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Some Minnesotans still benefit from North Dakota oil; others wait for prices to rise

ST. PAUL - Minnesotans do not only look across the border into North Dakota and drool at the money being made to the west.

This parking garage for the Mountrail-Williams Electric Cooperative in Williston, N.D., is an example of recent new construction in the Bakken oil field area. It was built by Shingobee, a Minneosta company. (Shingobee photo)
This parking garage for the Mountrail-Williams Electric Cooperative in Williston, N.D., is an example of recent new construction in the Bakken oil field area. It was built by Shingobee, a Minneosta company. (Shingobee photo)
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ST. PAUL – Minnesotans do not only look across the border into North Dakota and drool at the money being made to the west.

Even during the current oil price slump, Minnesota businesses continue to take advantage of what remains a strong oil economy in western North Dakota's Bakken oilfields. Many look for a price rebound, perhaps late next year, to boost their businesses.

Businesses from all parts of Minnesota take advantage of the oil boom, and studies show more could benefit from the Bakken black gold.

"The impacts to the Minnesota economy are 1 percent overall," analyst Neal Young of the Minnesota Department of Employment and Economic Development said.

While many businesses can benefit from the oil industry and new cash in some North Dakotans' pockets, Young said that Minnesota's steady economy is best not depending too much on the boom and bust energy industry.

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But North Dakota business is good for some Minnesota companies, including a St. Cloud-based grocery store chain.

Coborn's, Inc. operates 54 supermarkets in North Dakota, South Dakota, Iowa, Illinois and Wisconsin under the Coborn's, Cash Wise Foods and Save-A-Lot names, with a half-dozen Cash Wise stores in the Oil Patch.

"We have built a few new stores and have purchased some stores," Coborn's Rebecca Kurowski said, owning stores in Watford City, Minot, Dickinson, Williston, Stanley and Tioga.

"Everyone needs food," she said, so the stores continue to do well even as oil wells are not being drilled at the pace of recent years because existing wells continue to pump and many workers still are on the job.

The Cash Wise stores are not as fancy as seen in bigger cities, but they offer things oil industry workers need.

"Hot deli sales are unbelievable compared to many of the other communities where we have stores," Kurowski said.

On the liquor side of things, stores around the Bakken find little demand for wine, but experience heavy sales of beer and whiskey, she said.

"Our meat sales out west are tremendous," she added.

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On the other hand, she said, "we don't need full service floral out in the Oil Patch."

The oil price dip actually gave Cash Wise a chance to catch its breath from its own boom.

"When things were in the wild west mode, we had tons of overtime hours," Kurowski said. "We were working so very hard just to recruit people to work for us. ... Now, we have been able to stabilize."

A Bemidji, Minn., manufacturer that began in 2007 grew with the oil boom, but does enough other business around the world that the oil price drop has not hurt.

Jorge Prince of LaValley Industries said he expects North Dakota business for the firm's giant hand-like clamps used to lift pipes to rebound with an oil price rise he expects late next year.

"There is no doubt that it being slow over there has had some effect on us," Prince said, but with a diversity of products and international sales there has not been a big impact. "It is very, very quiet over there ... over the last six to eight months."

There will be little need for the 3,000-pound to 4,000-pound pipe clamps, known as Deckhands, until heavy well drilling resumes.

"We still are pretty optimistic long term on the future of the Bakken," Prince said. "We obviously don't have a crystal ball to predict recoveries, but it is an important part of the American long-term energy strategy."

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Lynn Helms, North Dakota's top oil regulator, told the North Dakota Industrial Commission last month that no one knows when oil prices will rebound, but most experts are saying 2017. North Dakota oil production is expected to gradually decline from the current rate of 1.19 million barrels per day to 1.1 million barrels per day at the end of June 2017, Helms said.

Young said that in the meantime North Dakota needs to build roads, schools, oilfield-related buildings and other infrastructure, and perhaps employ Minnesota design and construction firms.

Shingobee Builders is an example of a Minnesota construction firm doing well in western North Dakota. The company, headquartered just northwest of the Twin Cities, is doing so well there that it has opened a small Williston, N.D., office to be in the middle of the oil activity.

Company Vice President Tony Godlewski called Shingobee one of the construction leaders in the North Dakota Oil Patch, with more than 20 projects since the oil boom began. They range from medical centers to apartments to a just-started Williston fire station.

Before the boom, he said, 2 percent to 5 percent of the company's business was in North Dakota. In the boom years of 2009 to 2012, that rose to 25 percent to 35 percent.

The oil boom came as Minnesota's economy slowed, and Godlewski said Minnesota subcontractors took work in North Dakota. Shingobee hired many of those subcontractors, while the company itself may have had only one person on site.

The boom meant projects cost a third more in North Dakota than Minnesota, compared to 10 percent more in 2009, Godlewski said. Cost for most items are higher in the boom area, partly because of transportation costs.

"Nothing is made up there," Godlewski said. "Everything has to be shipped in."

Dealing with a myriad of newly formed subcontractor companies also was frustrating, he said. Many had little experience or money behind their operations. When the overall economy rebounded, most Minnesota subcontractors returned home to work, leaving long-standing, dependable North Dakota firms booked so companies like Shingobee scrambled to find firms to do the work.

Godlewski is optimistic that construction work will expand when oil prices rise again. The market, he said, "will come back and it will get crazy busy again. I think they will be more prepared."

Experts say that Minnesota companies should continue to look west, even in the current oil slow-down, as North Dakota remains the country's second most productive oil producer and money it produces is the envy of many.

"Despite the recent fall in oil prices and projected relatively lower level of oil related revenues, the energy production forecast included in this report indicates that North Dakota will continue to be a major player in U.S. oil production," reported a study finished earlier this year for the Minnesota Legislature.

Specialized goods and services not available in the mostly rural and small-town North Dakota might come from Minnesota.

"As examples, Minnesota offers specialized and high-end retail facilities such as the Mall of America; health care services like the Mayo Clinic; recreation opportunities; arts and culture facilities; and professional and business services that are not present in North Dakota," the report written by HSI consultants says. "As a result, North Dakota residents with their higher levels of income are purchasing some of these services in Minnesota."

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