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Northern Plains Business Resource
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November 2012
Pressing Ag'sPrecise FrontierCompany uses satelliteimagery to enhanceprecision agpg. 28
ALSOOil's Education BoomIndustry investments ramp up
region's energy education programspg. 32
Bakken BackersBakken region stakeholders
rally investors in South Dakotapg. 36
Randy Moen once weighed 340 pounds. In order to save his life,Dr. Keith Rau had to tell it to him straight—he had to lose weight.They worked together deciding on gastric bypass surgery and forexercise Randy would bike, because he hates walking.
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Randy’s exerciseof choice is biking.His doctor knows that.
Need to find your very own primary carephysician? Call us or go to EssentiaHealth.org
MyHealth ONLINE ACCESS TO YOUR DOCTOR’S OFFICE CONVENIENT NEIGHBORHOOD CLINICS 170 ESSENTIA HEALTH PRIMARY CARE PHYSICIANS
4 Prairie Business Magazine November 2012
|INSIDE|NOVEMBER 2012 VOL 13 ISSUE 11
FEATURES DEPARTMENTS6 Editor’s NoteBY KRIS BEVILL
Oil Patch dominatesconversation, activities
8 Business AdviceBYMATTHEWD.MOHR
Better late than never
10 FinanceBY CURT EVERSON
Rural home lendingfacesmany obstacles
12 Research &TechnologyBY PHILIP BOUDJOUR
Match brightmindswith stellar companies
14 Economic DevelopmentBY PAT COSTELLO
A new focus onfostering entrepreneurs
16 Prairie News
20 Prairie People
24 Business DevelopmentRebuildingMinot
42 Red River ValleyProject English providestraining to Fargo hotel staff
44 South DakotaReturn of the rail
46Western North DakotaShort on space
40 Energy
52 By the numbers
54 Business to Business
NextMonthDecember's issue of Prairie Businessmagazine highlights the area's top 40 under 40 business professionals. Theissuewill also include a profile of Great Plains software founder Doug Burgum, who provides an update on hislatest business developments and offers advice to the next generation of the region's business leaders.
On the CoverLanny Faleide is president ofNorth Dakota-based Agri ImaGIS.His company combines satelliteimagery andmoderncommunication tools to helpfarmers bemore efficient andprofitable. Here, he stands in asoybean field in North Fargo, N.D.PHOTO: JOHN BROSE
24 AGRICULTUREHigh-Tech Ag MiddlemanNorthDakota businessworkswithsatellite companies, ag community
EDUCATIONEnergizing EducationUniversities expand energy-relatedprograms tomeet industry demand
INVESTMENTExploring OpportunitiesSouthDakota real estate developers,investors and service providersgather to learn about Bakken region
28
32
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6 Prairie Business Magazine November 2012
|EDITOR’S NOTE|
Oil Patch dominatesconversation, activities
It is a rare day that I don’t find myself in a conversation with someone about the oil activity
in western North Dakota. People outside of the Bakken region are fascinated by the rate of
growth and enormous changes experienced there over the past several years. To be true,most
people living in the Bakken region are also fascinated by the changes happening before their eyes.
Population growth continues to outpace expectations and communities continue to break tax
revenue records, despite rumblings from some that the boommay be leveling off. Area represen-
tatives counter that communities are simply finally beginning to catch up with the demand, how-
ever, they stress that there continues to be a need for services, housing and workers.
The need for continued investment in North Dakota’s Oil Patch was the sole focus of a confer-
ence I attended this fall in Sioux Falls, S.D. Economic development corporations, industry represen-
tatives and real estate developers presented attendees with firsthand accounts of what it’s like to do
business in the Bakken region and what investments are required in order to meet the area’s needs.
Some of the attendees that I spoke with already have operations in the area, but came to the confer-
ence for an updated regional outlook, as developments can be difficult to keep up with. Other atten-
dees were seeking advice on how to gain a presence in the region. Presenters at the conference urged
potential investors to visit the area if they are serious about becoming a part of the action, as I report
in this month’s issue.
Meanwhile, oil companies are beginning to invest not just in their own activities in the Bakken,
but in other areas of the region aswell.Highly skilledworkers such as engineers continue to be in short
supply in the Oil Patch and the region’s universities are in the process of ramping up their programs
tomeet the demand. In September, oil magnate HaroldHammannounced a $10million donation to
the University of North Dakota to assist in that goal. Other universities in the area are also receiving
industry support to churn out the energy experts of the future. I cover several of them in this issue.
Oilmay grabmany of the current headlines, but no one can dispute agriculture’s role as a long-
reigning king of the Plains and it’s continued impact on much of the region’s economic activity. I
recently had a discussionwith someonewho suggested that a "new" focus on entrepreneurship in the
Dakotas could assist in growing local economies. This, to me, is not a new idea. I believe farmers are
the ultimate entrepreneurs and, particularly in this area of the country, have a history of displaying
their entrepreneurial spirit through the adoption of new farming practices and cutting edge techno-
logical advancements, the results of which most certainly benefit local economies.
As an example of the industry's technology advancements that have been developed here on the
northern Plains, contributing writer Jonathan Knutson profiles a North Dakota company which uses
satellite imagery to assist farmers with precision agriculture in our cover feature, “High-tech Ag
‘Middleman.’”Company head Lanny Faleide first rolled out the concept 15 years ago in central North
Dakota, to the skepticism of other area farmers. He persisted, however, and now provides services to
farmers throughout the country.As farmers in the region close out a season ofmixed results,no doubt
many are already looking ahead to what improvements and tweaks can bemade for the next growing
season.Let’s hope for a snowy (but not too snowy)winter with plenty of days to devise the next round
of innovative strategies.
KRIS [email protected]
7www.prairiebizmag.com
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8 Prairie Business Magazine November 2012
|BUSINESS ADVICE|
Better late than neverBYMATTHEWD.MOHR
Most businesses extend some type of
credit to customers. Naturally, extend-
ing credit in any form is based on the
expectation of receiving full payment at a later
date. However, if faced with the option of no
repayment, foreclosure, or certain loss, some
payment — even if over a longer time — is bet-
ter than none.
When bagels were at the height of popularity,
Dacotah Paper extended credit to two locally owned
bagel producers.As competition heated up and con-
sumers’ taste for bagels changed, both these stores
faced financial hurdles. One owner called us to say
they were struggling but would make every effort to
fulfill their product purchase commitments and pay
us. The other was contacted and informed us they
were in financial hardship. The first owner did pur-
chase all of the product as promised and paid us in
full. The second store went bankrupt and couldn’t
pay its creditors. As time passed, both bagel shop
owners tried to secure employment or start new
businesses for themselves.
The owner of the store which failed to pay
found it hard to secure employment. The owner
who honored his commitments moved to a new
venture and has done very well.
Sometimes credit decisions are wrong and too
much is borrowed, but some or hopefully total
repayment, even if it’s late, is better than no payment.
PBMatthewD.Mohr
CEO, Dacotah Paper [email protected]
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10 Prairie Business Magazine November 2012
|FINANCE|
Rural home lendingfacesmany obstaclesBYCURTEVERSON
In today’s world, politicians and pundits are
often quick to demonize large companies and
their leaders. Big Oil, insurance providers,
pharmaceutical companies and banks have all been
in the spotlight. Special interest pressure mixed
with political ambition is a recipe for enacting laws
to right past wrongs and to prevent history from
repeating itself. Unfortunately, cures sometimes
create problems. Such is the case with housing
finance in rural America.
Housing finance in rural America has always
been challenging. But rural community banks histor-
ically have found ways to overcome those challenges
and help buyers realize their homeownership goals.
But community banks of varying sizes have begun
leaving the business at an alarming rate.Why?
AppraisalsIn many rural communities homes don’t sell
that often. Lack of sales of comparable homes cre-
ates problems for appraisers, lenders and borrowers
alike. If licensed appraisers cannot find a broad
enough sample of sales in a prescribed geographical
area upon which to base an appraisal, potential buy-
ers of those loans in the secondary market (Fannie
Mae or Freddie Mac) will not buy the mortgage.
So why doesn’t the local bank just keep the loan
on its own books? That’s another problem.
Loan FundingBanks fund loans mostly using local deposits
which tend to be short term in nature. Bank deposi-
tors understandably don’t want to commit deposits
for a 30-year term.Absent the ability to lock in its cost
of funds at a 30-year rate, banks cannot bear the
interest rate funding risk of a 30-year fixed rate home
mortgage. Instead, many community banks long ago
decided to offer prospective home buyers another
type of mortgage; commonly one scheduled to amor-
tize over 15 or 20 years, but with a balloon payment
at the end of five years when the rate of interest would
be reset, up or down, to the prevailing rate at that
time. But now, courtesy of the reaction by federal
bank regulators to a little known provision of the
Dodd-Frank financial reform act, those “non-stan-
dard” home loans are going to carry a higher risk rat-
ing, meaning banks will have to tie up more scarce
capital in order to support those loans. Sound com-
plicated? Welcome to the world of community bank-
ing in the post Dodd-Frank era.
Compliance RiskIf you have tried to finance or refinance a home
in recent years, I am pretty sure you don’t know exact-
ly how many times you had to sign or initial a form.
Bankers tell me the number approaches 100. Bankers
and borrowers both agree that current forms and
processes aremind-numbing. Bankers don’t mind the
work, but the potential costs a bank could incur for
making an honest mistake are prohibitively high. So
rural community banks that would normally only
originate a handful of home loans in a year are reluc-
tantly getting out of that line of business.
Who will be left to support home lending in
rural America? What happens to prospects for rural
economic development if workers can’t buy a
home? Those are great questions for your members
of Congress. PB
CURT EVERSON
President, South Dakota Bankers Association
12 Prairie Business Magazine November 2012
|RESEARCH & TECHNOLOGY|
Match brightmindswith stellar companiesBYPHILIP BOUDJOUK
This may be one of the best-kept secrets to help
businesses innovate: Challenges are a way of life
for companies competing in global markets. A
program called STTAR provides businesses in the
region with human and technology resources to com-
pete. Students in Technology Transfer and Research
(STTAR) was launched in 1994 as a response to needs
for increased technology transfer between universities
and industry. The program assists businesses in locat-
ing students with cutting-edge skills who are compati-
ble with the company. In doing so, it offers the oppor-
tunity for companies to increase their competitive edge
while cutting salary expenses by sharing the cost of the
student’s salary.
With this program, students of North Dakota
University System schools and North Dakota residents
who are enrolled at other colleges and universities are
eligible to work with companies in the region to solve
science, engineering and technology challenges.
Juniors through graduate students in science, engineer-
ing and math use their training to assist in addressing
the most challenging science and technology-based
problems faced by the companies in the region.
Companies in North Dakota who seek STTAR stu-
dents do not have to be technology companies to be eli-
gible. However, a specific problem to be addressed must
have its foundation in science, engineering or mathe-
matics. Projects can include engineering, design and
testing of new products; software development; remote
sensing and automated mapping; chemical research;
and automated tooling and fabrication. Students have
assisted companies in energy, bioscience, manufactur-
ing, computer science and engineering fields.
The North Dakota legislature has funded the pro-
gram through the North Dakota Experimental
Program to Stimulate Competitive Research (ND-
EPSCoR). Companies that employ technology-savvy
students through the program pay at least half the stu-
dents’ salary. In the summer, students work for compa-
nies that qualify for the program, and STTAR contracts
can be negotiated to extend into the academic year.
More than 93 companies across North Dakota
have participated in STTAR, including companies in
Minot, Grand Forks, Carrington, Fort Totten,
Williston, Jamestown, Killdeer, Fargo, Bismarck and
New Rockford.
Students can bring new approaches to a long-
standing company project, or help jump-start new
ideas. STTAR provides a cost-effective opportunity to
hire an upper-level student who can help the company
solve science and technology-based problems. For
companies that qualify for the program, each company
interviews and hires students who match their business
needs from a pool of talented STTAR students.
“The program is a very good investment from a
business perspective,” says Lana Davis of Benchmark
Electronics in Dunseith, N.D., which hired two STTAR
students. “They did an excellent job and we look for-
ward to participating again in the STTAR program.We
would recommend the program to other companies.”
Former STTAR student Casey Hansen now works
as an electrical engineer for an electric cooperative in
Grand Forks, supervising new STTARs. “I was privi-
leged enough to be in the STTAR program as a student,
and now as a supervisor,” he says. “The system works.
It’s easy to understand and has great advantages.”
For more information on STTAR, visit
www.ndepscor.nodak.edu/programs/tech.transfer.com
m/sttar/. PBPHILIP BOUDJOUKND-EPSCoR co-chair
Vice president for research, creative activities and technol-ogy transfer, North Dakota State University
14 Prairie Business Magazine November 2012
|ECONOMIC DEVELOPMENT|
Anew focus onfostering entrepreneursBYPATCOSTELLO
In economic development,we receive a lot of publicity
and extra attention when we have major announce-
ments. Oftentimes, it is the result of a large company
from out of state locating in our state, creating jobs and
building beautiful new facilities.
While I definitely agree that this is positive and
exciting news for our state, the truth is that this sort of
announcement only represents a small portion of
South Dakota’s economic development activities. In
fact, more than 70 percent of the Governor’s Office of
Economic Development’s successful projects are with
existing SouthDakota companies that are starting upor
growing. Unfortunately, these small successes often-
times go unnoticed.
Gov. Dennis Daugaard recognizes that entrepre-
neurship—combinedwith expansions and relocations
— are essential elements of the state’s economic
growth. He has put the GOED in charge of fostering
entrepreneurial efforts and raising the visibility of
entrepreneurship in our state. To do this, we need
everyone to work together. We need to establish solid
public-private partnerships. Economic developers need
to work with schools, technical institutes, universities,
investors, friends and family.
Fortunately, we already have a solid base in place
to help reach this long-term goal. South Dakota is con-
sistently among the top states in the nation when it
comes to entrepreneurial friendliness.We have a strong
business climate, supportive government leaders and
low taxes.We have also begun to take additional steps.
In September, more than 100 inventors, investors,
entrepreneurs and economic developers attended the
Entrepreneurial Symposium in Sioux Falls. There, these
individuals learned what it takes to create a vibrant
entrepreneurial ecosystem in SouthDakota.They heard
about the state’s strategy and were connected to
resources that will aid entrepreneurs in their endeavors.
Since 2005, the governor’s office has partnered
with the South Dakota Chamber of Commerce of
Industry to sponsor the Governor’s Giant Vision
Business Plan Competition.Many of this competition’s
winners and entrants have successfully launched and
are continuing to grow thriving businesses. A special
portion of that competition is specifically designed for
students. Local school districts, technical schools and
universities have expanded entrepreneurship courses,
camps, and other activities to prepare and encourage
students to consider entrepreneurship as a career
choice. Today, student competitors are running compa-
nies that manufacture new agricultural equipment and
marketing new microbrews. This year’s competition
will be held April 16.
Our many partners, colleagues and community
organizations are also doing their part. The Wire Me
Awake conference is a brand-new event andwas held in
Yankton Oct. 3-4. The Enterprise Institute and its part-
ners held the InnovationExpo in Sioux FallsOct. 23-24.
Additionally, the Small Business Development Center
and its partners will facilitate the Big Idea business idea
competition this December in Aberdeen. For addition-
al events, please visit www.sdreadytopartner.com.
It is with this kind of communication, partner-
ships and optimistic attitude, I’m confident we can
work toward creating a vibrant, supportive entrepre-
neurial ecosystem for start-up companies across South
Dakota. I for one, amproud to be part of the team lead-
ing this effort. PB
PATCOSTELLO
Commissioner, South Dakota Governor’s Office for
Economic Development
16 Prairie Business Magazine November 2012
Prairie News Industry News & Trends
Regional credit managementassociationsmerge
Two regional affiliates of the National
Association of Credit Management have merged
to better serve their members. Forius NACM,
based in Minneapolis, will now provide the
administrative activities for NACM Fargo
(N.D.)/Moorhead (Minn.). Toni Nuernberg, pres-
ident and chief operating officer of Forius says
Forius will actively recruit newmembers and cus-
tomers in the Fargo area to grow the region’s busi-
ness credit community.
NACM’s mission is to provide members and
clients with information to assist in risk manage-
ment and enhance the financial stability of the
organizations they represent.
Exxon ups itsstake in the Bakken
Exxon Mobil Corp. and its subsidiary, XTO
Energy, recently signed an agreement with
Denbury Onshore LLC, a subsidiary of Denbury
Resources Inc., to purchase all of Denbury’s
Bakken shale assets — about 196,000 net acres in
North Dakota andMontana— for $1.6 billion in
cash and Exxon’s interests in the Hartzog Draw
field inWyoming andWebster field in Texas.
The Bakken acreage acquired by Exxon is
expected to produce more than 15,000 oil equiva-
lent barrels per day in the second half of 2012 and
increases the company’s acreage holdings in the
region by about 50 percent. The Wyoming and
Texas interests traded to Denbury as part of the
deal currently produce about 3,600 net oil equiva-
lent barrels per day of natural gas and liquids.
Williston gets new hotelsValue Place Hotels opened a 248-room hotel
in Williston, N.D., in September, offering extend-
ed-stay roomswith“hotel convenience, apartment
essentials’ style” to meet the demand for energy
worker housing in the area, according to the com-
pany. Nakota Development is responsible for the
project. “We are pleased to bring a greatly needed
resource to the Williston community at a more
affordable rate,”Nakota Development representa-
tive Don Nickell said in a statement. “The growth
of North Dakota and the Bakken region is a
unique event in North Dakota history and we are
humbled to be a part of it.”
The Hampton Inn and Suites also recently
held a ribbon cutting for a 98-room hotel in
Williston, developed by Braxton Development of
Bozeman, Mont. During the ribbon cutting cere-
mony, the hotel announced a donation of meeting
space room valued at $5,000 to Williston
Economic Development.
Small grains processing plantcomes toMinot
Idaho-based Alexander Co. plans to expand
its oat and barley processing operations to Minot,
N.D., under the nameMidwestMilling. The com-
pany selected Minot based on its rail access and
close proximity to desired crops, as well as the
affordability of doing business in the town,
according to the Minot Area Development
Corporation. Alexander Co. was awarded
$350,000 from the MAGIC fund, a local incentive
fund, to assist with installation costs for rail infra-
structure to serve the facility in east Minot. In
exchange, the company agreed to employ seven
workers in Minot by 2016. Midwest Milling also
plans to source barley and oats locally.
UND researchers get $1.4million to study obesity-Alzheimer’s link
Two scientists at the University of North
Dakota School of Medicine and Health Sciences
have been awarded $1.4million from theNational
Institutes of Health to research a possible connec-
tion between Alzheimer’s disease and obesity.
Obesity has been shown to be an increased
risk factor for developing the disease, but it is not
yet known if the relationship between the two is a
shared pathophysiology. Research conducted by
associate professor Colin Combs and assistant
professor Mikhail Golovko will focus on mole-
cules in specific proteins known as amyloid pre-
cursor proteins to attempt to identify a target for
intervention in both disease processes.
Northland tech school receivesfunds formedical equipment
Northland Community & Technical College recently
received $100,000 to purchase a computed radiography unit that
will provide radiology tech studentswith hands-on experience on
equipment currently used in the health care industry. The state
provided $49,000 for the equipment as part of a larger effort to
support education and training in high-demand occupations.
Grand Forks,N.D.-basedAltruHealth Systemmatched the state’s
allocation with a $51,000 donation. “The students who graduate
from this program have a reputation as some of the very best in
the upper Midwest,” Altru CEO Dave Molmen said in a state-
ment.“Northland is an important asset to the community as they
train health care professionals for areas that are always in high
demand.We see investments in these educational partnerships as
an investment in the future of medicine in our region.”
Northland Community & Technical College
continued on page 18
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18 Prairie Business Magazine November 2012
|PRAIRIE NEWS|
NE-based lift truckdealer acquiresWest Fargo company
Riekes Equipment Co., a Yale Materials
Handling Corp. lift truck dealer headquartered in
Omaha, Neb., recently acquired Valley Forklift
Services inWest Fargo,N.D.FormerValley Forklift
Services owner Terry Weigel has been appointed
branch manager for theWest Fargo location.
“Riekes Equipment has been active in North
Dakota for years,” Riekes President Duncan
Murphy said in a statement. “We are excited to
finally combine Valley Forklift’s 20-plus years of
customer satisfaction with our personnel and
product offerings.”
Riekes sells lift trucks as well as other used
trucks and parts and offers forklift rentals and
maintenance support.
New clinic underconstruction inMandan
Bismarck, N.D.-based St. Alexius Medical
Center has begun constructing a 22,000 square foot
clinic in Mandan, N.D. The project is expected to
cost $8 million and will be complete in early 2014.
The clinic is necessary to accommodate increasing
populationnumbers inMandanand the surround-
ing areas, according to the organization. When
complete, the clinic will employ six primary care
providers andwill feature 18 examrooms,a labora-
tory, radiology services and a pharmacy.
Delta adds service toWillistonBeginningNov. 12,DeltaAir Lines is offering
twice-daily, nonstop regional jet service between
Williston, N.D.’s Sloulin Field International
Airport and Minneapolis-St. Paul International
Airport via Skywest Airlines. Service will be pro-
vided using 50-seat regional jet aircrafts.
Delta is the secondmajor airline to enter into
the Williston market this fall. Earlier this year,
United Airlines announced it would begin offer-
ing service fromWilliston toDenver inNovember.
G& R Controls receivesENERGY STAR label
G & R Controls, a company specializing in
HVAC equipment, building automation, temper-
ature controls and air/hydronics testing and bal-
ancing, has been awarded an Energy Star label
from the U.S. Environmental Protection Agency
for meeting stringent energy efficiency require-
ments. The company, which has offices in Fargo,
N.D., and Sioux Falls and Rapid City, S.D.,
received the award for its Fargo location. It is the
only building in the state to receive the Design
Earn to the Energy Star award.
To achieve energy efficiency, the facility
employed a system to automate lighting and
HVAC equipment. Features of the system include
an automatic shut down of individual heat-
ing/cooling units when windows are opened in a
specific zone and automated dimming of lights
when the appropriate amount of ambient light
has been collected.
Williston State Collegeadds science center
State and university officials recently cele-
brated the grand opening of a $3.5million science
center addition to Williston State College in
Williston, N.D. The center covers 10,000 square
feet and includes four laboratories for physics,
chemistry, biology and engineering as well as
classrooms and faculty offices.
“Education is an integral part of our efforts
to growour economy andbuild a strong future for
our state,” said Lt.Gov.DrewWrigley,who attend-
ed the event. “This new science center is a great
example of how Williston State College and col-
leges and universities across the state are enhanc-
ing educational opportunities to prepare our
young people for the careers of the future.”
The state of North Dakota provided $2.9
million for the addition.
Border States Electricreceivesmarketing award
Border States Electric, an electrical products and
services supplier with headquarters in Fargo,N.D., recent-
ly received a Best of the Best marketing award during a
National Association of Electrical Distributors marketing
conference in Chicago.Awards are given in recognition of
marketing excellence and recognize creativity within the
electrical industry in companies of all sizes in 14 market-
ing and communication categories.BSE received its award
in the print ad — single category for distributors over
$200 million.
BSE is 100 percent employee owned and is the eighth
largest electrical distributor in the U.S. with nearly 1,500
employees and 56 branches in 13 states.
Lindsey Presser, northeast and northwest sales and marketing coordinator, left, andMichelle Keil, marketing communications manager, accept a Best of the Best marketingaward given to Border States Electric during a the National Association of ElectricalDistributors 2012 marketing conference. PHOTO: BORDER STATES ELECTRIC
continued on page 40
continued form page 16
20 Prairie Business Magazine November 2012
|PRAIRIE PEOPLE|
Ulteig adds Fargo staffUlteig, an engineering, surveying and consult-
ing firm with offices throughout the region, has
added two new employees to its Fargo, N.D., office.
Karsten Johnson has joined the firm as a help desk
technician.He previously worked as a desktop sup-
port analyst at CompuCom in Dallas. Neal Tareski
will serve as a facilities manager. He was previously
employed as an assistant facilitiesmanager at CBRE
in Overland, Kan.
Additionally, Sharon Miller has accepted the
position of human resources director.Miller joined
Ulteig in 2011 as a consultant andbecame the inter-
im human resources director in June. As director,
she will manage a team of human resources profes-
sionals and provide input on key initiatives, policies
and processes. Miller has more than 14 years of
experience and worked previously for Great Plains
Software,Microsoft, RDO Equipment Co., and the
North Dakota State University Research &
Technology Park. She also founded her own con-
sulting practice to assist businesses with strategies
for attracting,developing and retaining great talent.
Bismarck doctorteaches in Libya
Tarek Dufan, medical director at the
Bismarck Cancer Center and board-certified radi-
ation oncologist, recently administered the first
ever radiation oncology refresher course in Tripoli,
Libya. The course was held July 8-10 and was
accredited by the Bismarck Cancer Center, St.
Alexius Medical Center and Medcenter One
Health Systems. Information was given on breast
cancer, lymphoma and other types of cancers and
treatments. More than 35 doctors from Libya
attended the event. Plans are being made to offer a
similar course in 2013 in Bangasi, Libya.
The Bismarck Cancer Center is a cooperative
venture between Medcenter One and St. Alexius
Medical Center.
Anderson appointed interimND human services director
Maggie Anderson has been appointed inter-
im executive director of the North Dakota
Department of Human Services and may serve in
that position through the 2013 legislative session.
She replaces Carol Olson, who retired in August
after serving as executive director of the depart-
ment for 15 years.
Anderson joined the department in 2003 as
the deputy director of medical services. In 2005 she
became director of the medical services division
and served in that role until her recent appoint-
ment as interim executive director. She has also
served as an assistant director of child nutrition
programs in theDepartment of Public Instruction,
where she worked from 1989 until 2003.
Laub named CEOof Intelligent InSites
Margaret Laub has been appointed president
and CEO of Fargo,N.D.-based Intelligent Insites, a
software development company specializing in
real-time location system software for health care
systems. She will also hold a seat on the company’s
board of directors. Doug Burgum, who had been
serving as interim president and CEO of the com-
pany, is now the executive chairman of the board.
FMWF Chambernames new board
The Fargo Moorhead West Fargo Chamber
of Commerce recently named its 2012-2013 board
of directors. Wayne Bradley, president and owner
of Bradley Business Advisors, has been selected to
serve as chairman of the board. He will replace
Kristi Ulrich, vice president of marketing and pub-
lic relations for Heritage Homes and Prudential
Premier Real Estate, who served as chairwoman of
the board from 2011-2012.
Indigo Signworks CEO Bernie Dardis has
been named chair elect. Doug Restemayer, presi-
dent of D-S Beverages Inc. will serve as treasurer.
New board members include Doug Vang of
Essentia Health and Paul Von Ebers of Blue Cross
Blue Shield of North Dakota.
Karsten Johnson Sharon Miller Maggie Anderson
Margaret Laub
Tarek Dufan
Neal Tareski
Wayne Bradley
21www.prairiebizmag.com
|PRAIRIE PEOPLE|
Four earn supplychain certification
Four Border States Electric employees
recently earned supply chain professional
certification throughAPICS, the Association
for Operations Management. Employees
receiving the certification include Dave
Ferguson, supply chain services manager;
David Baltes, supply chain services opera-
tions manager; Josh Herberg, supply chain
services customer technology supervisor;
and Lisa Mueller, corporate and east region
supply chain services coordinator.
To qualify for certification, candidates
must complete a comprehensive examina-
tion to showmastery of supply chain man-
agement best practices. Those who become
certified are recognized as industry experts.
Border States Electric supplies prod-
ucts and services to the construction, indus-
trial and utility industries. The company is
employee-owned and is the eighth largest
electrical distributor in the U.S. Its corpo-
rate headquarters are located in Fargo,N.D.
Dave Ferguson David Baltes
Josh Herberg Lisa Mueller
22 Prairie Business Magazine November 2012
|PRAIRIE PEOPLE|
Zelewskinamedassistantdean at UNDmed school
Susan Zelewski has been named assistant
dean for theNortheast (GrandForks)Campus
at the University of North Dakota School of
Medicine and Health Sciences. She will suc-
ceed JohnAllen, who is leaving the position to
devote more time to his responsibilities as
leader of the North Dakota Simulation,
Teaching and Research (ND STAR) Center for
Healthcare Education facility in Grand Forks.
Zelewski has worked as a pediatrician at
Altru Health System since 2004 and served as
chairwoman of the pediatrics department
since 2010. She is also campus coordinator of
the pediatrics clerkship for the UND School of
Medicine and Health Sciences.
N.D.SoybeanCouncilhires newmarketingdirector
Michelle Swenson recently joined the
North Dakota Soybean Council as director of
marketing and development. In this role, she
will assist in expanding the domestic and
international marketing efforts for North
Dakota soybean producers.
Prior to joining the soybean council,
Swenson worked as a market analyst for
Powerit Solutions in Seattle,Wash., where she
analyzed electricity and manufacturing mar-
kets both domestically and internationally. She
previously served as a project manager for
Gold Energy LLC, a Wahpeton, N.D.-based
ethanol development company and has
earned farming experience on her family’s
Minnesota farm. She served on the board of
directors for the Minnesota Soybean Growers
Association for four years.
Susan Zelewski
Michelle Swenson
23www.prairiebizmag.com
|PRAIRIE PEOPLE|
Law firm recognized forfemale-friendly initiatives
The Women in Law Empowerment
Forum has awarded Minneapolis-based
law firm Fredrikson & Byron PA its gold
standard certification in recognition of the
firm’s success in providing professional
opportunities and leadership roles for
women equity partners. To receive certifi-
cation, law firmsmustmeet at least three of
the six following criteria:
• Women account for at least 20 per-
cent of equity partners.
• Women represent at least 10 percent
of firm chairs andofficemanaging partners.
•Womenmakeup at least 20 percent of
the firm’s primary governance committee.
•Women represent 20 percent ormore
of the firm’s compensation committee.
•Womenmakeup at least 25 percent of
practice group leaders or department heads.
• Women represent at least 10 percent
of the top half of the most highly compen-
sated partners.
Fredrikson & Byron is one of only
four firms nationwide tomeet all six criteria
for the certification. “We have strong long-
standing initiatives in place to focus on and
support the professional development of
women, which enable us to fulfill all six cri-
teria,” says Mary Ranum, chairwoman of
the firm’s board of directors.
Fredrikson & Byron has offices in
Bismarck and Fargo, N.D.; Des Moines,
Iowa; Monterrey, Calif.; Mexico and
Shanghai, China.
Mary Ranum
24 Prairie Business Magazine November 2012
|BUSINESS DEVELOPMENT|
Rebuilding after a major flood like the one that
ravaged Minot, N.D., last year requires a mas-
sive effort. Rebuilding after a flood while
also striving to accommodate escalating demands
from a nearby oil boom makes the task even more
daunting. But the town is eager to meet the chal-
lenge. As Jerry Chavez, president and CEO of Minot
Area Development Corp., puts it plainly, “Minot is
open for business.”
According to Chavez, Ward County had 3,000
unfilled jobs in September.He believes a major reason
for the lack of workers is a housing shortage, a situa-
tion which has plagued many communities in the
Bakken region of western North Dakota. But several
newdevelopment projects being constructed inMinot
should begin to combat that issue, adding approxi-
mately 3,500 housing units within the next few years.
In September, modular home manufacturer
Champion Home Builders and Genco Bakken
DevelopmentGroup LLCbroke ground on the town’s
first master-planned community. The Northern
Lights development, a $400 million project, will pro-
vide more than 3,000 residential units, including sin-
gle family homes, duplex homes and apartment com-
plexes, as well as schools, retail and commercial devel-
opments on 323 acres located on the north side of
Minot. Charles Lange, Champion Home Builder’s
general manager for the project, says homes will be
ready for the development this month. The modular
construction will be completed at Champion’s facto-
ries in Indiana and Idaho,with portions of each home
constructed on-site in Minot. Champion has built
more than 50,000 homes and has 17 factories
throughout North America, according to Lange, who
RebuildingMinotDevelopments will add 3,000housing units in the flood-ravagedcommunity on the edge of the Bakken regionBY KRIS BEVILL
PHOTO COURTESY OF CITIBANK
The Minot Art Lofts, a $9 million Artspace project financed in part by the Ford Foundation, ArtPlace and the Otto Bremer Foundation, will createaffordable residence units for artists as well as arts and cultural activity space in downtown Minot. IMAGE: LHB ARCHITECTS
continued on page 26
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26 Prairie Business Magazine November 2012
|BUSINESS DEVELOPMENT|
says completion of a home takes 30 to 60
days, about as long as the buyer’s closing
process.
As with traditional home building,
frozen ground can halt modular home
building projects, but in September Lange
was optimistic that the Northern Lights
project could continue throughout the
coldest months of the season. “As long as
we can have foundations in the ground
ahead of winter, which we’re planning to
do, then we can construct through the win-
ter,” he says.
Duplex and single-family homes pro-
duced by Champion will range in size from
1,300 to 2,200 square feet and are expected
to sell for $230,000 to $300,000. At press
time, the commercial development phase of
the project was still in the planning phase,
but Lange says a number of big box stores
were in consideration. A new hospital was
also being considered for the development.
The entire development is expected to be
fully built within five years.
On the south side of Minot, Roers
Development Inc. andOppidan Investment
Co.began constructing a 45-acremixed-use
development in September. When com-
plete, the development will include 363
multi-family residential units, as well as two
hotels and a retail center that will include
CashWise Grocery, a gas station and sever-
al retail stores. The first homes in the $109
million project are expected to be complete
in February. The retail portion of the devel-
opment is anticipated to be open in June.
DowntownMinot is also experiencing
development. After seven years of discus-
sions,Artspace, an arts-driving organization
focused on providing affordable live/work
units for artists and their families, has begun
work on Minot Artspace Lofts. The $9 mil-
lion project will create 34 housing units and
approximately 3,000 square feet of arts and
cultural activities space in Minot’s down-
town area. Chavez, who has been working
on the project since he joinedMinot’s devel-
opment corporation in2005, says it solidifies
the downtown’s “Imagine Minot” theme.
“We’re starting to see good use of land —
where they do commercial retail on the
main floor and apartments and condos on
the second and third levels,” he says.
Minot’s population has been estimat-
ed to reach 55,000 by 2026, but Chavez
believes actual growth could easily surpass
that number, provided housing develop-
ments continue to progress. “Once we get
our housing on the right track, we’re going
to see our population grow significantly,”
he says. PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
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continued from page 24
27www.prairiebizmag.com
28 Prairie Business Magazine November 2012
|AGRICULTURE|
High-Tech Ag‘Middleman’ND business works withsatellite companies, ag communityBY JONATHAN KNUTSON
When Lanny Faleide was growing up, he enjoyed watching the futuris-
tic gadgets on the classic “Star Trek”TV series.
Today, the North Dakota businessman uses similar, real-world tools to
help farmers and others in agriculture work smarter and more efficiently.
“We’re agricultural remote-sensing providers. We’re a middleman.
We’ve positioned ourselves to be in between satellite companies that are con-
trolled by governments and private companies and the ag community,” says
Faleide, who leads Agri ImaGIS.
The 18-year-old company’s name is a play on geographic information
system,orGIS, a computer system capable of capturing, storing and display-
ing data identified by location.
Agri ImaGIS, working with a German satellite imagery company, uses
a software mapping system to make satellite images more useful to farmers.
The ag producers use the information to improve their farming operation,
particularly in fine-tuning the amount of seed and chemical they apply.
Every field contains variations in soil types, elevation and drainage pat-
terns, among other things. Treating an entire field the same way short-
changes parts of the field with above-average yield potential and wastes
resources on parts of the field with below-average potential.
That’s where so-called precision agriculture andAgri ImaGIS come in.
Precision ag involves applying the right amount of inputs on every square
foot of a field, improving yields on the better chunks and holding down
expenses on the poorer parts.
For nearly two decades, North Dakota businessman Lanny Faleide hasbeen a leader in using satellite imagery in agriculture. He’s optimisticthat communication devices such as smart phones will make his compa-ny’s products more popular. PHOTO: JOHN BROSE
29www.prairiebizmag.com
|AGRICULTURE|
Farmers realize that some parts of a field are better than oth-
ers. Faleide says Agri ImaGIS builds on that understanding. “All we
are (doing) is pointing out the obvious. They already know it. But
we put it into a format that allows them to do something about it,”
he says.
The growing popularity of mobile communication tools is a
great opportunity for ImaGIS, he says.“I’m pretty excited about this
whole new wave of technology,” particularly when used in conjunc-
tion with satellite imagery, he says. “The smart phones, iPhones,
Android phones, iPads — that’s changing everything. Everybody
wants information in the palm of your hand,” he says. “And we’re
able to send it right out to the farmer in his tractor in the field.”
Faleide, 55, smiles as he recalls the small, handheld“communi-
cators” used on “Star Trek”, the 1960s TV show. “We’re making use
of something like that today,” he says.
Fees, CustomersAgri ImaGIS charges farmers a yearly fee of $695, plus $1 for
each enrolled acre.
It has eight employees: six in Fargo, one (Faleide) inMaddock,
N.D., and one in the Mississippi Delta to work with rice and cotton
producers there.
The companyworks with farmers across the country, as well as
a few producers overseas.Many of its customers are in theU.S.Corn
Belt, with some in North Dakota, South Dakota, Minnesota and
Southern Canada.
Agri ImaGIS also works with agricultural crop consultants,
farm equipment manufacturers and crop insurance companies.
The North Dakota company’s products can help insurance
companies track and manage their crop loss claims.
“Crop insurance has been good to us the past few years,”
Faleide says.
Agri ImaGIS has offices in Fargo and Maddock, a farm town
southwest of Devils Lake.
Faleide farmed in the Maddock area for about 20 years. In
1989, while still farming, he began working with satellite imagery
remote sensing.
“I saw it had so much potential,” he says.
In 1993, he quit farming full time — Faleide today describes
himself as a“hobby farmer”—andwent back toNorthDakota State
University. He took a class on geographic information systems,
which led him to start Agri ImaGIS in 1994.
‘Pushing the Boundaries’Paul Overby, a Wolford, N.D., farmer and crop consultant,
began using Agri ImaGIS products on his own farm in 2004. He
liked the products so much that he began recommending them to
his clients.
Using the Agri ImagGIS technology allows farmers to break
down large fields into small zones that can be managed individual-
ly.That smaller-scalemanagement helps farmers improve yields and
hold down expenses, he says.
Also, “On the environmental side, there’s growing concern
about the use of fertilizer. Limiting the use of fertilizer is part of the
goal,” he says.
Any farmer is capable of learning to use Agri ImaGIS prod-
ucts, though many producers prefer to hire someone else to do it,
Overby says.
Agri ImaGIS always seeks to supply the most advanced tech-
nology, Overby says.
“They’re out there, constantly, pushing the boundaries of what
can be delivered to farmers. They’re out there pushing the curve so
SOURCE: PRECISIONAG.COM
Plant seedmore accurately
Use lesschemical/fertilizer
Use less labor
Manage time better
Placechemicals better
Reduce overlapwhen sprayingchemicals
Track yields better
Precision agriculture uses tech-nology, including GPS, to improveprofitability by applying the rightamount of inputs such as seed andfertilizer at the right place at theright time.
Corn and soybean farmers sur-veyed by the Precision Ag Institutereported the following benefitsfrom the use of precision ag. Somerespondents answered more thanonce:
Benefits of precision ag
17%14% 32%
28%
23%23%
19%
30 Prairie Business Magazine November 2012
|AGRICULTURE|
hard, which is good,” he says.
Faleide says that “one of the failures of we — me — as a
company is we’ve maybe been too far ahead.” For example, “We
did the first variable-rate, satellite-image field of nitrogen (a
widely used fertilizer) in the world inMaddock in 1996,”he says.
“But even today, a lot of people are just getting into this.”
Crop Prices, DroughtIn theory, current high crop prices should encourage pro-
ducers to make greater use of Agri ImaGIS products. Grain is
worth more, so increasing yields seemingly would be attractive.
Faleide says that’s not the case.
“We’re kind of in a no-win situation.When prices are low,
they (farmers) say, ‘We don’t have enough money’ (to get
involved with Agri ImaGIS).When prices are good, they say, ‘Ah,
it’s too much work’,” he says.
He doesn’t guarantee that farmers will make more money
if they work with his company. “You’re not going to win every
time on this. You might make the wrong decision. But you’re
going tomake a better-educated decision if you havemore infor-
mation on your field,” he says.
An extended multi-year drought likely would impact Agri
ImaGIS, Faleide says. Farmers need to fine-tune and prioritize
irrigation during a drought, and precision agriculture/satellite
imagery can help with that, he says.
Concerns, MisconceptionsSome people, citing privacy concerns, worry about the use
of satellite imagery in agriculture. Faleide says those concerns are
misplaced. “My reaction to that (privacy concerns) has always
been, ‘OK, when I drove by your field in my pickup, I’m sup-
posed to close my eyes?’” he says.
Many people assume that utilizing satellite imagery in agri-
culture is complicated, he says.
“Well, it’s not complicated in defining the problem. It can
be complicated in what you do about it,” he says.
Important weather events, such as freezes and heavy rains,
can quickly affect crop conditions, he says.
‘Adoption Lag’Precision ag, though popular with some farmers, isn’t
attractive to others. A 2011 report from the U.S. Department of
Agriculture, which drew heavily on data from 2005 and 2006
studies, found that adoption of precision ag tools has been
“mixed.” For instance, yield monitors — electronic tools that
help evaluable crop performance— were used on nearly half of
U.S. corn and soybean acres in 2005 and ’06, according to the
USDA report.Yield monitors often are a first step in adoption of
precision ag by grain crop farmers.
However, farmers have been slower to adopt other preci-
sion ag tools, according to the report. “Some of the possible fac-
tors behind this adoption lag include farm operator education,
technical sophistication and farm management acumen,” the
report said.
Faleide says he understands why many farmers haven’t
moved into precision agriculture.
“The technology can be intimidating. Farmers want to
farm. They want to get on that tractor,” he says.
Through the years, he says, Agri ImaGIS has competed
against some big, well-financed companies. “There have been so
many times when I really wondered if we’d be able to go keep
going,” he says. “But I love what I do, and we’re still here.”
Now, “We’ve kind of become the image guys. We’re trying
to take it more into the mainstream,” in part because of smart
phones and other mobile communication devices, he says. “It’ll
be an interesting few years to see if we can make a success story.
We’ll let you know in five years.” PB
JonathanKnutsonStaff writer, Agweek
701-780-1111, [email protected]
www.satshot.comis the website of AgriImaGIS: Satshot. The latteris a software toolset fromAgri ImaGIS.
www.rapideye.comis the website of RapidEye,a German satellite imagerycompany that works withAgri ImaGIS.
www.gps.govprovides official U.S.government informationabout GPS (globalpositioning system) andrelated topics. Click on“agriculture” in the“applications” section.
www.precisionag.comis a leading source ofinformation aboutprecision agriculture.
Websites of interest
32 Prairie Business Magazine November 2012
|EDUCATION|
EnergizingEducationUniversities expand energy-relatedprograms to meet industry demandBY KRIS BEVILL
New and expanded courses being developed at several universities near
the Bakken region of NorthDakota are a direct reflection of the state’s
new status as a major oil producer. University officials say they are
adding courses and faculty to meet growing demand from students looking for
opportunities in theoil andgas sector,as evidencedby the steadily growingnum-
ber of industry-related programparticipants over the past several years. Industry
collaborationisvital inprovidingthehighest-qualityeducation,department lead-
ers say, and the oil industry appears to be more than willing to help universities
beef up their programs, providing themwith expertise and substantial financial
donations in exchange for a steady crop of potential newhires.
Expanded EmphasisHarold Hamm, founder and CEO of Continental Resources Inc. —
one of the Top 10 largest oil producers in the U.S. and the largest lease-
holder in the Bakken oil play — delivered a $10 million donation to the
University of North Dakota’s College of Engineering andMines in Grand
Forks, to enhance the school’s geology and geological engineering pro-
grams.Hammpersonally provided $5million of the gift and delivered the
other half through Continental Resources. Combined, the donation is the
largest gift ever given to UND from someone who did not attend the uni-
versity. In gratitude, UND renamed its program the Harold Hamm
School of Geology and Geological Engineering.
Hamm’s donation compliments the college’s overall strategic plan to
produce students who will advance society, be competitive and contribute
South Dakota School of Mines & Technology students, from left to right,Derek Morris, Akash Jaggi, Ivana Stevanovic, Scott Anderson andNicholas Cook learn about exploration for hydrocarbons on a field tripto Harding County, S.D., in April 2012, sponsored by the Society ofPetroleum Engineers and Continental Resources Inc. The drill rig in thebackground is using horizontal drilling to explore for oil in the RedRiver Formation at a depth of approximately 8,000 feet.PHOTO: SOUTH DAKOTA SCHOOL OF MINES & TECHNOLOGY
33www.prairiebizmag.com
|EDUCATION|
to economic development in North Dakota and throughout the
world, says Hesham El-Rewini, dean of the College of Engineering
andMines.“Mr.Hamm has great passion for geology and for North
Dakota,” he says of Hamm’s motive for the donation. “Related to
this particular gift, simply put, the goal is to enhance and strength-
en education and research in geology, geological engineering, petro-
leum engineering and other petroleum and energy-related fields.”
The boost comes during a time of significant growth for
UND’s engineering programs. Enrollment in the College of
Engineering and Mines has increased by 70 percent over the last
four years, El-Rewini says. Currently, 1,600 students are enrolled in
the college. Two years ago, UND created a petroleum engineering
department, expecting to begin with 10 students and achieve an
annual growth rate of 50 percent. To the surprise of many, enroll-
ment has far exceeded expectations. This year, the petroleum engi-
neering department has 100 students.
“There is a demand. Students need more programs in this
area,” El-Rewini says. “Between the expanded geology and geologi-
cal engineering school and the department of petroleum engineer-
ing — both are under the umbrella of our College of Engineering
andMines— I think it will be an addition to serve the students and
provide research value to the state and industry.”
Hamm’s gift will be delivered to the college beginning in 2013
and will be spread over the next four years, providing funds to retain
two endowed professors, as well scholarship opportunities for stu-
dents and financial support to establish a high resolution core
library, named the Continental Resources High Resolution Virtual
Core Library, within the state’s Wilson M. Laird Core Library. The
state library, which is already housed at
UND, contains a wealth of cores and oil
well samples from throughout the state,
El-Rewini says.
In tandem with Hamm’s dona-
tion,UND received $4million from the
state Industrial Commission/Oil and
Gas Research Program which will be
used to purchase laboratory equip-
ment, provide scholarships and student
experience activities and support the
high resolution core library. El-Rewini
says the public-private combination
could serve as a model for others to
replicate. “We are providing a great
model of private-public partnerships
that will help education, research and
economic development,” he says. “I feel
that the future of the oil and gas indus-
try in North Dakota will be dependent
on having a strong university here and
strong energy programs and commit-
ted faculty. The new school and the
department of petroleum engineering and department of chemical
engineering will be able to develop new technologies that will
enable better utilization of our oil and gas resources.”
Software UpgradeEarlier this fall, the South Dakota School of Mines &
Technology in Rapid City received a software package donation
valued at $49 million from Schlumberger, supplier of technology
and information solutions for the oil and gas industry. The dona-
tion includes a suite of four petroleum industry-related software
packages and 20 licenses which will be used for students, faculty
and researchers.
Assistant professor Foster Sawyer, who wrote the proposal for
the donation and was one of the first to explore the software, says
the software includes applications for many aspects of petroleum-
related engineering, such as drilling, oil production pipelines, seis-
mic data and well logs. “It’s very comprehensive software,” he says.
“It’s going to be a steep learning curve [for students and faculty].”
The software is unlike anything offered at SDSMT previously,
he says. “It really is a quantum leap forward for our students and
their preparation for the energy field,” he says. “This will expose
them to state-of-the-art software that typically has been the domain
of larger universities that teach oil and gas. This puts us in a different
league as far as preparing our students for the petroleum industry.”
SDSMT currently has 47 graduate students and 138 undergrad-
uates enrolled in the geology and geological engineering department.
Sawyer says he has noticed increasing interest in the department’s
petroleum-related programs in response to the large number of avail-
Hesham El-Rewini, dean of UND College of Engineering and Mines, left; Harold Hamm, CEO ofContinental Resources; N.D. Gov. Jack Dalrymple and UND President Robert Kelley participate in anews conference to announce a combined $14 million donation to the University of North Dakota.PHOTO: UNIVERSITY OF NORTH DAKOTA
34 Prairie Business Magazine November 2012
|EDUCATION|
able high-paying jobs in the industry.“There’s so many opportu-
nities now in the field and students are very aware of it,” he says.
Many of the school’s undergrads go on to receive graduate
degrees, but even the undergraduate degrees at the geology and
geological engineering department command high wages in the
workforce. In 2010-2011, for example, a geological engineering
degree garnered a $63,000 annual salary, the highest average
starting salary on campus, according to Laurie Anderson, head
of the department.
Anderson says it is will be difficult to estimate how the new
Schlumberger software impacts enrollment until the next
round of admissions numbers becomes available in the spring,
but the school plans to use its new capabilities to aid in the
recruitment of students as well as new faculty members. She
says Schlumberger has a pattern of donating software licenses to
schools that have strong petroleum, geology and engineering
programs.“We’ve been added to the list and that puts us in very
good company with universities nationwide,” she says.
Business ManagementTechnical expertise is an integral component of energy
sector education, but it’s not the only area in need of addi-
tional focus. The University of Mary in Bismarck, N.D., aims
to improve management education offerings for all energy
sectors with a new master of business administration degree
in energy management. Courses specific to the degree will be
offered beginning next fall on campus and online, says
Shanda Traiser, dean of the university’s Tharaldson School of
Business.
“We’re really excited about this program because most ener-
gy-related degrees come out of engineering schools,” she says.
“[But] we’ve visited with lots of people over the past three years
who are working in the energy industry in various aspects and
they all said that this is a hole. The business side of energy is dif-
ferent, and there isn’t anybody teaching that aspect of it.”
Courses in the programwill provide an overview of specif-
ic energy industries, including fossil fuels as well as renewable
energy sources. The diversity of the program has made its cre-
ation a challenge at times, Traiser says, but she is confident in the
program director, Sen. Kent Conrad staffer Tim Moore, and his
ability to identify industry experts in all sectors that will provide
students with specified training. “We live in this great location
where we’ve got access to expertise and knowledge in areas like
energy development, economics and markets, financing, regula-
tory issues, legal issues, all of those things,” she says, adding that
the wealth of knowledge in the region was one of the drivers in
developing the program.“Wewanted to use it to benefit the peo-
ple working in the industry,” she says.
The enrollment goal for the first year of the MBA-Energy
Management program is a modest 15 to 20 students. However,
Traiser says the online availability opens the door to a potential-
ly much larger audience. Additionally, the program will allow
students not interested in a master’s degree to receive a certifi-
cate instead. This option may be attractive to someone who
already holds a master’s degree, in engineering for example, but
would like to supplement their education with business-specif-
ic courses, Traiser says.
Healthy CompetitionUniversity representatives agree that enhanced energy pro-
grams will benefit the region overall through economic devel-
opment and, potentially, higher student retention rates. El-
Rewini points out that North Dakota is the No. 2 oil-producing
state in the country, but until two years ago there were no in-
state options for students seeking a degree with an emphasis on
petroleum geology. He remembers meeting several North
Dakotans during a trip to the Bakken region two years ago who
had all left the state to obtain their degrees, only to return later
for work.“So I think ourmain purpose is to serve students from
North Dakota who would have left the state to get education
somewhere else and also to help the region and attract people
from [elsewhere],” he says.
There is healthy competition between universities offering
similar programs, but SDSMT’s Anderson says it’s good to have
competition. “It keeps us all active in trying to move forward,”
she says. “It’s a good sign for the whole region that companies
are paying attention to higher education in the Dakotas.” PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
“I feel that the future of the oil and gasindustry in North Dakota will be dependenton having a strong university here and strongenergy programs and committed faculty."
- Hesham El-Rewini, dean, University of North Dakota College ofEngineering andMines
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35www.prairiebizmag.com
36 Prairie Business Magazine November 2012
|INVESTMENT|
Exploring OpportunitiesSouth Dakota real estate developers, investors and serviceproviders gather to learn about Bakken regionBY KRIS BEVILL
Boots on the ground. Feet on the street.
Whatever you choose to call it, if you want to
invest in western North Dakota’s oil produc-
ing region, you won’t get far without an actual phys-
ical presence in the area. This was the message from
the region’s economic development groups and
experienced developers during an investment con-
ference held recently in Sioux Falls, S.D.
Because the volume of outside inquiries received
by economic development offices is so high, the
chances of getting a response are slim unless the
investor or developer takes a trip to the area and
makes an effort to meet face to face with community
representatives, they said. It requires a little hard work
and time, but with the effort comes unlimited oppor-
tunities as towns in the Bakken region continue to be
in need of everything from office spaces for service
providers to housing for people living and working in
the area, according to area representatives. Even post
office boxes and laundry services have been known to
be in short supply in past months.
“Think of everything you do.We need all of it,”
said Jeff Zarling, president of Williston, N.D.-based
marking firm Dawa Solutions Group.
He also advised potential investors and develop-
ers to conduct adequate research before making their
first Bakken trip.“Don’t just show up,”he said, noting
that local officials are overworked and stressed by the
high demands of development in the region.
The Sioux Falls conference, titled
“Opportunities in North Dakota, the Bakken & the
Williston Basin,” was held Oct. 24 and was one of a
series of events held in the Midwest this year by
Minnesota Real Estate Journal and Midwest Real
Estate News. Sioux Falls-based investment and com-
mercial real estate firm Hegg Companies Inc. co-
hosted its hometown event after receiving inquiries
from other companies requesting more information
on the Bakken.
“We had a number of clients and friends that
came to us asking how to best get their small business
involved in the opportunity created by the Bakken
economic expansion,” says Paul Hegg, president of
Hegg Companies. “So we brought the political and
business leaders of the Bakken area tomeet with Sioux
Falls-area entrepreneurs and community officials.”
The need for expert advice was confirmed early
in the event, after a show of hands indicated thatmost
of the 175 attendees, consisting mostly of service
providers, investors and developers, had not visited
the Bakken region.
Boosting ConfidenceOne of the day’smost popular speakers was Tom
Rolfstad, executive director of Williston Economic
Development. A native of Williston, Rolfstad has
About 175 entrepreneurs, real estatedevelopers and service providers lis-ten as an oil industry representativediscusses opportunities forinvestment in the Bakken region.PHOTO: IMAGERY PHOTOGRAPHY
37www.prairiebizmag.com
|INVESTMENT|
weathered two other oil plays in the area and spends much of his time
discussing the expected size and duration of the latest boom with curi-
ous investors and developers. “The Bakken oil play is a huge economic
engine that will impact the economy well beyond the Williston Basin
itself,” he said. “There is a tremendous opportunity for investors and
businesses in Sioux Falls to either directly invest in the Bakken region
and/or supply goods and services to us from their facilities in South
Dakota. We all know that Detroit builds cars and trucks, but there are
suppliers of door knobs, hub caps and seat belts that come from a large
region beyond Michigan. So, too, is the Bakken.”
Tim Fischer, CEO of Bakken Energy Services, offered another
vibrant perspective of the area’s activity. His tongue-in-cheek confession
that he has slept in his car in theWillistonWal-Mart parking lot onmore
than one occasion drew laughs from the crowd and cemented his status
with attendees as being a first-hand Bakken expert. His company advis-
es a coalition of 30 individual companies working in the Bakken, repre-
senting combined yearly revenues of more than $30 billion, although not
all of the revenue is attributed directly to Bakken activities.
“We are the people that are out in the Bakken,” he said. “If you go
out there by yourself you can catch a fish.We throw a net.”He said coop-
eration between competing companies is fairly standard practice in the
Bakken region, including among BES’s companies, because it makes it
easier to do business in the fast-paced environment. He also noted that
the amount of opportunity in the area is so large that competition for
business is often a non-issue.
Fischer said he has been surprised at the lack of Minnesota and
South Dakota companies represented in western North Dakota. “We
need to get out there,” he told attendees. “It’s right in our backyard. We
understand the winters.We can get home on the weekends. Companies
from other states can’t.”
Fisher did his part to assure investors that money spent in the
Bakken will provide long-term returns by noting that major oil explo-
ration companies such as Hess Corp. andWhiting PetroleumCorp. have
already invested billions of dollars into their Williston Basin operations,
indicating a long-term commitment to the area. He expects future
growth in the Bakken region will be focused on the expansion of natural
gas pipelines in the area. “The pipeline business is huge,” he said, adding
that companies will be spending billions of additional dollars in the
coming years to connect well sites across the Bakken’s vast 200,000
square miles.
Challenges, ConstraintsMany of the event’s speakers addressed the challenge of acquiring
financing for real estate projects. Charlie McLaughlin, director of struc-
tured real estate finance at investment firm Global Hunter Securities
LLC, said he believes the Bakken is a 10- to 15-year oil play and that there
Tom Rolfstad,executivedirector ofWillistonEconomicDevelopment,provides adviceto attendees ata Bakken regioninvestmentconference heldOct. 24 in SiouxFalls, S.D.PHOTO: IMAGERYPHOTOGRAPHY
38 Prairie Business Magazine November 2012
|INVESTMENT|
continues to be strong demand for all types of real estate in the area,
but labor and materials shortages, harsh weather and infrastructure
capacity are areas of concern for Wall Street investors. However,
hedge funds and private equity investors may be the most readily
available method for financing Bakken-related capital projects
because traditional banking sources can be even more difficult to
acquire, he said.
According to McLaughlin, large banks outside of the immedi-
ate area are skittish about financing real estate projects in North
Dakota’s Oil Patch, partially because they have limited knowledge
about the area and are concerned about the oil industry slowing
down, but also because many are still recovering from the national
real estate fiasco of several years ago. Meanwhile, North Dakota’s
banks have never handled the types of demands they are now facing
and are largely unable to finance large projects, he said. The state’s
largest bank, the Bank of North Dakota, “is absolutely strained” and
many other banks in the state are too small for large projects, he said.
It’s this lack of real estate capital that is slowing down construction
and creating pent-up demand for housing, he said.
When approaching hedge fund managers or private equity
investors with requests for financing, McLaughlin had several sug-
gestions for project developers: keep projects small to limit front-end
capital requirements, simplify projects for better cost control, and
research, research, research. He said good market research is “an
absolute requirement”to build credibility with outside investors who
aren’t familiar with the region.“These people have never been here,”
he reminded attendees.
Project developers who have already completed projects in
the Williston Basin said their biggest obstacles have been finding
and retaining subcontractors and acquiring accurate data on
potential sites. One panel member said he has no problem in
attracting quality help because his company pays workers accord-
ingly. Developers who had difficulty in finding subcontractors sug-
gested that potential developers be prepared to bring their own
crews with them to the Bakken.
Some builders cited customer financing as another issue in the
Bakken.Becausemanyhomebuyers there are peoplewhohavemoved
to the area after losing everything somewhere else, credit repair is a
commonnecessity in thehome-buyingprocess.Others said there con-
tinues to be a lack of ancillary services associated with building proj-
ects. Dean Dovolis, CEO of Annabelle Homes, is an architect but said
he also became a home inspector after discovering therewere no other
inspectors available to check his work in the Bakken.
Next Phase of DevelopmentIn general, many of the panelists agreed that while there is cur-
rently a housing shortage in western North Dakota, the supply of
single-family homes andmulti-unit housing developments will soon
catch up with demand. However, there are many other areas of real
estate development in significant need of expansion.
Myles Richards of Richards Construction Inc. said there is an
extreme shortage in office space throughout the area. In fact, when
he was setting up his business he could not find a single available
office space and ended up buying a duplex in Minot to serve as his
office and home, he said.“As soon as you turn the dirt on any indus-
trial project, there’ll be people there to lease it,” he said.
Dawa Solutions’ Zarling said many developers have focused on
the so-called low-hanging fruit of real estate projects — single fam-
ily and multi-unit complexes — but there is a strong need for other
types of housing, such as single-level housing for the elderly.
When an attendee said some developers are wary of building in
the Bakken because they are unsure how longworkers will stay in the
area, Zarling expressed confidence that the Bakken boom is a stable
investment. “I think it’s a mistake to generalize,” he said. He suggest-
ed that the number of women and children living in the area has
grown over the summer, indicating thatmany of theOil Patchwork-
ers are bringing in their families and plan tomake the area their per-
manent home.
Hegg said the conference delivered an interchange of ideas and
sparked a number of discussions as to how Sioux Falls’ businesses
can scale their business to the region. “Those who say the opportu-
nity has been missed in the Bakken are the same folks that said to
avoid Apple when the Mac was introduced,” he says. “North Dakota
has 7,000 wells, is building them at a pace of 2,400 a year and the
state of NorthDakota estimates they need 50,000 total wells. It is easy
to gauge the opportunity once you know the facts.” PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
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39www.prairiebizmag.com
40 Prairie Business Magazine November 2012
|PRAIRIE NEWS|
Spearfish hospitalreceives performance award
Spearfish Regional Hospital (SPRH) in Spearfish, S.D., recently
received the 2012 MAP (Measure, Apply and Perform) performance
improvement in revenue cycle award from the Health Financial
Management Association. The award is given to health care organiza-
tions that achieve excellence or demonstrate substantial improvement
in revenue cycle performance. Winners must meet or exceed criteria
addressing performance factors such as revenue cycle processes, finan-
cial performance, innovation, adoption of patient-friendly billing
principles and patient satisfaction.
SPRH CEO Larry Veitz commended the hospital team for its
work and commitment to the hospital’s patients.“This award is confir-
mation of their hard work and ultimate goal of providing our patients
with accurate billing in a timely manner,” he said in a statement.
ICON installs videodisplays at high-profile locations
Grand Forks, N.D.-based iconHD, a division of ICON
Architectural Group, recently installed video display boards at two
major stadiums.
Six boards designed and engineered by ICON were installed at
Arthur Ashe Stadium in Queens, N.Y., prior to the 2012 U.S. Tennis
Open in late August. The package included two high-definition LED
video boards, standing 20 feet tall and 33 feet wide, and four fascia rib-
bon boards, each one spanning 78 feet.
At Spartan Stadium in East Lansing, Mich., the company com-
pleted a project prior to the start of this year’s Michigan State
University football season thatmakes the stadiumamong the largest of
video display venues in NCAA Division I football. The main display
spans 5,300 square feet and enables fans to view live game action as
well as replays, statistics, other game scores and updates, as well as
advertising and sponsorship messaging.
USD ranked amongbest national universities
The University of South Dakota has been ranked as one of the
200 best national universities byU.S. News and World Report. Criteria
for inclusion on the list is based on several credentials, including
undergraduate academic reputation, graduation and retention rates,
faculty resources, student selectivity, financial resources, graduation
rate performance and alumni giving.
University President James Abbott said in a statement the acco-
lade is a tribute to the people and programs at the university.
“Whether it’s in a classroomor laboratory, on the football field or vol-
leyball court, or a semester abroad to study foreign culture, students
know that they’re going to have every opportunity to succeed at
USD,” he said.
continued from page 19
41www.prairiebizmag.com
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42 Prairie Business Magazine November 2012
|RED RIVER VALLEY|
Workers at the Holiday Inn in Fargo, N.D., receive Englishlanguage training through software provided by localRotary clubs. PHOTO: HEATHER RANCK
Project English providestraining to Fargo hotel staffSoftware donated by local Rotarygroups has noticeable impact on workersBY KRIS BEVILL
As the region’s population has becomemore
diversified in recent years (primarily
through the efforts of faith-based interna-
tional relocation programs) the number of non-
English speakers in the area has climbed. Fargo-
Moorhead (Minn.), for example, has become home
for more than 2,500 refugees from a number of
countries over the past few years, many of whom
have only rudimentary English-speaking skills.
To assist in providing English language
training to newmembers of the community, the
Rotary Clubs of Fargo-Moorhead, led by
Heather Ranck, district literacy coordinator for
Rotary District 5580, launched a program called
Project English about two years ago. As part of
the program, the clubs installed computers
loaded with Rosetta Stone software at several
locations throughout the metro area, including
libraries and training centers.A fewmonths ago,
the project was expanded to include its first
business — the Fargo Holiday Inn. Combined,
the clubs have committed nearly $13,000 to the
ongoing project and have provided over 1,000
hours in volunteer assistance to help newcomers
navigate the program and improve their
English-language skills.
The goal of Project English is to provide
adult learners with access to English training to
improve communication with their children,
who often learn English quickly through
school. The clubs also want to help newcomers
become successful members of the communi-
ty. From a business standpoint, Mike Prekel,
general manager of the Fargo Holiday Inn, says
he has noticed a difference in staff members
who utilize the training software.“There’s been
enough success with it that if it were taken
away I would want to buy it for the hotel,” he
says. “Even our management company sees the
value in it.”
The vast majority of the hotel’s partici-
pants originate from Nepal and work in the
housekeeping department, according to Prekel.
Housekeeping staff account for about a third of
the hotel’s 310 total employees, but Prekel esti-
mates that only about 5 percent of the house-
keeping employees speak English fluently as a
second language. Most of the staff speaks a lit-
tle English, but many do not have conversation-
al English skills, which limits their potential for
advancement within the hotel. However, once
they are able to communicate more readily,
hotel management can consider them for posi-
tions that require more employee-guest con-
tact. “[For] so many of them, it’s their first job
in America and they just aren’t used to the serv-
ice industry, where they’re asked to speak to
people and people speak to them,” Prekel says.
“It’s been really amazing for about four or five
of my associates. It’s just opened them up and
has been such a nice thing.”
The number of actual participants utiliz-
ing the Holiday Inn’s training station varies, but
about 20 employees initially signed up for the
program.Workers can access the training at any
time, but most participants come early or stay
late after a shift to use it, Prekel says. A 50-hour
threshold has been set as an achievement goal
and employees who accomplish that goal will
be recognized with a plaque provided by the
hotel. However, Prekel says co-workers have
noticed a difference in the English-speaking
skills of employees who have spent as few as 10
hours on the program. Aside from providing a
space to house the computer station, the hotel
wasn’t required to contribute financially to the
project. Prekel decided to pay workers their
hourly wage for time spent using the program
anyway.“But there’s somuchmore value in that
than the dollars that we pay them,” he says. “It’s
well worth it.” PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
43www.prairiebizmag.com
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44 Prairie Business Magazine November 2012
|SOUTH DAKOTA|
It’s been decades since rail service was pro-
vided with any frequency along 60 miles of
state-owned track stretching from
Mitchell to Chamberlain in south central
South Dakota. Because of the lack of rail
access, farmers and grain elevators in the agri-
culturally rich region have been forced to haul
millions of bushels of grain annually by truck
to elevators elsewhere for rail shipment, put-
ting pressure on local roads and costing work-
ers time and money in fuel expenses. This year,
the situation has changed.
Liberty Grain LLC, a $38 million grain ele-
vator/fertilizer storage facility project owned by
Gavilon LLC, Dakota Southern Railway and sev-
eral private developers, was recently completed
just south of Kimball, approximately 48 miles
west of Mitchell and 20 miles east of
Chamberlain along Interstate 90. According to
the project developers, the facility was built as a
direct effect of a $16 million Transportation
Generating Economic Recovery (TIGER) grant
provided to the state in late 2010 to help recon-
struct that stretch of track to allow heavy freight
train traffic. “When the TIGER grant was
announced, we went barreling down to Kimball
and did a site selection there,” says project devel-
oper Toby Morris. “There’s really only one build-
able site, and that’s what we have.”
Morris and his partner, Chuck Jepson, co-
owner of Liberty Grain, acquired land from local
farmers in a “nice, simple South Dakotan-to-
South Dakota negotiation,” Jepson says. A tax
increment financing (TIF) package was provided
for the project, but funds were otherwise acquired
entirely through conventional financing and equi-
ty. Construction of the facility began last August
and progressed rapidly through the mild winter.
The facility began receiving wheat in July.OnOct.
1, the first inbound train shipment of fertilizer
arrived and outbound trains of grain began leav-
ing the elevator at the end of the month.
Liberty Grain LLC, a newly built grainelevator and fertilizer storage facilitynear Kimball, S.D., will ship approximately25 million bushels of grain by rail annually.PHOTO: SHARON HUIZENGA, PLATTE ENTERPRISE
Return of the railReconstructed railway spurs new grainelevator project near Kimball, SDBY KRIS BEVILL
45www.prairiebizmag.com
|SOUTH DAKOTA|Jepson says the elevator will handle 25
million bushels of wheat, corn and soybeans
per year.Themajority of trains leaving the ele-
vator will be large 75- to 100-car shuttle trains
headed for ports in the Pacific Northwest,
where the grain will then be exported to mar-
kets in China and the Pacific North Rim.
About 20 percent of the total outbound traffic
will consist of 50-car trains delivering product
to the Chicago wheat market. The 42,000 ton
fertilizer shed will store incoming product for
sale to local retailers.
Liberty Grain will employ 18 people and
pay out approximately $1 million in salaries
annually. Jepson says the number of jobs cre-
ated by the new facility may sound insignifi-
cant to people in metropolitan areas of the
region, but in rural South Dakota it makes a
difference. “It’s a pretty major thing creating
thatmany jobs,”he says. In addition to job cre-
ation, the elevator will benefit farmers by
reducing the time and money spent trucking
products elsewhere. Jepson estimates local
farmers could save 20 to 25 cents per bushel in
transportation costs. Additionally, fertilizer
brought in to the storage facility will be sold at
a reduced rate to local retailers.“Because we’re
able to buy in such quantities, we’re able to
save those other retailers’ money,” he says.
“Those savings will be passed on to farmers,
which will also have a local impact.” Also,
Liberty Grain has already begun purchasing
grain from small elevators in the region that
lack rail access to provide them with new
export opportunities.
Now that the railroad has returned in
force to the area, Jepson, Morris and others
envision the opportunity for a number of
agriculture-related businesses to become
established in the region. They have formed a
development group known as Ironhorse LLC
to pursue those types of opportunities.
Attractive options include companies such as
feed plants, retail agronomy services and seed
distributorships, but the group is willing to
assist in the development of other projects as
well. Jepson says the company’s formation
symbolizes the second-coming of the railroad
to the area, adding, “We’re pretty excited
about it.” PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
46 Prairie Business Magazine November 2012
|WESTERN NORTH DAKOTA|
Short on spaceMinot airport awaits expansion asdemand continues to climbBY KRIS BEVILL
When Frontier Airlines began working with Minot
airport officials earlier this year to set up service to the
facility, Airport Director Andy Solsvig walked airline
representatives into the terminal’s lobby to evaluate
potential areas for the airline to set up shop. There
weren’t many options.“We found a location in our lobby
area where the airline can make a kiosk of some sort,”
Solsvig says. “It’s basically a countertop.”
Space constraints are a daily issue for airport offi-
cials, airlines and passengers at Minot International
Airport. Passenger numbers have risen dramatically over
the past three years, due in large part to booming activi-
ty in the nearby Oil Patch and an increasing number of
Canadian travelers who drive to Minot to catch destina-
tion flights via Allegiant Airlines. In response to
increased demand, new carriers have entered the market
and added flights (Frontier is the most recent addition
with service beginning Nov. 5) but the terminal just
wasn’t built for that amount of traffic and the airport is
feeling the pinch. “In 2009, we had one of our lowest
years on record — just under 67,000 passengers,”
Solsvig says. “Three years later, we have four airlines
doing an estimated 210,000 enplanements with 12 to
15 flights per day. We’ve basically tripled air service in
three years.”
To remedy the cramped situation, a major overhaul
is being designed that will include a new, much larger
terminal, a parking lot expansion and an additional taxi-
way to better accommodate larger airplanes. The entire
project could cost up to $90 million.
Solsvig says the design portion of the terminal proj-
ect might be ready by January, but construction of the
new terminal won’t likely begin until spring. The airport
recently received a $7.8 million U.S. Department of
Transportation grant to assist with expenses but as of
late September the complete financial details for the
project had yet to be finalized. Federal funding may be
used to support up to 90 percent of the eligible portions
of the project, however. Solsvig says the airport brings in
enough revenue to support the local cost share.
“Operationally, we are self-sufficient,” he says. “It’s just
the capital projects that are having a challenging time
because of the number of projects and the cost of those
Passengers waiting to passthrough a security checkpointpack into a waiting area atMinot International Airport.PHOTO: ANDY SOLSVIG, MINOTINTERNATIONAL AIRPORT
North Dakota’s Mandan Municipal Airport recently received a $3.8 million
U.S. Department of Transportation grant to complete a $5.7 million runway reha-
bilitation project that will replace 35-year-old asphalt with a fresh layer of concrete
and add new lighting. Northern Improvement Co., a highway, heavy and munici-
pal construction firm with offices in Fargo, Bismarck, and Dickinson, N.D., has
been awarded the civil contract for the project. Grand Forks, N.D.-based Strata
Corp. won the electrical contract.
Mandan’s airport handles about 50 takeoffs and landings total per day,
according to Lawler. Private businesses, crop sprayers, and freight service make up
the majority of the airport’s customers. The airport doesn’t track air traffic num-
bers, but Lawler says the number of planes using the airport has increased in recent
years.
Major reconstruction work will begin in the spring, depending on weather
conditions. The project is scheduled to be complete in October 2013.
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47www.prairiebizmag.com
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projects are all happening at once. When you have normal growth
you can spread it out over a couple of years.”
Population growth in communities in the Bakken region of
North Dakota has repeatedly beat expectations, but Solsvig is con-
fident that Minot’s new terminal, set to be three times the size of
the existing facility, should sufficiently handle future demands.
“We anticipate for growth of 20 years when we consider building
anything,” he says. “The building may be phased in over a couple
of years, but I think we’re going to have adequate space for the
long haul.”
Solsvig estimates the entire expansion project won’t be com-
plete until 2015. Until then, the airport will continue to make do
with its available resources. “The airlines work very well together to
make it work,” he says. “We’ve asked the airlines to make some
adjustments to their schedules. They have, and some of those
changes will take place in November. But we’ve pretty much run out
of space.” PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
48 Prairie Business Magazine November 2012
Ethanol producers across the Midwest are
reeling from a challenging year filled with
policy challenges, tight margins and
uncertain corn crop expectations. But the young
industry has faced these types of uphill battles
before, most recently in 2008 when corn prices
skyrocketed and oil prices dropped. The indus-
try recovered, however, and currently accounts
for 10 percent of the U.S. fuel supply, with the
ability to produce more. As the corn harvest
comes to a close in the northern Plains, ethanol
industry representatives express optimism that
the industry will weather its latest series of chal-
lenges, but they caution that expanded market
access is desperately needed in order for the
industry to continue to grow.
“The industry as a whole is struggling with
access to the marketplace,” says Lisa Richardson,
executive director of the South Dakota Corn
Growers Association and South Dakota Corn
Utilization Council. Earlier this year, E15 (a
blend of gasoline containing 15 percent ethanol
by volume) was allowed into the market for use
in 2001 and newer vehicles. The increase marked
a much-needed opportunity to expand ethanol’s
market share, but the oil industry immediately
Located near Underwood in central NorthDakota, Blue Flint Ethanol produces about65 million gallons of ethanol annually. It isone of four ethanol plants operating inNorth Dakota. PHOTO: BLUE FLINT ETHANOL
Market access, droughtchallenge ethanol producersFuture success of industry tied to increased market share and corn pricesBY KRIS BEVILL
49www.prairiebizmag.com
challenged the government’s decision to
allow it and retailers have been slow to offer
the new fuel option to their customers.
“E15 is in its early stages of implemen-
tation,” says Jeff Zueger, chairman of the
North Dakota Ethanol Council and general
manager of Blue Flint Ethanol in
Underwood, N.D. “Challenges with imple-
mentation primarily reside around retailers
verifying pump and storage equipment
compatibility with E15. The good news is
that even at today’s elevated corn prices,
ethanol is priced 50 cents to $1 lower than
gasoline. As we work to implement E15 and
higher level ethanol blends, this price advan-
tage will put additional gallons of ethanol
into the fuel supply.”
North Dakota and South Dakota both
offer incentives for retailers to install blender
pumps, which dispense a variety of ethanol
fuel blends, such as E15, E30 and E85, for use
in flexible fuel vehicles (FFVs). Both pro-
grams have been extremely successful and, in
fact, North Dakota has more blender pumps
than any other state. Aside from offering
higher blends to FFV drivers, retailers with
blender pumps can more easily sell E15 to
the larger vehicle pool, which can speed
implementation. However, while local use
impacts local producers and economies, even
widespread adaptation in the Dakotas will
not significantly impact ethanol’s national
market share. “We really need the population
bases to put their arms around it and the
refiners to blend it up,” Richardson says.
Currently, the nation’s ethanol produc-
tion capacity is greater than the industry’s
market share, which Zueger says has led to
some plants slowing down or shutting down
production. This year’s severe drought has
delivered additional pressure in the form of
high corn prices. Because drought condi-
tions varied in South Dakota, Richardson
says the success rates of ethanol plants in the
state will likely reflect their proximity to
good crops. Southeastern South Dakota suf-
fered much drier conditions than the north-
ern part of the state, for example.
In North Dakota, the situation is a little
brighter. “North Dakota corn growers pro-
duced a fantastic crop this year which will
provide our plants with a market advantage
in sourcing corn compared with facilities in
drought impacted areas,” Zueger says.
The future success or downfall of the
ethanol industry will have a noticeable
impact on economies in the region.
Minnesota and South Dakota each produce
more than 1 billion gallons of ethanol annu-
ally. North Dakota’s four ethanol plants pro-
duce a combined 400 million gallons each
year. All three states rank among the top 10
states in terms of production capacity. Iowa,
with approximately 3.5 billion gallons of
annual capacity, leads the list. South
Dakota’s ethanol producers are the No. 1
corn consumer in the state, requiring 350
million bushels of corn per year, according
to Richardson. By comparison, livestock
producers are the second largest corn cus-
tomer, using 80 million bushels each year.
North Dakota’s ethanol producers require
approximately 140 million bushels of corn
each year. PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
“North Dakota corn growers produced afantastic crop this year whichwill provide ourplants with amarket advantage in sourcingcorn comparedwith facilities in droughtimpacted areas."
- Jeff Zueger, North Dakota Ethanol Council chairman
|ENERGY|
50 Prairie Business Magazine November 2012
|ENERGY|
The North Dakota State Geological Survey
recently completed a mapping project to
investigate the potential for clay deposits
located in the southwestern part of the state to be
mined for the production of ceramic beads used
as a proppant in hydraulic fracturing activities.
Ceramic proppant is one of two types of prop-
pants currently used in hydraulic fracturing activ-
ities in the Bakken region.
State geologist Ed Murphy collected
approximately 200 rock samples from 61 sites in
two kaolinite-rich geologic formations stretch-
ing across an area that includes the cities of
Dickinson and Bowman. Collected samples
were then analyzed for aluminum oxide content,
which is a desired component for proppant
material. According to Murphy, clay containing
at least 20 percent alumina has the potential for
use as a proppant. A small number of initial
samples displayed an aluminum oxide content
ranging from 26 to 38 percent. The larger sam-
ple pool showed to contain lower percentages of
aluminum oxide, but Murphy believes the con-
tent could still be high enough to be useful. The
state’s mapping project will serve to assist inter-
ested parties in further exploring the potential
resource.“We’ve laid the groundwork for a com-
pany to come in and do a more detailed investi-
gation,”he says.“Ultimately, they will need to do
some small-scale mining and run that clay back
into their plants” to see if it works.
Kaolinite is a clay mineral known for its
strength and stability when baked, properties
which are beneficial to hydraulic fracturing
applications. According to Murphy, proppants
are named as such because, when injected along
with hydraulic fracturing fluid, they serve to
“prop open” cracks in the rock, preventing those
cracks from sealing shut. Kaolinite is also used to
manufacture bricks. North Dakota’s only brick
manufacturer, Hebron Brick Co., currently
mines one of the state’s kaolin-rich formations
for its operations.
The North Dakota Geological Survey esti-
mates there are 1.7 billion tons of economically
mineable kaolin in the state. Because companies
The brightly colored streaks in southwestNorth Dakota’s buttes indicate clay depositsthat hold the potential for use in hydraulicfracturing activities. PHOTO: ED MURPHY,NORTH DAKOTA STATE GEOLOGICAL SURVEY
Proppant potentialState geologists examineNorth Dakota clay formationsfor use in hydraulic fracturingBY KRIS BEVILL
51www.prairiebizmag.com
|ENERGY|
working in the Bakken region currently use ceramic proppant,
natural white sand proppant, or a combination of the two, it is
difficult to estimate the current rate of ceramic proppant usage in
the area. However, Murphy says a typical Bakken oil well uses
between 3million to 5million pounds of proppant. By the end of
2012, an estimated 2,400 oil wells will be completed in North
Dakota, requiring roughly 5 million tons of proppant. Most of
the natural white sand used in Bakken wells originates from
Wisconsin and Illinois, while the majority of ceramic proppant is
imported from China. Hydraulic fracturing is a significant
expense associated with oil production in the Bakken, accounting
for about a quarter of the total $9 million to $11 million spent to
complete each well, according to Murphy. He says the kaolin for-
mations could help reduce those costs and prove to be a signifi-
cant resource for the state.
Land explored for the mapping project varies in use, but the
majority is pastureland. Owners of the clay material can vary
depending on the terms of each mineral deed, so each deed
would need to be examined to determine if the surface owner or
mineral rights owner controls that resource, Murphy says.
A full report of the state’s findings, including clay mineral-
ogy conducted by researchers at North Dakota State University’s
Center for Nanoscale Science and Engineering Laboratory, is
expected to be published by the end of this year. According to
Murphy, the main goal is to provide answers to industry ques-
tions in advance. “If a dozen companies come in to investigate
the potential for these clays for ceramic proppant they would all
have to do the first three or four steps that we’ve done,” he says.
“Now they can pick up this report and go from there.” PB
Kris Bevill
Editor, Prairie Business
701-306-8561, [email protected]
Ceramic beads used as a proppant in hydraulic fracturing arecreated by mining and processing kaolinite clays.PHOTO: ED MURPHY, NORTH DAKOTA STATE GEOLOGICAL SURVEY
52 Prairie Business Magazine November 2012
|BY THE NUMBERS|
CanadiandollarsperU.S.dollar
Percent(%)
Federal Funds Rate10 yr Treasury, Constant Maturity
480
460
440
420
400
380
360
340
320
300
280Medianusualweeklyearningsinfarming,fishing&forestry
Date
Exchange
Interest Rates
Wages
N.D. PRODUCING OIL WELLSJuly 2012 7,468July 2011 5,777
AVERAGE DAILY BARREL PRODUCTIONJuly 2012 674,067
July 2011 425,121
TOTALWELL PERMITSJuly 2012 184July 2011 136
AVERAGE RIG COUNT
July 2012 211July 2011 177
PRICE PER BARRELJuly 2012 90.6
July 2011 71.13
Employment UNEMPLOYMENT RATE EMPLOYMENTJul-12 Jul-11 Jul-12 Jul-11
North Dakota 3.00% 3.60% 376,682 368,344Fargo MSA 3.3 3.7 117,788 118,152Bismarck MSA 2.5 3.1 62,597 62,548Grand Forks MSA 4.3 4.7 50,774 51,673Minot MiSA 2.6 3.7 33,271 33,756Dickinson MiSA 1.5 1.9 19,626 18,103Williston MiSA 0.7 1 36,282 25,834Jamestown MiSA 3 3.3 10,514 11,249Wahpeton MiSA 3.9 4.1 11,170 11,932South Dakota 4.40% 4.60% 424,815 424,283Sioux Falls MSA 4 4 126,914 126,651Rapid City MSA 4.3 4.2 66,573 66,527Aberdeen MiSA 3.6 3.5 22,596 22,576Brookings MiSA 4.4 4.6 17,599 17,550Watertown MiSA 3.7 3.8 18,812 18,717Spearfish MiSA 4.4 4.1 12,545 13,022Mitchell MiSA 3.5 3.7 13,140 13,162Pierre MiSA 3.4 3.3 12,238 12,347Yankton MiSA 4.1 4.3 11,461 11,572Huron MiSA 3.3 3.2 9,815 9,866Vermillion MiSA 4.7 4.8 6,696 6,627Minnesota 5.80% 6.60% 2,799,523 2,781,038Minneapolis-St. Paul MSA 5.9 7 1,770,576 1,736,925Brainerd MiSA 6.9 8.3 46,548 46,478Winona MiSA 6 6.4 28,125 28,421Fergus Falls MiSA 5.2 6 30,594 30,629Red Wing MiSA 5.5 6.5 25,328 25,157Willmar MiSA 5.1 6 23,574 24,698Bemidji MiSA 7.8 9.1 20,679 20,794Alexandria MiSA 4.7 5.2 21,039 21,310Hutchinson MiSA 6.9 7.3 19,130 19,590Marshall MiSA 4.8 5.7 14,769 14,658Worthington MiSA 4.8 5.2 11,134 11,464Fairmont MiSA 5.7 6.5 10,905 11,461
7
6
5
4
3
2
1
0Jan2000
Jan2002
Jan2004
Jan2006
Jan2008
Jan2010
Jan2012
Jan2014
Jan2000
Jan2002
Jan2004
Jan2006
Jan2008
Jan2010
Jan2012
Jan2014
Jan2000
Jan2002
Jan2004
Jan2006
Jan2008
Jan2010
Jan2012
Jan2014
1.6
1.5
1.4
1.3
1.2
1.1
1
0.9
Men
Women
Data provided by David Flynn,chair of the University of North Dakota Department ofEconomics. Reach him at [email protected].
Source: Board of Governors of the Federal Reserve System
Source: Board of Governors of the Federal Reserve System
Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics
Source: NDIC Oil and Gas Division
53www.prairiebizmag.com
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