The Bakken: When Boom Goes Bust
Posted: Mar 03, 2016 1:55 AM EDT
Updated: Mar 17, 2016 1:55 AM EST
By Greg LaMotte, Anchor
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SIDNEY -
At the peak of the Bakken boom it was like the gold rush of 1849. Hotels, motels, man camps, restaurants, infrastructure couldn't be built fast enough to deal with all the oil workers. Housing prices went through the roof. Everyone was making a lot more money. A lot more money.
But, just like the gold rush, the Bakken boom has become the Bakken bust. And, left behind impacted communities left with empty properties and lots of bills to pay.
Boom. Boom. Boom. Boom.
Bakken black gold.
Boom. Bust.
Jeff Eisenbrey owns a oil services business. He said work is a fourth of what it was last year.
"We've got to make cuts, ain't no questions about that," Sidney, Montana Mayor Rick Norby said.
"Right now it's just about on rock bottom," Oil worker retiree Mike Fifer said.
"Where'd everybody go?" Cafe owner Anissa Gillespie is wondering. "They definitely moved out."
And, according to Richland Economic Development Corp. Executive Director Leslie Messer, the number of available jobs is shrinking.
"There were over 350 or 380 openings a year ago, and now there are like 150," Messer said.
In June of 2008, the price of a barrel of crude oil hit an all time high of just under $145, and the rush to North Dakota's Bakken hit full tilt. Boom. But now, oil is struggling to pull in $30 a barrel, and the only thing booming in places like Sidney, Montana, are baby boomers.
Fact is, North Dakota's bust is spilling over into Montana.
Nowadays, it's not so sunny at Sunny's Café in Sidney. Not all that long ago, people lined up at five in the morning to get into the café. Owner Anissa Gillespie said now, it's much different.
"At the peak of the boom, I had somewhere in the neighborhood of 25, 26 employees. Today I have 10," Gillespie said.
Jeff Eisenbrey said he sees a big difference.
"You used to have to wait to get into places, and now you go in there and you go, 'Wow, nobody there.' A lot of people have left already. They couldn't afford to stay here, and that's the hard part," Eisenbrey said.
Mike Fifer agrees.
"Some mornings you come in here and maybe there's four people, five people and they're just drinking coffee, that's all came for just to drink coffee 'cause they can't afford to eat breakfast in here all the time," Fifer said.
Motels and apartment buildings used to be full up, 100-percent occupancy, prices through the roof. Now, those same places would be thrilled with half that amount as they struggle to stay in business.
Leslie Messer knows the numbers.
"Before this started, we had about 150,180 rooms and we're over almost 500 now. So, we have five or six new hotels and they're probably pushing 20-percent if they're lucky, occupancy, so they're one of the first hardest hit," Messer said.
Tami Maltese owns a tax preparer business in downtown Sidney.
"People are talking about the oil, they're talking about the prices going down, they're talking about less people in town, the retail end they've seen less business, they've seen that decrease and like the restaurants the hotels that's decreasing but everybody is talking about the oil," Maltese said.
When oil was booming, Sidney became a bedroom community to the boom's ground zero, Williston, North Dakota, about 50 miles down the road. In six years, Sidney's population grew from about 5,000 to 9,000.
With growth came more crime.
Now that the boom is over, you'd think crime would be on the decline. But, according to Mayor Norby, there is deep frustration, and, for some, despair.
"Our crime definitely has tripled over this winter," Mayor Norby said. "Domestic violence is at an all time high which comes along with the tail end when things are slowing down."
Speaking of slowing down, how about oil revenues Richland County was getting from the energy companies?
"Oil revenues are down probably 35 to 40-percent, maybe 45-percent," Richland County commissioner Duane Mitchell said. "So, we know that we're going to have to pull back our horns."
From $11 million a year in oil revenues, to almost half. And the financial impact isn't isolated to Sidney.
Mayor Norby said, "We started spilling into like Savage, Glendive even. Even go as far as Miles City. We had people living in Billings where they were working two weeks and one week off, they would be living in Billings."
Todd Buchanan with Buchanan Capital in Billings said Montana state legislators would be wise to tighten the budget.
"I would, if I were in the position of a lawmaker, I would certainly start to pencil out several more conservative revenue budgets, because I think that's where the state's going to have its biggest challenges is the reduction in income tax related to these."
So, with some communities facing deep debt as the result of infrastructure costs born during the boom, what would be the advice from the mayor of ground zero regarding how to go about paying off that debt?
"I don't know the politics of Montana, but unless the state of Montana steps in and gives them some money to the Sidney and those kinds of people, they're going to be hurting," Williston, North Dakota Mayor Howard Klug said.
"What's going to bring it back? I don't know. When's it going to come back? I don't know. If it never comes back to Montana, who knows?" Mitchell said. "We still have oil and the best place to store oil is in the ground. Cheap. You don't have to worry about it."
When will the boom come back? That answer probably rests with a higher authority.
