‘Black gold’ boom drives demand for white trucks

Mike Gietzen, pictured Friday, Aug. 30, 2013, in Minot, N.D., commercial sales professional for Ryan Chevrolet, often sells 20 or more pickups at a time to oil companies working in North Dakota. Amy Dalrymple/Forum News Service

MINOT, N.D. – Mike Gietzen sells so many white pickups to the oil industry, he added the word white to his email address.

North Dakota’s oil boom has meant big business for auto dealers, but staying ahead of the demand can be tricky, said the commercial sales professional for Ryan Chevrolet in Minot.

“It’s crazy and it’s fun, but it can be maddening,” Gietzen said.

Down the street at Minot’s Ford dealership, Hank Ripplinger, commercial fleet manager for Westlie Motor Co., said many oil companies will buy up to 12 pickups at a time, but he’s had some orders exceed 100.

“It’s a fast business,” Ripplinger said. “They want the unit now and preferably you have it on the ground for them.”

Hank Ripplinger, pictured Friday, Aug. 30, 2013, works as the commercial fleet manager for Westlie Motor Co. in Minot, N.D. Amy Dalrymple/Forum News Service

Both auto lots have rows of their best-selling pickups: the Chevy Silverado 2500 and the F-150 or Super Duty for Ford.

But often they’ll have to call on other dealerships in the region to help fill a big order.

Ninety percent of the fleet vehicles they sell to the oil industry are white because companies like to add their company logos, Ripplinger said.

Gietzen used to prefer a silver pickup as his personal vehicle, but he’s switched to white.

“I’ve made a lot of money on white,” Gietzen said.

Many sales are done online, often with a national company that manages the fleet vehicles for the oil company, Ripplinger said.

Gietzen said he drives west to deliver pickups to Stanley, Tioga and the surrounding area about once or twice a week.

Both dealerships say the fleet pickup sales have hit a plateau.

“We’ve seen that the last two or three years have been fast and furious, and it appears to be leveling out right now,” Ripplinger said.

But the demand to maintain those vehicles won’t level off anytime soon. In addition to the oil industry vehicles that need maintenance, customers will drive from as far as Montana to have vehicles serviced in Minot due to a shortage of workers in the Bakken, Ripplinger said.

“On given days, you can’t get in this lot,” Ripplinger said.

More oil workers expected in ND to catch up on fracking this summer

A hydraulic fracturing crew works on an oil well in Mountrail County, N.D., on June 11, 2013. Amy Dalrymple/Forum News Service

BISMARCK – More temporary oil workers are expected in Williston, Dickinson and Minot this summer to catch up on a backlog of wells that need hydraulic fracturing, North Dakota’s top oil and gas regulator said Monday.

Lynn Helms, director of the Department of Mineral Resources, said drilling crews are outpacing well completion crews. At the end of May, an estimated 500 oil wells were waiting on fracking crews.

North Dakota oil production rose 2.1 percent in May to set an all-time high of 810,129 barrels per day, according to preliminary numbers from the department.

“We finally broke through that 800,000 barrel-a-day barrier,” Helms said.

Production increases are expected to be more substantial this summer as oil service companies bring in additional workers and equipment to catch up on the backlog, Helms said. They’ll likely put pressure on housing in the three hub cities in the Bakken where the companies have headquarters, he said.

Companies are taking an average of 22 days to drill a new oil well, but the length of time to complete the well and bring it on production has increased to 92 days, Helms said.

North Dakota had the wettest May on record, which prompted restrictions on some roads to last longer than usual, making it difficult to move heavy equipment, sand and water used for hydraulic fracturing, Helms said.

Some companies are refocusing their workforce to add more well-completion personnel in North Dakota instead of drilling crews, Helms said.

The percentage of North Dakota crude oil transported by rail fell from 75 percent to 69 percent in May, said Justin Kringstad, director of the North Dakota Pipeline Authority.

The change resulted from a shift in market prices, which prompted more oil to be transported by pipeline, Kringstad said.

North Dakota officials are monitoring the investigation of the train carrying Bakken crude that derailed in Quebec.

“Continued shipment by rail is critical to continued development and production growth of North Dakota,” Helms said. “Without it, price differentials and lower prices would have a big negative impact on what’s happening in the Bakken and Three Forks.”

The price of sweet crude was $97 per barrel on Monday, up from an average of $85 to $87 in previous months. Helms attributes the increase to unrest in Egypt.

North Dakota natural gas production rose 4.5 percent in May to 899,977 thousand cubic feet per day, also an all-time high.

The percent of natural gas flared in May remained at 29 percent. The all-time high was 36 percent in September 2011.

Congressional leaders visit Bakken today

MINOT, N.D. — Rep. Kevin Cramer will host the chairman of the U.S. House Committee on Energy and Commerce and other top committee leadership today in Minot.

Participants include:

  • Congressman Fred Upton, Michigan, Chairman of the Committee on Energy and Commerce
  • Congressman Ed Whitfield, Kentucky, Chairman of the Subcommittee on Energy and Power
  • Congressman Lee Terry, Nebraska, Chairman of the Subcommittee on Commerce, Manufacturing and Trade
  • Congressman Cory Gardner, Colorado, Committee on Energy and Commerce
  • Congressman Mike Pompeo, Kansas, Committee on Energy and Commerce
  • Congressman Bill Johnson, Ohio, Committee on Energy and Commerce

The group will hold a news conference at 3 p.m. today at the Hampton Inn and Suites in Minot and share their observations of North Dakota’s energy boom.

North Dakota Oil Patch no Wild West, researcher says

Carol Archbold

WILLISTON, N.D. — Police activity is busier in western North Dakota, but it’s not the Wild West, says a researcher studying the impact of the oil boom on law enforcement.

Carol Archbold, a North Dakota State University criminal justice associate professor, said interviews with more than 100 officers in the Oil Patch revealed a misconception about crime in western North Dakota.

“There’s a perception by people in the state and elsewhere that we have sort of a Wild West going on out there, with massive amounts of violent crime,” Archbold said.

In reality, however, the violent crimes are not increasing as steadily as people think, but police are seeing more calls for alcohol- and drug-related crimes, traffic incidents and disorderly conduct, she said.

“People are mistaking the increase in calls for service for increase in violent crime, and they’re not the same thing,” she said.

Archbold and doctoral students Tod Dahle and Rachel Jordan interviewed officers from eight law enforcement agencies from Williams, Ward, McKenzie and Dunn counties.

The study will not be complete until later this year, but Archbold said one trend she’s noticed from the interviews is that much of the increase in workload for police can be attributed to alcohol.

Archbold experienced this firsthand when her car was struck by a drunk driver while she was parked in Minot conducting an interview. The driver fled and the deputy Archbold had just finished interviewing chased him.

“I can laugh about it now,” Archbold said. “It’s just really ironic.”

Departments said a lack of staffing causes stress and fatigue for the officers working long hours. Many agencies said they had the resources to hire more people, but didn’t have the ability to provide housing, Archbold said.

Despite the demands of the job, officers said they still love the job, she said.

“These are really dedicated people and they’re really hard workers,” she said.

Radioactive waste on the N.D. monitor

Eric Olson, operator at the Williston landfill, holds up one of an estimated 100 filter socks containing radioactive material that were improperly disposed of in a city of Williston garbage container on Thursday, May 16, 2013. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – Landfill employees here discovered at least two “hot loads” this week, illustrating why a group of North Dakota citizens is worried about the proper disposal of radioactive waste that comes with oil production.

A Williston landfill operator found an estimated 100 filter socks Thursday containing naturally occurring radioactive material. The socks, which look like large tube socks and are used in oilfield salt water disposal wells to filter out the solids, should have been transported out of state but instead were hidden in a city garbage can.

The discovery came a day after the Williston landfill issued a $10,000 fine to a company that illegally brought about 50 filter socks to the landfill, said landfill foreman Brad Septka.

“We’re trying to do everything in our power to catch them,” Septka said.

A newly formed group called the Energy Industry Waste Coalition will meet Sunday in Minot to discuss concerns about radioactive oilfield waste and efforts to influence public policy.

Darrell Dorgan of Bismarck, who helped organize the group, said members worry about what happens to the radioactive material after landfills reject it.

“What’s happening is it’s just being scattered out here in the wind,” said Dorgan, owner of Dakom Communications who reported on radioactive waste in the 1980s while working as a broadcast journalist.

The naturally occurring radioactive material, referred to by the acronym NORM, is brought to the surface as a result of drilling and other oil production activities, said Dan Harman, manager of radiation control and indoor air quality branch with the North Dakota Department of Health.

The material can be found in oilfield waste, such as drill cuttings or tank sludge, Harman said. NORM is commonly found in filter socks, Harman said.

Currently, only low-level radioactive waste can be legally disposed of in North Dakota and the rest must be shipped to approved sites in Colorado, Michigan, Texas and other states.

The North Dakota Petroleum Council, an oil industry group, would like to develop a solution to safely handle the material within the state, said president Ron Ness.

The council is working with the Department of Health and the Energy and Environmental and Research Center at the University of North Dakota to study the issue.

“Unfortunately, if the only disposal options are out of state, I think that creates a bad environment for people to try to sneak bags of it into landfills,” said John Harju, associate director for research with the EERC. “People don’t know what to do with it.”

The first steps of the EERC study, which is expected to begin in the next few weeks, include getting a handle on the nature of the material in North Dakota and understanding it in the context of radioactivity that people are exposed to every day, Harju said.

“We need to get these things into some perspective,” Harju said.

For a comparison, Harman said a worker would have to stand 6 inches from bags of ceramic frac sand for 2,000 hours to get the same dosage of radiation as one dental X-ray.

North Dakota does not accept radioactive waste with levels greater than 5 picocuries per gram, which Harju called “amazingly low radiation.”

Other states accept waste with higher levels, some as much as 10 times higher, Harman said.

When North Dakota officials have asked other states how they determined the rates, most based their answers on what other states did rather than relying on science, Harman said.

The Department of Health has asked the Petroleum Council to bring a science-based proposal that would be open to public comment, Harman said.

Dorgan said he worries that if North Dakota increases the level of radiation it will accept and other states lower theirs, North Dakota could become a destination for the waste.

“We could end up as the dump site,” Dorgan said.

Brad Septka, landfill foreman for the city of Williston, N.D., pictured Thursday, May 16, 2013, has had to crack down on companies that try to illegally dispose of radioactive waste. Amy Dalrymple/Forum News Service

The Williston landfill already has taken steps to prevent becoming a radioactive wasteland.

Septka said the landfill increased fines for bringing in the waste from $1,000 to $10,000. Scale operators use Geiger counters to check every oilfield load and employees give drivers a list of oilfield waste management facilities.

“There’s no reason for it to come to the landfills,” Septka said.

The companies that receive the fines usually claim they didn’t know the items were there, but Septka said the waste often appears like it was hidden.

In 2011, the Williston landfill did its own testing on two filter socks and found that one had a radiation level of 17 picocuries per gram and another had a level of 45 picocuries per gram, Septka said.

The Department of Health now receives information about every load that is rejected at a landfill and follows up to see where the waste goes, Harman said.

In addition to reports from landfills, Harman said there was a confirmed case of a sack of filter socks discovered west of Tioga along U.S. Highway 2 this spring after the snow melted that appeared to have blown off a truck, Harman said.

Edmund Baker, environmental director for the Three Affiliated Tribes, issued a warning to tribal members early this year about radioactive waste, particularly filter socks that he said can resemble fishing nets.

“There’s a risk of children looking at these things not knowing what they are,” Baker said.

During the recent clean-up days on the Fort Berthold Reservation, volunteers found an estimated 30 filter socks, with a third of those concentrated around the Mandaree area, Baker said.

Baker said he’s working with the Environmental Protection Agency and watching what the Health Department does regarding disposal.

Don Morrison, executive director of the Dakota Resource Council, which is also involved with the newly formed coalition, said the group is getting organized to make sure the public has input on policy changes the state would make about radioactive waste.

The coalition will strongly oppose new sites for radioactive storage and increasing the level of radioactivity of material that can be kept in North Dakota, Morrison said.

“It’s time for North Dakotans to have a voice in deciding what’s going to happen,” Morrison said.

Eric Olson, operator at the Williston landfill, sets aside a bag of filter socks containing radioactive material on Thursday, May 16, 2013, to be disposed of properly. Amy Dalrymple/Forum News Service

Oil companies continue Pick Up the Patch campaign

Volunteers clean up a ditch near Dickinson, N.D., this spring. Photo courtesy of North Dakota Petroleum Council

TIOGA, N.D. — Volunteers from oil and gas companies will clean up litter from roadways in Tioga today, continuing the North Dakota Petroleum Council’s Pick Up the Patch initiative that has already involved 500 employees this spring.

Dozens of energy companies have helped pick up more than 900 bags of trash and clean 20 miles of roadway in western North Dakota during the past four weeks. Cleanup efforts have been held in New Town, Williston and Dickinson.

Today’s event focuses on the Tioga area and an event Friday focuses on the Minot area.

The North Dakota Petroleum Council launched the campaign last spring to clean up debris left behind after the snow melted. Last year, more than 70 companies and 1,000 volunteers picked up more than 200 miles of roadways.

Singapore investor eyes N.D. Oil Patch

Danny Lim, founding principal of Barons Companies of Singapore, speaks during the Bakken Investor Conference Friday, April 26, 2013, in Minot, N.D. Amy Dalrymple/Forum News Service

MINOT, N.D. – A real estate investor from Singapore expects to make two or three deals in the Bakken before leaving a conference this week with plans to invest millions in North Dakota.

Danny Lim, founding principal of Barons Group of Companies, was among more than 200 people who attended the Bakken Investor Conference in Minot this week.

Lim said he raises funds from Singapore, India, Malaysia, China and other eastern countries that he’s interested in investing in western North Dakota residential and commercial projects.

Initially the fund is looking to make $5 million to $10 million in investments for a period of three to five years. But the group would like to establish a larger fund and return to North Dakota to invest as much as $100 million for the long term, Lim said.

“We’ll come back to North Dakota when things are a little more stable and we’ll know exactly who makes it and who got killed,” Lim said.

The company, which includes Property Barons, began doing work in the United States in 2009, buying properties from banks.

“We thought everybody is running out, perhaps we should start looking in,” Lim said.

The investors found success in the United States and decided to investigate North Dakota.

Before attending the conference this week, Lim said he thought there would be a huge demand for hotels. But after visiting, he’s reevaluating his strategy and looking for local partners.

He said he expected to make two or three deals and visit a Stanley apartment project before returning to Singapore today.

Lim said he’s nervous about the danger of overbuilding and the lack of information about what housing projects are being built.

“It’s everybody’s guessing game,” he said.

Lim said he’d like to see communities and the state compile information about building projects that have been permitted so developers can analyze that information.

“The main challenge is for the entire state of North Dakota to actually bring all of the statistics together so everybody knows what is being built and what is the supply and nobody gets burned,” Lim said.

International investors are interested in the Bakken, said Tom Rolfstad, economic development director for Williston. Williston has seen investors from Turkey, India, England and China and continues to receive interview requests from international media, Rolfstad said.

“A lot of the world is very interested in what’s going on here,” Rolfstad said.

Lim said he is leaving North Dakota impressed with the prospects.

“There are loads of opportunities but there are a lot of entrapments as well,” Lim said. “Easy to get in, but not easy to get out. I think the main strategy is to find how you can actually exit. For investors, most of the time, you don’t put in money forever.”

Bank of N.D. bringing together smaller lenders for Bakken projects

MINOT, N.D. – Investors and developers interested in helping solve North Dakota’s housing shortage often run into a common problem: how to finance multi-million dollar projects.

Community banks in the state don’t have the ability to finance deals of that magnitude, national lenders don’t have a presence in western North Dakota and out-of-state banks are wary, said Jeff Zarling, organizer of the Bakken Investor Conference being held this week in Minot.

A new program through the Bank of North Dakota is combining resources of community banks to finance projects that none of the individual banks could do alone.

“We’re hoping that is one solution for opening up more commercial lending in western North Dakota,” said Zarling, president of DAWA Solutions Group, a business development firm based in Williston.

The program was one of the topics highlighted Thursday in the Bakken Investor Conference, which attracted more than 200 attendees from around the country and a few foreign countries.

Tom Redmann, commercial loan officer for the Bank of North Dakota, said the state-owned bank has now done two multi-bank loans, known as subparticipation loans. One loan was a small, pilot project and a larger loan involved several banks.

First International Bank, founded in Watford City, was the lead lender to finance the Renaissance Heights apartment development in Williston that’s being developed by Investors Real Estate Trust of Minot.

First International Bank then partnered with the Bank of North Dakota, which backed a significant chunk of the loan but also involved 12 smaller lenders, Redmann said. The total project cost is $63 million and the loan was for $42 million, he said.

One of the participants was Garrison State Bank, a small-town bank that never would have been able to get involved in a Bakken project without partnering with the Bank of North Dakota, said Garrison Senior Vice President Norman Thoreson.

Some banks from eastern North Dakota participated in the program, but Redmann pointed out that none of the banks from the eastern part of the state were represented at the conference.

“The eastern part of the state is fairly convinced that the western part of the state is just going to fall off the side of the planet,” Redmann said. “They’re not too sure that this oil play is for real.”

He added that eastern North Dakota banks are interested in the Bakken, but they need to get more comfortable with it.

National banks such as U.S. Bank and Wells Fargo are primarily staying on the sidelines when it comes to the Bakken, Redmann said.

The Bank of North Dakota has financed a lot of projects in oil country in the past two years, but is starting to worry about being too heavily concentrated in that area and may not be able to jump in as heavily, Redmann said.

Another presenter, Jon Nelson of Hegg Development Group, spoke about how to position major projects to get the attention of Wall Street. Hegg Development, based in Sioux Falls, S.D., expects to break ground on $100 million of development in the Bakken this year, with help from Wall Street financing, Nelson said.

“Wall Street is paying attention to the Bakken,” Nelson said.

The conference continues through today.

N.D. energy company cited for safety violations after worker’s death

STANLEY, N.D. — The Occupational Safety and Health Administration has cited First Choice Energy of Minot with nine serious safety violations following an inspection that was prompted by the death of a worker.

Joshua Hoiland, 31, Minot, died March 14 at a work site south of Stanley after he was caught in the agitator of an oilfield vacuum truck storage tank.

An OSHA inspection found that workers were exposed to unsafe conditions at the oilfield drilling and disposal operation, according to a news release from the U.S. Department of Labor.

Five of the nine citations involve OSHA’s confined space requirements, including lack of atmospheric testing, permitting, signs and emergency response procedures.

Other citations involve not properly protecting workers from open pit fall hazards, lack of energy control and lockout/tagout procedures and equipment, failing to conduct annual inspections of energy control procedures and failing to train workers on such procedures.

OSHA has proposed penalties of $33,000. First Choice Energy has 15 business days to comply, request an informal conference with an OSHA official or contest the findings.

“First Choice Energy failed to develop and implement the most basic of confined space and energy control safety protocols,” Eric Brooks, OSHA’s area director in Bismarck, said in a statement. “Companies have a responsibility to recognize – and train their workers to recognize – hazards unique to their job sites in addition to protecting workers from such hazards.”

Conference connects Oil Patch with investors

WILLISTON, N.D. –  A new private equity firm based in Minot aims to create an avenue for people to invest directly in oil and gas activity in western North Dakota.

“People who don’t own land or don’t own minerals have been asking ‘How can we participate in all this economic activity going on?’” said Mark Anderson, president and CEO of Mainstream Investors.

Connecting money with ideas is one of the goals of the Bakken Investor Conference scheduled Wednesday through April 26 in Minot. Anderson is one of the presenters at the conference that is expected to attract 300 to 400 investors from around the country.

Anderson and Mike Donohue, vice president, founded Mainstream Investors last fall to connect people with economic activity in the Bakken.

Although the firm is open to all investors, it primarily focuses on local clients.

“It’s by North Dakotans, for North Dakotans, investing in North Dakota,” Anderson said.

Mainstream buys working interests in producing wells in the Bakken and Three Forks formations. The firm also will finance projects or developments that support or are supported by energy development, Anderson said.

“There are some very grand plans that people have for housing developments but they need capital,” Anderson said. “That’s one of the things that we offer is access to capital.”

Jeff Zarling, president of DAWA Solutions Group, which is organizing the conference, said the event will provide information about high-growth investment opportunities in North Dakota.

“I don’t think people understand these opportunities are there,” Zarling said.

The conference aims to provide investors with the data they need to make decisions, such as population projections from a North Dakota State University professor and a survey of the energy industry from the chief economist for the American Petroleum Institute.

The opportunities are targeted at accredited investors, or investors who have a net worth of $1 million, not including their home, or earn $200,000 a year.

The conference also features real estate presentations and information about how to finance projects in the Bakken and get the attention of Wall Street investors.

Last year, the conference attracted more than 250 participants from 30 states. This year the event has even stronger interest, including people from other countries, Zarling said.

“They’re coming from all over looking at what’s going on in North Dakota,” Zarling said.

Cost for the conference, held at the Sleep Inn, is $850 for registrations received by Wednesday. For a complete schedule and registration information, visit www.bakkeninvestorconference.com.