BAKKEN PLAY: BOOM OR BURDEN? Companies act while the gettin’s good

Billings companies hustling for a piece of Bakken Field oil boom
2010-08-15T00:10:00Z 2010-08-16T00:14:16Z BAKKEN PLAY: BOOM OR BURDEN? Companies act while the gettin’s goodJAN FALSTAD Of The Gazette Staff The Billings Gazette
August 15, 2010 12:10 am  • 

WILLISTON, N.D. — Tugging at his King Ropes cap, Greg MacCarty laughed about his unexpected career shift to truck driver in the oil fields of western North Dakota after 35 years ranching with his wife, Vickie, near the Pryor Mountains south of Billings.

Despite long days hauling scoria rock to new drilling sites and the challenges of getting a nighttime pizza in Stanley, N.D., MacCarty has no complaints.

“I make more money than I’ve ever made in my life. I never made any money ranching, which is a great way to live, but it’s got very marginal money,” he said.

On a tornado-sighting evening in late July, MacCarty was one of three Billings men refueling their trucks in Stanley, east of Williston along U.S. Highway 2. They had finished another 500-mile day servicing the oil fields for a Billings company, CMG Construction Inc.

Along with an estimated 200 oil companies from around the world, CMG and Tractor and Equipment Inc. of Billings and Fiberglass Structures Inc. of Laurel are just three of dozens of Montana and Wyoming companies pumping up their profits from oil and natural gas in the Williston Basin.

Some of the major refiners also are involved. ConocoPhillips, which has been active in the basin for decades, recently brought 15 employees to Billings and opened another Williston Basin operations office. ExxonMobil just purchased XTO Energy, a player in Montana and North Dakota.

The boom has helped one startup Billings business grow faster than the founders ever expected, especially while much of the rest of the country suffers thorough a sharp recession.

In 2004, three construction pros from the former JTL Group started CMG. In six years, the company has grown to 200 employees, including 46 in North Dakota, and so far this year it has purchased or leased another 18 belly dumpers, tankers and tractor-trailers.

Company President Scott Chester laughed, saying he and his partners have been too busy to even erect a company sign at their headquarters behind T&E on the Frontage Road to Laurel.

CMG joined the oil scene in North Dakota only this year, but oil already accounts for a quarter of its sales and is expected to climb to one-third next year. But, like most businesses trying to hire qualified people in the oil fields, CMG is advertising across the country.

“The unemployment rate is zero for the folks who want to work,” Chester said.

Housing is so scarce that CMB bought 20 acres near Stanley and moved in housing from Pierce RVs in Billings for its workers.

Oil field work is an intense, highly capitalized game. So much money is at stake — up to $8 million per well sits on the table as a diamond-tipped bit punches through shale 2 miles underground — that companies and workers are basically on-call.

“We’ve always been in a performance industry where they want it now no matter what. The only difference is, the oil field runs 24 hours a day, seven days a week,” Chester said. “They may call at 2 in the morning for a water haul.”

CMG’s Mack Long said the company has built loyal customers through reliable performance.

“It s just a bigger scale and a bigger symphony. You still have a conductor, but the symphony is grander,” Long said.

The booms and busts

The intense demand for right-now service by qualified workers also is boosting business at T&E, a major Caterpillar dealer on the West End of Billings with seven stores in Montana, Wyoming and North Dakota.

Nick Schneider started as a diesel mechanic fixing Caterpillar equipment and now manages parts and service out of Billings.

In early 2009, even as the U.S. economy continued to tank, Schneider noticed the oil field activity ramping up, especially around Williston.

“More people in the store, not having enough people to fix things. That increased demand led to opportunity,” he said.

Schneider opened T&E’s Williston store during the second oil boom in the winter of 1982, and the paint had hardly dried on the walls when the boom went bust. By spring, Schneider had to lay off workers, the first layoffs he knows of since T&E started in Sidney in 1929.

So far this year, T&E has hired five more workers for the Williston Basin and is hiring at least that many more. But as busy as things are, this third oil boom hasn’t yet matched the second bonanza, Schneider said.

“At the height of the last boom, we peaked out with 65 employees over there and 35 technicians. Today we have 18 techs and 37 employees,” he said.

Fiberglass Structures Inc. runs two plants in Laurel and is about to hire another six employees, for a total of 19 new workers this year, to add a second shift so the company can build 85 fiberglass tanks a month for the oil fields.

But the boom depends on oil prices.

In 2008, oil hit unheard of highs around $140 a barrel and was predicted by some to reach $200. Instead, oil tanked to below $40 a barrel last year.

“The oil field is notorious for making poor people rich and rich people poor,” CMG’s Long said.

Plenty of play left

North Dakota may soon surpass its record 148-active rig count set in 1981. At least 45 new drilling permits have recently been issued for Eastern Montana and the demand for millions of gallons of water, sand, scoria, pipe, electricity, technicians and tankers to haul the crude to market seems insatiable. The Bakken Formation and a potentially even richer oil shale formation below, the Three Forks, could keep the oil patch booming for five years to even 50 years, experts say.

But nobody really knows.

“If the price of oil stays up, they drill faster. If the price goes down, they quit drilling,” Chester said.

The Montana-Dakota oil industry has a foreign flavor this time, especially with China and India affecting the markets, T&E’s Schneider said.

With the oil boom moving into Richland and Roosevelt counties in Montana’s northeastern corner, riches will come again to some people lucky enough to own mineral rights and those servicing the boom. For them, life will get easier from a hard-scrabble life of cows and wheat where an “industrial site” meant a dozen shiny grain bins lined up on the prairie.

Despite the top wages, some workers get tired of the “work-eat-sleep” monotony of oil jobs. In June, Culbertson-area natives Al Stanford and Bob Royan quit their truck-driving jobs and switched to remodeling houses so they could live closer to home.

When he has some down time, Pryor rancher MacCarty drives 6 1/2 hours home to his Montana ranch. But Bob Royan ranched near Culbertson until the land was sold and he had to move on.

Over lunch at the Wild West Diner in Culbertson, with big trucks rolling by from wells to the north, Royan and Stanford said they’ll probably go back to oil wages come winter, a return spiced with some reluctance.

“You know what the oil field does to towns?” Royan said. “It makes everybody greedy.”

Contact Jan Falstad at jfalstad@billingsgazette.com or 657-1306.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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