2016 Vision West ND Housing, Workforce, and Population Projections Final Report
Agribusiness & Applied Economics Report No. 769 July 2017
Williston Basin 2016: Employment, Population, and Housing Forecasts
Executive Summary
Local governments in western North Dakota continue to experience substantial changes in population. The development of shale oil dramatically altered or reversed long-term trends in population size and composition. The purpose of this project was to provide the 19 oil, gas, and coal producing counties in North Dakota with future employment, population and housing forecasts.
Employment forecasts were developed for potential changes in the pace and size of shale oil development in North Dakota over the next 20 years, and for counties with low oil and gas impacts, develop projections that capture a reasonable range of future employment change given historical trends.
This study developed a new population model that incorporates dynamic linkages between employment levels, migration rates, workforce commuting behavior, and local populations. The methods developed in this study proved a substantial step forward from previous modeling efforts.
Three general crude oil price scenarios were used to frame likely employment in the Williston Basin. A low price environment would be similar to the conditions present in the Williston Basin in 2016 and 2017 with an annual completion of 400 to 800 wells per year. A moderate price environment was modeled to develop 1,000 to 1,500 wells per year. High price environments were also examined, and were expected to produce 1,750 to 2,300 wells per year.
Employment
Employment forecasts included anticipated changes in oil and gas employment (i.e., rig counts, oil field maintenance, transportation), employment in other industries, farm and ranch proprietors, and secondary job growth from oil and gas industry expansion. In the core-oil producing counties, overall employment will continue to be dominated by oil and gas activity. However, drilling efficiencies have improved substantially, are likely to continue to improve, and will allow the oil and gas industry to use fewer rigs in the future to drill the same number of wells as in previous years. Expect fewer rigs in the future even if prices return to levels observed from 2010 through 2014. Also, labor efficiencies will act to curb the growth in oil and gas industry employment even as the number of producing wells in the state increases.
In a low price environment, employment in the Williston Basin was forecasted to grow slightly. Employment over a 20-year span in a moderate oil price environment was forecasted to remain below peak regional employment observed at the end of 2014, but annual employment growth would be sufficient to present challenges for the region. A high price environment would likely result in regional employment surpassing the peak levels found 2014, and while the pace of employment growth was not expected to match the trajectory experienced from 2010 through 2014, rates of expansion would re-introduce many of the same growth issues the Williston Basin recently experienced.
It is important to remember even in higher-priced environments, the oil and gas industry is not likely to require adding service roads, well pads, depots, office space, industrial facilities, and so on, as much of that infrastructure work is complete. Also, roads and highways have undergone substantial upgrades and expanded capacity, as well as water and sewer, electrical transmission, and other public infrastructure needs. Both private and public infrastructure required to handle a much larger oil and gas industry have largely been satisfied for the foreseeable future. Therefore, future infrastructure-based employment is likely to represent a substantially smaller component of overall regional employment, even in high oil and gas price environments, than was present from 2010 through 2014.
Population
In moderate and high price scenarios, population growth in core oil producing counties was forecasted to be similar but slightly slower than the growth rates those counties experienced from 2011 to 2014. Long-term population growth rates of 2 percent to 3 percent per year under the moderate and high price scenarios will create challenges for local jurisdictions. Population change is generally around 1 percent or less per year in the low price environment for core oil producing counties.
Population growth, albeit at very low rates, occurs in most non-core oil producing counties in the low price scenarios, except Divide, Renville and Slope Counties which were forecasted to have slight population declines. In high oil price environments, long-term population growth rates are generally around 1 percent per year or less. Population growth across the three oil price scenarios for the non-core oil producing counties is considerably lower than the rates projected for the core oil producing counties. Another interpretation of population change in the low and moderate growth scenarios is that those price environments act to stabilize or slowly grow populations in the non-core oil producing counties, and are unlikely to create rapid population growth.
Service populations were estimated using new data that indicates the proportion of the local workforce that is not a permanent resident in the Williston Basin. In moderate and high price environments, when the mix of employment in the oil and gas industry is weighted towards oil field development, core-oil production counties will have substantial service populations. These conditions will require making provisions for temporary housing in the local housing stock.
Housing
Housing requirements were based on forecasting the number householders as a percentage of future population for four age groups, and using the number of future householders to approximate the housing inventories that would be required given an area’s permanent population. Future housing inventories therefore change based on the size and composition of future population. However, in examining the future rate of housing inventory growth to past rates of housing inventory change, future housing requirements are unlikely to repeat the rate of change observed in the Williston Basin from 2010 through 2014.
The percentage mix of housing types (e.g., single family, apartments) was not adjusted over the projection period. However, recent housing inventories suggest some shifting from single family housing to multi-family housing. Those shifts are consistent with changes in resident population and workforce characteristics.
The ability to close the gap between housing requirements (i.e., the amount of housing needed for the number of individuals in the area) and market demands (e.g., cost, size, amenities, location) for housing remains elusive. Existing methods of projecting housing requirements still rely heavily on current or past relationships which either 1) match householders as a percentage of current population to future population levels as a means to estimate housing requirements, 2) assign housing requirements based on ratios of housing to employment, or 3) divide population by occupancy rates to estimate housing needs. The last two strategies were not employed in this study, which is a substantial departure from previous modeling efforts. Housing needs based on income, age, and householder characteristics can be obtained from the 2016 North Dakota Statewide Housing Needs Assessment, which would complement the housing inventory forecasts in this study.
Conclusions
Study findings do not suggest a return to the pace of employment growth or a quick return to the peak employment experienced in the Williston Basin from 2010 through 2014. The projections do indicate that employment is likely to remain at levels observed at the end of 2016, even in most low price environments, which implies the region is not likely to return to pre-shale employment levels.
Low oil price environments
Population effects in the low price environments are mixed. At a pace of adding 400 wells per year population can continue to decline or will remain mostly stable. With a pace of 600 or more wells added per year, population is likely to grow slowly for the core oil producing counties. All but the worst low oil price scenarios will act to stabilize long-term population trends.
Moderate oil price environments
Moderate price environments that produce 1,000 or more new wells per year will return the Williston Basin to healthy economic and demographic expansion. Growth will still present some challenges but is likely to remain at levels that are much more manageable than what was experienced from 2010 through 2014.
High oil price environments
High price environments that produce 1,700 or more wells per year will bring about very challenging growth conditions. Sustained high prices are likely to reintroduce many of the issues local communities and governmental jurisdictions faced during the 2010 to 2014 period. However, within the range of likely outcomes evaluated the rates of growth are likely to be remain lower than those observed from 2010 to 2014.
Additional Materials
The Vision West ND employment, population, and housing projections study produced a number of materials for constituents and stakeholders in the Williston Basin. This report focuses on study assumptions, scenarios, and modeling processes, while covering an overview of the study results.
For county-level information, Vision West ND posted a series of one-hour webinars for each county on their website. In addition to the webinars, county-specific data files are available on the Vision West ND website detailing key data and projections for each study county.