Projections for Western North Dakota Bottineau County

Projections for Western North Dakota Bottineau County

Acknowledgments Analysts Dean Bangsund, NDSU Dr. Nancy Hodur, NDSU Funders North Dakota Association of Oil and Gas Producing Counties North Dakota Energy Infrastructure and Impact Office Vision West ND Moderators Deb Nelson, Vision West ND Administrator Host and Coordinator Center for Rural Entrepreneurship and DLN Consulting, Inc.

Employment, Housing & Population Projections Department of Agribusiness and Applied Economics North Dakota State University Dean Bangsund Dr. Nancy Hodur Research Scientist Ph: 701-231-7471 d.bangsund@ndsu.edu Research Assistant Professor Ph: 701-231-7357 Nancy.Hodur@ndsu.edu

Baseline Conditions Population Economy Workforce characteristics Employment Oil and gas industry activity

North Dakota Population Change ND population growth outpaced all 50 states in the last four years 13 percent increase in 5 years 18 percent increase in 15 years Communities in oil and gas producing counties experienced even more rapid growth than statewide

Recent Population Trends Slight declines since 2000.6.9 percent increase since 2010

Changing Characteristics of Population State has gotten younger the only state to get younger from 2014 to 2015 For the first time since the early 1980s the number of children age 14 and under grew A sustained growth in birth rates began in 2002, 11,352 births in 2014 Increase in birth rate a result of the increase in the 25-44 year cohort Continuation of aging of baby boomers Oldest boomers hit age 65 in 2011 Youngest will turn 65 in 2029 Baby boomers will influence future housing needs Population growth being driven by two factors Natural births Migration

Economy: Gross State Product GSP growth rate that far exceed historical trends Fastest growing state economy for the previous 4 years Statewide personal income grew by 5 percent from 2013 to 2014 Personal income grew faster than the national average in 90 percent of North Dakota counties, half grew at a rate twice that of the national average GSP decline of 6 percent in 2014 Low commodity prices in agriculture and oil and gas Other sectors saw modest growth

Workforce Workforce defined as population age 16 and older does not include non-resident workers or self-employed Work force has grown by 10 percent or 37,000 workers Workforce participation rate is 71 percent, the highest in the nation, very important statistic, little excess capacity Have a better understanding of the oil and gas industry workforce know there is a substantial non-resident workforce Did lose jobs in 2015 7,580 Losses concentrated in oil and gas producing counties Many of the lost jobs were held by non-resident workers Unemployment rates are still low Workforce participation rates remain high Steady labor force numbers and workforce characteristics study reinforce that notion Labor markets have improved More jobs than active resumes statewide

All Employment (Public and Private) R2 = 0.9746 Average annual change from 1990-2008 = 4,900 jobs Average annual change from 2008-2014 = 15,000 jobs

Production has declined, but production is 8 times what it was in 2007 Production as of June 20-16

Summary of current conditions Despite the downturn in oil and gas industry activity the state s population and economy is much larger than it was just a few years ago. Population characteristics have changed which may influence future planning We have better data and a better understanding of workforce characteristics, economic drivers Growth and industry activity has moderated substantially Dealing with uncertainty of new normal and uncertain future and what may happen under various macro-economic conditions, e.g. oil prices increase Change and growth has not been uniform, Bottineau County has not experienced similar growth Economic development and economic diversification as important as ever

So What is New for Our Project? Cohort component model Actual fertility and mortality rates Recent migration trends Workforce by place of work and place of residency Verified and adjusted housing supply data Include data on farmers and ranchers Oil and Gas employment numbers (ND Job Service) Housing Needs Assessment (NDSU) and general population forecast (ND Dept of Commerce-Census Office) NDSU Workforce characteristics study

Actual Fertility and Mortality Rates for Cohort Component Population Model current population + births deaths + net migration (in-migration out migration) = population new year

Net Migration current population + births deaths + net migration (in-migration out migration) = population new year

Verifying Total Housing Units Housing Inventory Rational: Concerns regarding accuracy of U.S. Census estimates of total housing units Collected actual building permit data from 12 largest cities in the state Used same computational data as the Census with actual building permit data rather than building permit data from the U.S. Census Bureau s Building Permit Survey For most jurisdictions, Census Bureau s estimates were accurate and within a few percentage points Especially true for cities with stable growth Adjusted census estimates to reflect actual housing inventory for estimates of future housing from cities and counties where data was collected For all other counties 2014 Census estimates were used for estimate of baseline housing inventory

Job Service Data Oil and Gas Employment

Forecasting Model and Research Methods Employment Modeling (retained our previous model) Dynamic adjustments for efficiencies in oil and gas industry Include other economic sectors Include secondary job creation New population and housing models

How Does All This Work? Step 1: What is the size of current workforce? Resident Population Participation Rate Employment Rate Resident Workforce Total Workforce Commuters Outside the region Delineated by segment of industry Non-resident Workforce

Step 2: How much workforce do we need? Demand Supply Future Labor Requirements Existing Labor Pool Future Scenario using Employment Model Residents Greater Less Equal Resident Workforce Nonresidents Greater Less Equal Nonresident Workforce Employment Change combined with Workforce Characteristics

Step 3: Incorporate labor force (needs/changes) into cohort model. Start (2015) Employment Workforce Needed Migration Period 2 Period 3 Employment Employment Workforce Needed Workforce Needed Workforce Present Workforce Present Needs/changes Needs/changes New Population New Population Available Workforce Available Workforce New Population Available Workforce

Step 4: Estimate housing inventory requirements. residents commuters Employment permanent service Population Permanent Single Family Apartments Mobile Housing Requirements Housing Forecasts utilized the models and assumptions applied in the North Dakota Statewide Housing Needs Assessment.

What future possibilities are we considering? Profitability (prices and costs)? Rig counts and drilling activity? Re-fracking? CO2 EOR? Well counts? Oil production? Restrictions on fracking?

Future Price Projections? Much Uncertainty.

Examined Three Sets of Future Conditions Scenarios* Prices** Wells Completed Per Year Rig Counts Per Year First Purchaser Prices in ND Low Moderate High Low High Low Price $25-$60 400 600 800 25 50 Moderate Price $60-$90 1,000 1,250 1,500 63 95 High Price $>90 1,700 2,000 2,300 107 145 * Price ranges are approximate as many factors influence development activities. * Scenarios do not include re-fracking, CO2 EOR, or restrictions on fracking.

*Prices are approximate

Results/Findings Employment Trends Petroleum as a Percentage of All Employment Farm and Ranch Proprietors Non-farm and Ranch Proprietors Commuter Data Where people live that work in Bottineau County Where people work that live in Bottineau County Industry Employment Population Housing

Farm and Ranch Proprietors

Non-farm and Ranch Proprietors and Non-farm and Ranch Proprietors as a Percentage of Total Employment

Farm and Ranch Proprietors and Wage and Salary Employment

Oil and Gas Industry Employment as a Percentage of All Wage and Salary Employment

Wage and Salary Employment

Wage and Salary Employment, by County and State Planning Region

Annual Change in Wage and Salary Employment

Change in Employment 1990-2015 Bottineau County 1990-2015 2000-2015 2010-2015 Total Percent Change 30.5 22.8 2.4 Average Annual Change in Jobs 25 33 12 Average Annual Percent Change in Jobs 1.1 1.4 0.6

Commuter Data Where People Work and Where They Live (in flows)

Commuter Data Where People Live and Where They Work (out flows)

What does this mean? Employment at a specific location may/may not translate to residents of that location Employment in one location can affect population in another location Workforce is not limited to those residing in the immediate area Our modeling incorporates locational dynamics

Oil and Gas Industry Over Range of Potential Prices

Employment Forecasts, Low, Moderate and High Price Scenario

Bottineau County Employment Projections Scenario 2016 2040 Change from 2016-2040 Average annual growth rate Jobs % % Low Price 2,377 2,547 170 7.2 0.3 Moderate Price 2,377 2,837 460 19.4 0.7 High Price 2,377 31,28 751 31.6 1.2

Population Projections: Low, Medium and High Price Scenarios

Bottineau County Population Projections Change from 2016-2040 people % Average annual growth rate % Scenario 2016 2040 Low Price 6,636 7,162 526 8.0 0.3 Moderate Price 6,636 7,682 1,046 15.8 0.6 High Price 6,636 8,195 1,559 23.5 0.9

Projected Total Housing Units Added Low Price Scenario

Projected Total Housing Units Added Moderate Price Scenario

Projected Total Housing Units Added High Price Scenario

Recent Trends and Other Research Findings Household Composition Trends in the mix of housing of housing Workforce characteristics Changing makeup of the population, results of state wide housing needs assessment Seniors Younger population First-time homebuyers Cost-burdened seniors Age of housing inventory

Characteristics: Household composition Continued increase in non-family household Continued increase in married with out children First increase in household that are married with children Potentially substantial implications for future mix of housing Source: U.S. Census Bureau, 2014 ACS 5-Year Estimates

Historic Distribution of Total Housing Units, by Type of Housing Source: U.S. Census Bureau, 2014 ACS 5-Year Estimates

Results from Workforce Characteristics Study Source: Assessment of the Oil and Gas Industry Workforce, http://ageconsearch.umn.edu/handle/236245

Non-Resident Workforce Intentions to Move to North Dakota YE S NO Source: Assessment of the Oil and Gas Industry Workforce, http://ageconsearch.umn.edu/handle/236245

Type of Housing North Dakota : n=1,158 Elsewhere: n=489 Source: Assessment of the Oil and Gas Industry Workforce, http://ageconsearch.umn.edu/handle/236245

Projected Change in Population, by Age, 2014-2029 Source: 2015 North Dakota Housing Needs Assessment

Projected Change in the Number of Households, by Household Income, 2014-2029 Source: 2015 North Dakota Housing Needs Assessment

Projected Change in Number of Households By Type of Homebuyer, 2014-2029 Source: North Dakota Statewide Housing Needs Assessment

Cost-Burdened Seniors Source: U.S. Census Bureau, 2014 ACS 5-Year Estimates

Total Occupied Housing Units, by Year Built Source: U.S. Census Bureau, 2014 ACS 5-Year Estimates

Key Findings/Implications Characteristics of population are changing Increase in younger cohort has implications for housing, childcare, schools Aging of the baby boomers has substantial implications for housing for seniors Affordable housing a key issue, substantial number of cost burdened seniors Age of housing stock may be a consideration Workforce characteristics and data on commuters and non-resident workers suggest workforce will not be just local residents Communities should plan for a high degree of commuters and non-resident workers in the high price scenario Service population will likely continue to be an a more appropriate measure of public service requirements

Key Findings/Implications Low price environment is steady and stable with growth rates that exceed the 2000-2007 period Moderate prices may produce excitement and challenges Sustained high prices may bring a return to challenges faced from 2010-2014 Average annual growth of 3 percent challenging Likely result in increased and rapid demand for temporary housing The industry is becoming more efficient and will likely lower lab0r requirements in the future As the industry get larger, it becomes more stable, larger base in production and operations

Additional Resources Available North Dakota Statewide Housing Needs Assessment https://www.ndhfa.org/publications/housingne eds.html North Dakota Compass http://www.ndcompass.org/ Assessment of the Oil and Gas Industry Workforce, http://ageconsearch.umn.edu/handle/236245 North Dakota Kids Count http://www.ndkidscount.org/ NDSU Department of Agribusiness and Applied Economics http://ageconsearch.umn.edu/ https://www.ag.ndsu.edu/agecon/ Vision West NDSU Center for Social Research https://www.ndsu.edu/csr/ https://www.ag.ndsu.edu/agecon/research-exten sion-centers http://ageconsearch.umn.edu/ ND Department of Commerce https://www.commerce.nd.gov/census/ http://www.visionwestnd.com/ North Dakota Job Service: North Dakota s Oil and Gas Economy https://www.ndworkforceintelligence.com/gsipu b/index.asp?docid=578 Census on the Map http://onthemap.ces.census.gov/

Nancy Hodur, 701-231-7357 nancy.hodur@ndsu.edu Dean Bangsund, 701-231-7471 d.bangsund@ndsu.edu

Thanks for Listening! 2493 4th Avenue West, Suite G Dickinson ND 58601 701.483.2801 Email: VisionWest@dlnconsulting.com Website: www.visionwestnd.com