S.E.C. Real Estate Observer

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As you know, the last four years have featured plenty of glum economic news. Unless you’ve invested in the Bakken region of North Dakota. You see, while the national economy has been stagnant, the Bakken oil boom has been progressing at a breathtaking speed.

Hundreds of billions of dollars have been invested or committed into the region by leading petroleum/energy companies, suppliers & supporting business.

Whiting Oil has just announced that they will be creating 500 new wells between Belfield and Dickinson. MDU is building a $350 million diesel refinery just outside of Dickinson.

Recently, Harold Hamm, the President of leading petroleum producer Continental Resources, predicted that the population of North Dakota will hit one million in the near future. (The current population is approximately 680,000 – and ten years ago this type of growth would have seemed completely absurd.)

And, of course, with that surge in population comes increased demand for a wide variety of goods and services. As of right now, there is demand for more than 10,000 new homes. This number will continue to rise as workers and their families flood into the region.

Hamm and other experts believe that the population will grow dramatically in part because the Bakken boom is just getting started. Yes, you read that right – there are still many untapped oil reserves in the region. The Bismarck Tribune reports: “Continental – a leader in prognosticating Bakken oil reserves – said it now believes there is as much as 27 billion to 45 billion barrels of oil recoverable from the Bakken based on production from two previously untapped bench zones in the resource.”

Whiting’s Chief Executive Officer, Jim Volker, said his company is going there too, by developing a new field between Dickinson and Belfield called the “Pronghorn area,” in the Pronghorn sands.

The Pronghorn sands are between the Bakken shale and the Three Forks, and Volker said that he expects 500 wells to be drilled in the Dickinson to Belfield region, its deepest probe into southwestern North Dakota. It currently has 30 wells there.

“We’ll have 7 to 10 rigs there for the next couple of years,” he said. “What we’ve found in our Pronghorn area is every bit as good as the Sanish (field near Parshall) was,” Volker said.
As you would expect from an oil rush of this magnitude, the Bakken boom is presenting a tremendous array of investment opportunities of every shape and size. One of the most obvious is the need for new homes and other construction – as well as the supplies, labor, and expertise needed to get the job done. The Dickinson Press reports: “Michael Milner, managing member of American Landmark Group with 40 years of experience in the building industry, said the long-term development opportunities provided by the oil boom in western North Dakota are exciting.”

“Without federal interference, this will be one of the most significant economic opportunities this country has had in the last 50 to 100 years,” Milner said.

Builders and developers spoke about the difficulties in finding enough licensed electricians, plumbers and other contractors in North Dakota, and the need to do a lot more planning to get materials. “Building up here is kind of like building on the moon,” said Clint Wilson of HybridCore Homes, a California-based company. “If you haven’t brought it with you, you’re going to have a delay trying to complete your project.”

Whether it is real estate, construction, infrastructure, commerce, or a variety of other products and services, there are investment opportunities everywhere you look in the Bakken region. The amount of money flowing into the region is mind-boggling – and the opportunities offered are life-changing. This is no dying fad. In fact, we expect growth to continue for as long as 20 years before leveling out.

Of course, there are potential roadblocks. A drop in oil prices would impact revenue. Regulatory issues are always a potential threat to the drilling industry – but major oil companies are well-positioned to put the brakes on any regulations that aren’t supported with sufficient science.

There are no sure things in life, let alone in the world of investing. But the opportunity that exists in the Bakken is as close to a sure thing as any of us will ever see. It’s unlikely that any of us will experience an opportunity of this magnitude again in our lifetimes – so look into it!