prairie business nov. 2012

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

http://www.prairiebizmag.com

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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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|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]

mailto:[email protected]

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|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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|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

[email protected]



|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

[email protected]

http://www.ndepscor.nodak.edu/programs/tech.transfer.com



|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

[email protected]

http://www.sdreadytopartner.com



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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|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 form page 16


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|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


|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



|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


|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



|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



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|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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Think earth friendly by making theswitch to an online subscription.

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continued from page 24

http://www.prairiebiz-mag.com/pages/subscribe_digital





|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


|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%



|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


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


http://www.satshot.com

http://www.rapideye.com

http://www.gps.gov

http://www.precisionag.com


|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


|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



|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



“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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|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


|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



|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



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|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.

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|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





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|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


|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






|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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|WESTERN NORTH DAKOTA|

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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







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


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



“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|




|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


|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



Ceramic beads used as a proppant in hydraulic fracturing arecreated by mining and processing kaolinite clays.PHOTO: ED MURPHY, NORTH DAKOTA STATE GEOLOGICAL SURVEY




|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



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