Dickinson city leaders gained insight into the future during a meeting with North Dakota State University researchers.

Significant growth in the petroleum sector likely will continue for the next five to 10 years, according to the study by Nancy Hodur and Dean Bangsund from the NDSU Department of Agribusiness and Applied Economics. Near-term employment will remain strong and it is possible there will be higher levels of employment in the region than there are today.

The researchers’ model illustrates that there will be substantial demand for housing in the near future, but that demand will level off in the next 10 to 25 years, depending on future oil field development.

“However, workforce characteristics are an important consideration,” Hodur says. “For now, employment will be driven more by short-term or temporary jobs, such as those associated with construction, drilling and fracking. Long-term employment will be more closely associated with maintenance and oil field services. However, both will require housing and access to services.”

Hodur and Bangsund examined characteristics and potential growth scenarios to understand how the industry will influence the population and demand for housing in Dickinson and the region.

The model illustrates the potential ramifications of building to meet the demand for both permanent and temporary workers. Overbuilding is a real possibility if permanent housing is developed for people who work in North Dakota only but prefer to live elsewhere.

The challenge is that these workers still need a place to stay while working in the state, which illustrates the need for temporary and permanent housing. This reinforces the need for comprehensive planning and continual updates to those plans.

“Workforce characteristics have substantial implications for housing demands,” Hodur says. “Some jobs have a high turnover rate. Other jobs can move around a lot, such as jobs in pipeline construction, drilling or fracking operations. These people are likely not to become North Dakota residents. Building permanent housing for a temporary workforce has negative consequences. However, in the short term, they will have needs. We looked at future employment in the region and found the housing issue is more than just supplying more units. The city needs to avoid chasing peak demand and must have a plan to provide for temporary workers.”

The researchers also pointed out that there are implications for not responding to the demand for housing.

“The workforce is very mobile and will go where housing is available,” says Bangsund. “They will live at one place and work at another. Workers who live elsewhere have different demands for goods and services, which translate into less demand for secondary goods and services and secondary employment. A lack of housing also may affect growth in other sectors of the economy. Other local businesses or industries may relocate or at least not expand if they cannot find workers because of a lack of housing.”

Hodur and Bangsund were hired by the city of Dickinson. However, NDSU’s ongoing research is part of a comprehensive plan being developed by Kadrmas, Lee and Jackson Engineering for Dickinson as the city responds to unprecedented growth in the petroleum industry.

NDSU Agriculture Communication – May 8, 2012