude supply candidates.”

The Prairie Dakota Refinery, operated by MDU Resources and Calumet Specialty Products Partners, was the first refinery built in the U.S. in decades. That project, which took more than two years of construction and testing, cost about $425 million.

The Tesoro refinery in Mandan processes 68,000 barrels of oil per day.

The proposed Berthold refinery would primarily be fueled by purchased natural gas, as well as refinery fuel gas produced by the refinery, the permit application states.

In addition to processing Bakken crude, the refinery may process an additional 10,000 barrels per day of naphtha to make retail gasoline, the document says.

 

10,000 Bakken wells drilled, 50,000 to go, Helms says

An oil well pump in a sunflower field on July 26, 2015, west of Dickinson just off Interstate 94 as a storm brews off to the east.  (Dustin Monke / Forum News Service)

An oil well pump in a sunflower field on July 26, 2015, west of Dickinson just off Interstate 94 as a storm brews off to the east. (Dustin Monke / Forum News Service)

BISMARCK – Oil companies have drilled one-sixth of the potential Bakken and Three Forks wells in North Dakota, exceeding 10,000 wells in the shale formations for the first time in June.

The state’s oil production rose slightly in June to more than 1.2 million barrels per day, the second-highest production month behind only last December, the Department of Mineral Resources said Friday.

The nearly 1 percent increase in oil production was driven by companies that were aggressive in fracking and completing oil wells in June, Director Lynn Helms said.

Crews completed 149 wells in June, up from 116 in May, according to preliminary figures. An estimated 848 wells were drilled but waiting on fracking crews at the end of June.

North Dakota had 12,864 producing oil wells at the end of June, with 10,113 of those wells in the Bakken and Three Forks formations, preliminary figures show.

That amounts to about one-sixth of the drilling potential in the Bakken based on what we know today, Helms said.

Since drilling activity began to drop in December due to lower oil prices, North Dakota has maintained oil production, in part because operators have found ways to cut costs.

Helms said the current number of active drilling rigs – 74 on Friday – and the inventory of wells that needs to be completed is sufficient to maintain production of 1.2 million barrels per day for 24 months.

“We think that we’re in a period of sustained low prices. It could last two years,” Helms said. “The capacity is there to maintain North Dakota production for a full two years even at these sustained low prices. It’s going to be a long, difficult period.”

In June and July, the department saw a surge in drilling permit applications with operators optimistic about oil prices, Helms said.

But that optimism has faded so far this month, and the price for North Dakota sweet crude, which Helms quoted at $28.50 on Friday, is “real cause for concern,” he said.

If prices stay this low, Helms said he anticipates activity to slow even more.

“Those kinds of numbers can’t last,” he said.

North Dakota’s oil revenue exceeded the budget forecast for June and likely will for July, Helms said. But the state’s oil revenue will likely fall below what was forecasted for August, with prices for Bakken crude about 12 percent below what the state projected in its budget, he said.

“We’re going to end the biennium on a real positive, but that’s fading,” Helms said.

Natural gas production increased 1.2 percent to 1.65 billion cubic feet per day, a new all-time high, preliminary figures show. The percentage of gas flared decreased from 18 percent to 17 percent.

The state saw a shift in the percentage of crude oil hauled by rail in June, falling from 52 percent in May to 47 percent in June, said Justin Kringstad, director of the North Dakota Pipeline Authority.

Between 600,000 and 630,000 barrels per day were transported by rail in May and June, the lowest since mid-2013, according to Kringstad’s figures. The state saw a peak in crude-by-rail volumes last December, with an estimated 817,000 to 847,000 that traveled by rail that month.

Kringstad attributes the drop in rail transportation to a shift in market prices plus the addition of the Double H Pipeline and the Dakota Prairie Refinery that together take up about 100,000 barrels per day.

Most oil trains that left North Dakota in May went to either the East Coast, which received about 59 percent of the oil shipments, or the West Coast, which received 21 percent, Kringstad said, using information from the Energy Information Administration.

 

North Dakota oil production

1st barrel of oil produced in April 1951

1 billionth barrel of oil produced in October 1989

2 billionth barrel of oil produced in November 2011

3 billionth barrel of oil produced in January 2015

4 billionth barrel of oil projected in 2018

Source: Department of Mineral Resources

Ethane pipeline project would feed Canadian demand

WILLISTON, N.D. – A proposed pipeline would send more ethane from the Bakken to Alberta’s petrochemical industry, adding value to North Dakota natural gas as the state works to reduce flaring.

Vantage Pipeline laid out its plans Thursday to the North Dakota Public Service Commission for a 47-mile pipeline that would transport liquid ethane in Williams and Divide counties.

The pipeline would start at Oneok Partners’ Stateline II gas processing plant near Williston and connect to the existing Vantage ethane pipeline system near the Canadian border, transporting 26,000 barrels per day.

Public Service Commissioner Randy Christmann said he thinks the proposal is an exciting project because adding more value to natural gas could add more incentive to producers to capture gas that is currently being flared.

North Dakota produced more than 1.6 billion cubic feet per day of natural gas in May. Producers flared 18 percent of the gas that month.

Most ethane produced in North Dakota is blended with methane and consumed by homes and businesses, or it’s blended with other natural gas liquids and shipped out of state for further processing, said Justin Kringstad, director of the North Dakota Pipeline Authority.

Separating the ethane from other natural gas liquids attracts a premium price for producers,  said Jason Wiun, vice president for conventional pipelines for Pembina, a Canadian company that acquired Vantage.

Oneok is spending an estimated $60 million to $80 million to construct de-ethanization towers at the Stateline facility to separate ethane on site, said spokeswoman Stephanie Higgins. The construction is expected to be complete in the second quarter of next year.

Higgins said the project is not expected to have a direct effect on flaring because it won’t enable the company to capture more natural gas produced at the wellhead.

Vantage has a long-term agreement to sell the ethane to Nova Chemicals in Alberta, where it’s used to produce plastics, rubber, detergents and other consumer products. Gas drilling has declined in Alberta, and the regional ethane supply is projected to fall short of the petrochemical industry’s demand, Wiun said.

“Imports from the Bakken formation and other shale plays are expected to supply the deficit over the next 20 years,” Wiun said.

Vantage currently transports 20,000 to 25,000 barrels per day of liquid ethane from the Hess gas processing plant in Tioga to Alberta. The proposed pipeline, which would connect with the existing Vantage line near Stady in Divide County, would be the only additional pipeline to transport pure ethane in North Dakota.

Commission Chairwoman Julie Fedorchak said she’d like to see North Dakota develop its own petrochemical industry.

Badlands NGL’s LLC and two partners announced plans last October for a $4 billion plant in North Dakota that would convert ethane gas into polyethylene for use in plastic products. In June, the company said it had yet to secure an ethane supply for the project.

“I’m hopeful long-term that there’s more ethane that stays in North Dakota, but I also understand there’s plenty of ethane, so there should be enough to go around,” Fedorchak said.

If the Public Service Commission approves the pipeline, construction could start as early as September. The company aims to put the pipeline into service in early 2016.

Commissioners said it was encouraging to see that Vantage has secured easements with 100 percent of landowners.

“Apparently they’re working pretty well with landowners,” Christmann said.

Commissioners pressed Vantage officials for details about reclamation and the company’s contingency plans if they are still doing construction during winter weather.

“With the magnitude of pipeline construction occurring in North Dakota, we have to do the reclamation right,” Fedorchak said.

Source of pipeline leak not detected for days

Cleanup is ongoing northwest of Crosby, N.D., on Tuesday, Aug. 11, 2015, following a pipeline leak. Photo courtesy of Divide County Emergency Services

Cleanup is ongoing northwest of Crosby, N.D., on Tuesday, Aug. 11, 2015, following a pipeline leak. Photo courtesy of Divide County Emergency Services

CROSBY, N.D. – The company that owns a saltwater pipeline that leaked last week in Divide County shut down its system after detecting a problem, but it took a few days before workers found the source of the leak.

Samson Resources discovered on Aug. 3 that the volume of produced water coming into its facility was lower than it should have been, prompting officials to shut down the system and begin looking for a leak.

Workers began walking along more than 20 miles of pipeline on Monday night, but it wasn’t until Wednesday afternoon before they discovered the leak, according to Samson Resources.

The pipeline leak released 4,260 barrels, or 178,920 gallons, of produced water in a field about seven miles northwest of Crosby, killing soybeans and other vegetation.

The brine spill is the largest Divide County has had during the Bakken oil development, said Jody Gunlock, emergency services coordinator for the county. Gunlock said it was clear from the brown grass and other dead vegetation in the area that the pipeline had been leaking for days before it was discovered.

“This vegetation just didn’t die overnight. This was an ongoing leak that wasn’t getting detected,” Gunlock said.

Based on pump data, Samson Resources believes the leak began the morning of Aug. 2, according to a company representative.

“We have notified the appropriate regulatory authorities and landowners and are taking all appropriate action to address this situation,” Samson Resources said in a statement.

The company estimates the spill affected an area of 800 feet by 800 feet, according to a spill report filed with the North Dakota Department of Health, but work is ongoing to define how far the contamination spread.

There have been no impacts to surface water or groundwater, said Bill Suess of the health department’s Environmental Health Section.

Cleanup crews continue removing brine and contaminated soil from the area. They had removed about 1,000 barrels, or 42,000 gallons, of brine by Monday and were removing about one foot of soil for disposal in a landfill, the health department said.

The extent of the cleanup required will depend on how deep the contamination spread, Suess said.

“I think there’s going to be some major excavation,” Gunlock said.

The cause of the leak remains under investigation. In addition to health officials, the Department of Mineral Resources has had inspectors at the site.

Half-built Bakken housing becomes an eyesore

The partially constructed Great American Lodge in Culbertson, Mont., pictured Friday, July 17, 2015, has been vacant since the U.S. Securities and Exchange Commission filed a civil complaint against developer North Dakota Developments in May. Amy Dalrymple/Forum News Service

The partially constructed Great American Lodge in Culbertson, Mont., pictured Friday, July 17, 2015, has been vacant since the U.S. Securities and Exchange Commission filed a civil complaint against developer North Dakota Developments in May. Amy Dalrymple/Forum News Service

CULBERTSON, Mont. – Weeds are growing around a partially constructed Bakken housing camp that is connected to an alleged Ponzi scheme, and officials in this northeastern Montana town would like it cleaned up.

Work on the Great American Lodge in Culbertson stopped in May after the U.S. Securities and Exchange Commission filed a civil complaint against developer North Dakota Developments and its owners, alleging they defrauded investors for Bakken housing projects that were not finished.

Culbertson Mayor Gordon Oelkers said construction was about 80 percent complete on 130 units of the Great American Lodge, which was planned to be a 300-unit extended stay hotel geared for oilfield workers.

Crews were delivering mattresses and air conditioners to some of the units on the day the news broke that the lodge was connected to a $62 million Ponzi scheme, Oelkers said. The assets of the developers were frozen, work on the facility came to a halt and the site has become an eyesore.

“We have a half-done facility that can’t be occupied,” Oelkers said. “The weeds are growing and it’s looking real tough and it’s going to deteriorate real fast.”

City officials are talking to a receiver who’s been appointed to protect assets involved with the case about cleaning up the property.

Oelkers said he anticipates the units will eventually be sold “for pennies on the dollar” either to someone who wants to open it up or move the units elsewhere. But officials want to prevent the facility from deteriorating before it can be sold.

Gary Hansen, the appointed receiver, wrote in a status report filed in U.S. District Court that an independent appraisal is necessary before the facility can be sold. Hansen wrote that he’s contacted an appraiser familiar with crew camps in the Bakken to appraise the Culbertson lodge, as well as another Great American Lodge in northwest North Dakota between Watford City and Alexander.

Hansen also wrote that he’s arranged for people familiar with both properties to patrol the sites daily.

Some work on the North Dakota lodge was ongoing, but it was the only North Dakota Developments project to be partially operational, housing 160 people when it abruptly closed.

North Dakota Developments had committed to pay the city of Culbertson $100,000 for five years in an impact fee to offset the cost of the city’s sewer expansion project, but had not made any payments, Oelkers said. The city has submitted a claim for the money it was promised, but officials don’t expect to collect, Oelkers said.

Hansen wrote in his update that he’s identified liquid assets of $175,000.

Red flags started occurring with the development about a year ago, Oelkers said. Investors from Canada started calling the city to inquire about the status of construction and the developers brought in modular units that were poorer quality than they initially talked about, Oelkers said.

“About a year ago, things started to get questionable,” he said.