North Dakota job boom in danger as oil prices plummet

The shale oil boom of the last five years has brought soaring housing prices to Williston, North Dakota, where a 700-square-foot apartment costs an average of $2,394 a month. Rootless, job-seeking newcomers have occasionally resorted to sleeping in their vehicles, unable to afford the highest rent in the nation.

“We’ve seen people living in their motor vehicles through the last five years, because of housing prices being expensive,” said Williston Police Department’s public information officer, Det. David Peterson.

But as oil prices have plunged over the last seven months, from about $100 a barrel to below $50, the possibility of a bust for this boomtown has raised fears that those who once enjoyed higher-than-average salaries and free housing from oil companies contingent upon employment might be forced to move or take shelter in their vehicles.

What puts Williston workers particularly at risk while oil prices remain low is the unusually high cost of extracting crude oil from the area’s Bakken Shale formation, said Don Stowers, an editor at Oil and Gas Field Journal, an industry publication.

“They’re like the canary in the cage. They’re going to be affected first,” he said.

“The decline there has already started, but the question is how long it’s going to last and how deep is it going to be,” he added. He said he understands from industry analysts that nationwide, as many as 250,000 people could lose their jobs in the U.S. oil industry.

He said companies will likely lose workers on the lower end of the pay scale, roughnecks who operate and maintain wells, drills and rigs. And it’s not just oil industry workers who have reason to worry. The people who staff restaurants and motels in Williston and towns like it could feel the effects of a slowdown.

Williston has no homeless shelter and, according to church and charity officials, its government has adopted a faith-based approach to providing social services. The town’s houses of worship are already straining themselves to handle the steady stream of people asking for refuge from the cold or just bus money to leave.

“There’s definitely a desperate need for social services, and as much as I get frustrated with the city leaders, I’m understanding of the situation they’re in. They’ve been tasked to do a humongous job,” said Ben Loven, pastor at First Lutheran Church, citing the rapid transformation of Williston from quiet hamlet to boomtown.

There are no statistics available of how many people are homeless in Williston, and city officials did not return multiple calls for comment. Loven said he couldn't guess how many people lack homes in Williston, but he added that he had heard from the school district that 120 children were sleeping in cars, trailers or the homes of others.

Officially, Williston has a population of about 20,000, but it’s difficult to estimate the city’s actual population, as so many of the oil workers and other laborers are temporary or reside on the city’s outskirts.

Exacerbating the lack of shelters, local laws require fire sprinklers for commercial buildings, making it technically illegal for churches to house the homeless. And Loven said neighbors have complained when other churches set up services for the neediest.

But last fall, when temperatures at night plunged to 30 degrees below zero, First Lutheran opened its doors for several days to let people take refuge around the clock. They called it a prayer vigil to avoid running afoul of building codes.  

“The city has made it clear that they are not in the business of making shelter but that it would a faith-based initiative,” he said.

And with layoffs looming — even if only a small fraction of workers remain in Williston — demand for shelters would rise.

“It’s sometimes 20 to 30 degrees below zero, so it doesn’t work supergreat to be homeless in Williston, North Dakota, in the winter,” said Kristin Oxendahl, a Williston native and spokeswoman for the local Salvation Army.

“People keep their cars keep running at night because they would freeze to death if they didn’t," she said, adding that the Salvation Army provides gas vouchers to help the poor survive.

The residents of this city — who rode the boom, enjoying new jobs but enduring a rise in crime — are now worried what a bust would bring.

By one estimate, provided by the Federal Reserve, as many as 10,000 people in the Bakken Shale formation stretching across North Dakota could lose their jobs, oil industry trade publication Fuel Fix reports.

Schlumberger SLB, an oil services company, announced layoffs last week of 9,000 workers worldwide, in anticipation of a slowdown in production. Some of those newly unemployed are in Williston, but Schlumberger wouldn't say how many are losing their jobs there.

Many have already seen their share of problems, which sometimes started before they even stepped foot in the city.

“A lot of people who moved here arrived here in crisis,” Oxendahl said.

“They didn’t move here with savings or a backup plan," she said. "A lot of people have moved here with the clothes on their back. Those people are getting laid off, and they don’t have a safety net.”

The oil boom in Williston began in tandem with the 2008 housing crisis, when a housing market meltdown led to job losses nationwide. Hungry for work, job seekers — primarily young unmarried men — went to the region seeking good pay.

But now, Oxendahl said, more people are moving with their families.

She said people expect the worst of the layoffs to happen this summer if oil prices don't recover. Two men had gone to her Salvation Army location in Williston on Tuesday reporting they lost their jobs, she said.

The charity group gives gas or bus money to help people get out of the city when they have no other options for work.

The fall in oil prices comes just as employment in the region reached a new height — 38,000 people employed in 2014 compared with just 11,000 in 2007 — accompanied by a steady increase in the number of children enrolled in the city’s schools.

Still, some in Williston are hopeful that the town will bounce back quickly or perhaps even escape a bust. 

Cindy Sanford, who works for a Williston Jobs Services, a placement agency, said there’s still plenty of demand for employees and out-of-staters are still pouring in.

“There’s people that get laid off, but there’s always been people that get laid off,” she said. “Four young guys came up here from Florida looking for work, and they’re just here for the first time.”