Industry sign banking north dakota permission slip fast
first I wanna thank you for having me I want to give some attribution to my colleagues there were some other folks that helped me pull this together because unfortunately I'm not an expert in everything already it I try so Dean banks and we may recognize as daily to long-term colleague Commission member of the Center for Social Research and Green Olson from the Department of Ag business and Applied Economics there we go I want to talk a little bit beyond just energy okay and talk a little bit about demographics because it's very significant shift other than from in the last decade the economy has gone boom and then it's now so and also when I talk about the oil and gas industry but I do want to mention that the oil and gas industry is just part of a larger energy industry I'm not going to touch on our growing wind economy when it wind sector or the lignite coal industry in the mining and commercial or the electricity generation and conversion that goes with it and again I can't talks about our time without I'll talk to the body agriculture there we go that's what I like this slide just for the dramatic effect not being really get yourself a look at it we've just been trucking along since the nineteen forties and at the turn of the century and in the last ten years the economy's just on the population is literally just exploded in in North Dakota when you take a look at it since well we've just seen dramatic growths in the last ten years here's a little look at some more recent population forecasts as you can see along the the trendline we've got a population now open all-time high of six hundred seventy two thousand the dotted line that goes up to eight hundred and ninety one by 2029 that's what worked for some population projections we did back in 215 I think those projections are a little hot yeah we were doing those projections right at the peak of the rule when things were going the strongest in the oil and gas energy I ran a little trendline on it from 213 onto to 2029 and I think we're going to see more stable steady population growth throughout the state I know there's some folks that are saying we can hit even in the next ten years but I think that's a little optimistic you know but anyway again that's good I look at what's transpired in the last few years something is pretty dramatic given the history of North Dakota now here's a really interesting slide we've seen growth overall but if you're what population change not consistent throughout the state and there's two takeaways from this slide one is he out the purple out in the West and those are our four key oil and gas producing counties it's just gone boom out there McKenzie County is increased by a hundred and fourteen percent Watford City and the county has gone from a population of about six thousand to about thirteen thousand less than ten years so they imagine that the above stress that's been on the infrastructure on there has been absolutely incredible the other takeaway is that we're really seeing other areas of the state where we're not seeing population growth those yellow areas are predominant agriculture areas are small rural communities under quite a bit about that this morning but we're seeing some some the trends of the past continue the other reason growth are in our urban areas Grand Forks Bismarck Dickinson might not perhaps not so much Grand Forks but those economies are much more diversified much more stable and are growing pretty consistently there's another big takeaway we have gotten much younger or the fourth yoga statement country and then again is a dramatic shift in trends over the course of the decades so you can see the median age at 38 nationally and now the 35 in in North Dakota now that's going to have some substantial impact on how our population grows future future growth is going to be driven by natural births much more much less so in the end migration that that really sparked the big boom so we had in the last few years again kind of the tale of two states once again the median age is not consistent we've got much lung younger from the west where we've got average ages in the low 30s you know in our urban counties were much younger and then we go back into the central parts of the state where we're driven where agriculture is the key driver where we've got sparsely populated areas population is much older so again kaylynn to States now I'm gonna skip over some stuff because we're gonna stay on time here I don't want to be the one to bus the bus the schedule a wide open here's a little slide that again kind of illustrates that how we've got much longer if you look over on the right what we've got in terms of population growth and children it's moving quite a baby boom in fact there was just an article in the pharma form day before yesterday they talked about how Dickinson historically the number of births was about 300 per year last couple of years they've been on track for over 700 so we're gonna have some real issues in terms of being able to build the schools Memphis strong to try to accommodate that population girl again there's just another little slide that talks about interchange of population you can see on the right our population growth I think it's going to be slow and steady in those growing counties it's going to be driven by the fact that we've got a much younger population here's another really big takeaway now I'm going to cut Estelle's not very diverse okay we're still only have a population of color of about 16% and that's up from 11% in 2010 but I think you really have to take a look at the percentage change to put it into perspective North Dakota seen a 64% increase in the population of color and compared to 16% for the United States so again that's a really really big change even though we're still you know not very diverse so overall with the demographics and I have to strike on this because the change has been so dramatic when you look at the historic conditions in North Dakota you know that dramatic population grew the girls miss fueled by a booming economy and that was largely fueled by the oil and gas industry and I'm going to talk about that specifically in a little bit again but future growth is going to going to be the result of births and the characteristics have changed for younger and more diverse mr. Mukesh briefly on our gross state product again I throw this up there just to try and illustrate how the oil and gas industry and high oil high commodity prices in the earlier in the last five years really really fueled a really booming economy when you see a seventy five percent in he says mm it kind of makes you sit up and take notice now again we also know that isn't sustainable we took a pretty good crash when the oil and gas market went went downhill in 2014 unfortunately that coincided when a commodity markets went down as well well the Nordstrom economy's still driven by commodities oil and gas and agriculture however things have stabilized especially in the oil and gas industry I'm going to skip to the oil to gas I don't it's not care of one thing in terms we've talked a lot about workforce even though we've got this booming economy we've also have a serious workforce issue we have 15,000 job openings in the state the governor Bertrille ASA says that's the city of Jamestown now the real key part of this is that the speak North Dakota job services tracks the number of active resumes to job openings and statewide we've got point two nine active resumes for every job opening so like everybody else we've got a workforce issue all right now we'll go to the 800-pound gorilla in the room the oil and gas industry in North Dakota again I throw these graphs up just for effect things are clipping right along and then we get the hockey stick in October we set a record of 15,000 wells in a million 1/2 barrels per day the production is concentrated in those four core areas and one of the key things to take away the gas industries things are really stabilized prices went down but the industry has gotten so much more efficient they've gotten my vision sees in technology in terms of grilling technologies in terms of infrastructure we have roads and pipelines we've got the drilling rigs much more efficient you know when things were at the height of the gulaman in 2014 over 200 rigs out there now there's 56 and the drilling time is is decreased by about half oh the other really big issue here is that the recovery rates have improved dramatically Lilliana maybe they were getting three to five percent of recoverable oil by about 2014 we were maybe getting 78 currently we're getting 13 to 15 percent so all of these things are really making oil and gas industry but for stable and I would would argue much more susceptible to severe price shocks here's an example of the some of the efficiencies we've got clear improvements in infrastructure now this is a slide that I stole from Justin Princeton and the arts go to pipeline authority and the two lines to look at are the blue and the purple so if you look back in October 10 at the left-hand side pretty much everything that we were producing was going out by pipeline okay well as the production ratcheted up that that capacity was quickly overtaken and then we started pulling out oil using rail and the rail is the purple so you can see at the height 13 and 14 most of it was going out by rail very little by pipeline as you can see to the right hand side and October 19 that's been that that has been inversed and we're now could made dramatic progress in filling in pipeline infrastructure again I throw this chart in just for dramatic effect in terms of amount of oil and gas that that we're producing that 15 billion or 1.5 billion gallons a day is significant now so if you guys seem to think that we've got more capacity those are my predictions but the North Dakota we have the North Dakota Mineral Resources predicts in order to go to what had two million euros in the next 10 years I think that's maybe a little optimistic but you know we didn't think we'd get to a million and a half either oil and spot prices again this just shows that you know we got into commodity prices are going to go up and down now one thing about this is that the prices of steam know stabilize we've gone up a little bit more but with all of the efficiencies I think the oil and gas industry is much less susceptible to huge price shocks now again these are my estimates but Lynn Helms nor the Mineral Resources is suggesting that the breakeven points in our core counties can be lowest twelve twelve dollars per barrel so again I'm not the numbers but that's what's being put up a couple of other interesting things you know these price shocks given us some real fiscal fits in North Dakota you know which reminds us that we're still an economy that is dominated by commodities oil and gas is a commodity just like corn and wheat prices go up and prices go down see I forgot to fill in the blank there an example of our fiscal problems and yes you see a 23 percent of its budget over the last value now on the web side of it we've got a little thing called Legacy Fund in North Dakota that's funded by a portion of the extraction taxes it's got a balance of 6.5 billion dollars and so there's a pretty interesting conversation going on about how do we spend it here's another issue I know that this comes up frequently the flaring issue in the oil patch we're doing much better than we were previously for example in 2011 we were flaring 36 percent of the natural gas and as you can see by just slide we're doing much better okay well now we're only flaring about 17 percent of it but that flaring is still a result of the fact that we don't have all the infrastructure in place that we need now the current goal is to capture about 88% and ultimately the goal that's been set by 2020 is to capture 91 percent I don't think we're going to make the 2020 goal but the industry continues to work on that and so again that's a function of infrastructure so again I think Moody's take away the industry stabilized the technology technology changes in the infrastructure improvements are just phenomenal now there's still a long way until this is played out you know some people say that you know we're going to end up with 45 50 maybe even 60 thousand wells over in a period of 20 30 or 40 years again I like to stay out of the prediction business because the only thing for sure is that I'll be wrong activity is in the four counties and the breaking points improve dramatically I'm getting short on time but I do have to stop their agriculture just briefly probably agriculture started in 218 and I've got you have to speak about agriculture in North Dakota because it's everything it is important to this date as the oil and gas industry so the kernel started with 218 with more prices and and then the start of the trade wars what 32:18 producers managed to positive cash flow the word that I got for my on taxes they said that the Donnell dollars helped everybody straight not us not my turn and I'm not passing any judgment on it with those direct payments managed to keep cash flows positive in 2018 but in 2019 the troubles have mounted tremendously we've got pork prices but tariffs have her terribly on the tariffs are disproportionately impacting North Dakota and the weather was horrible just a couple of little tidbits about how horrible the weather was 60% of the corn in North Dakota is still in the field and that's gonna cause troubles in the spring because that crops had to come off before you can put another one on I have to mention that we had a snowstorm in October they got about two feet of snow because for some New Year's soybeans disproportionately affected 75 percent of the soybeans in North Dakota go to the Pacific Northwest ninety-five percent of the soybeans in the Pacific Northwest go to China so this really is a isn't is a big deal in North Dakota some of our other crops were to meet we had disease problems so producers are getting discounts here's a here's a terrible one potatoes a lot of a man didn't get left on the ground there's a potential shortage for potatoes for french fries okay all right sugar beets yeah lots of sugar beets left in the ground and now the unharvested sugar beets and potatoes cause less of a problem with a screen they look till those up and plant over it so I guess this is just going to say one thing about this is a dr. Frayn Olson of Grover the soybean supply chain has shifted and we're living through another major transition in agriculture in North Dakota so this is a big deal now there's going to be producers that are going to go under that's without a doubt now rain is also indicated that there may be some opportunities for generational transfer the conditions are perhaps putting some downward pressure maybe not on single prices but at least leases but what's going to transpire in agriculture in order to go to them in the next few years if I get the answer to that I wouldn't be am standing right here but this is a big big thing for the state so I guess the the key points is you know we've really seen some substantial changes in North Dakota our population is increased dramatically we've got a much longer fiber regional take away with oil and gas it's stabilized you know it's the infrastructures caught up now we're going to need to continue to invest and start infrastructure both for the industry and in third terms of schools that's going to be a big one Williston right now they're struggling to get a bond passed let's build a new school they need a supermajority of 60 percent last boat they got thinking so again the price collapse and in agriculture same times as the oil and gas also caused us some significant collisions and we've got a substantial strained and they egg industry so I guess the big takeaway that I would take on this slide I spoke to the last two or three points the oil and gas industry is stabilizes that I mean continue to be a major driver in our economy in North Dakota we've got serious concerns in agriculture and I think both of these things point out that economic diversification especially in North Dakota is as important as ever and unfortunately I think we're relearning some of the lessons that we learned in the in
he 1970s and the 1980s what's up the fat I will step aside and I think only would over a little bit I have just seven things that I want you to take away and the first one is that the Upper Peninsula of Michigan is an important part of Michigan both culturally and economically for those of you who are interested in history you know that Michigan acquired the Upper Peninsula in 1837 when he was admitted in the Union and that was to sell a the war between Michigan and Ohio over the Torino stream he represents about 29 percent of Michigan's land nine that's about 16,000 square miles 9,000 of em are rich in natural resources we talk timber we're talking about copper I knew coal and we we are still exploring many other to be discovered despite the size only 3% of the population only that the preparation of you people presents only 3% of Michigan population that's about 300,000 in 2018 so that brings me to the next fact about the repo market of tup is that its population has been declining in his forecast to continue to decline abscissa Nanak's for his five years so dramatic you know my colleagues have been using this curve dramatically share what's happening the population of the European peaked in 1975 and has been declining since then it's forecast to continue to decline by 2045 we think that it's going to be around 2000 82 to 80,000 so that's about 20,000 below the river that we had today out migration domestic our migration is the number one reason for this we know for those of you who work with population data natural growth has been declining in many parts of not just patented the nation because just declining fertility rates so declining birth rates and you pee especially increasing death rates as the population in which I'm going to show in a minute so 60% this is very interesting 60% of the UT population reside in only four counties out of fifteen comprise the higher and those are market chip or cotton and Delta and all of all of them have one common trait is that they have a university or a college unit there are only two counties Houghton and Marquette whose very own age of the population is below the state average and that's again Houghton and Marquette that's how you find in the morning that's where we have northern I mean Michigan Tech and in Marquette lots we have Northern Michigan University so that that you know brings a constant flow of young person in those two RSI 'try head of pyramid up with dramatic read always show this dramatically but because of time I I was at so this brings me to the third fact about the repo market of Philippi is that this population behind is also one factor that explains the lower levels of labor force and improvement in the area the labor force has now returned for example into the pre-recession of neighbors in new peak and that's we can contrast with the state the state after the recession since a steady increase in the labor force yupi has continually declined we see an increase of labor force immunity between 2003 and 2006 and this is because the state closed several prisons in a row or peninsula and workers were allowed to repeat and most of them end up in new people but since then the fact that the labor force is in decline they have skill accelerated during the recession and hasn't recovered at all so compared to 2000 for example we are still 12.4% below but above 2000 and in premiere rates the pattern is almost the same of the states do you pee in normal times tend to have a little bit higher and Roman reigns but within the margin of error during the recession you pH we had lower and premier weights just because it depends less on the automotive industry that we know only chigan depends on a lot employment SEM trained by tooth by 2018 annual average is about 18,500 below 2000 we have not returned to the procession of Labour's new key we stabilized that's the good news the improvement is stabilized at since 2011 at about 130,000 and that's about 14000 before below 2007 it was so a natural question then to up RG is with this down down down trade of in in employment are there any industries that are growing and which industries are declining and so the next fact is there more than half so we're talking about about 10 out of 19 industry sectors in the you PE are still losing jobs and nearly 80% of u-kiss jobs are concentrated in these six industry groups public public administration so we're talking about local federal state plus every tribe owned business is counted public public public administration sorry is the largest employer in LP about 26 percent the one thing that is interesting is that in the U P the center of health care and social assistance which in the state and many other places around the nation has been growing even during the Great Recession in the UPS sectors dakari and mostly because of social somebody mentioned about the social assistance type in declining especially in rural areas with the culture there show a nursing nursing position with their shoulder saying that is happening a lot you people and that brings us to the fifth fact about the U P labor force is about mining which is a focused industry and the mining is a very important important part of the UPS economy as we're gonna see in a minute so if we talk about jobs mining is really small he represents only one point three percent of favor jobs in the U P but if you look at the state that's about a quarter of mining jobs in the whole stay tuned now if you know that and I think I'm gonna point to this if you look at a mining jobs they have been declining over the past two decades right and the decline is usually equal sides with the closure of Mines so mines have a limited life of production and when they get to that the end of the production end of that life they have to they have to show that they still have enough to keep producing otherwise they closed and when they close of course they need to pull factors away and improvement was away so if you look at between 2218 mining jobs in new key drop by 35 percent from 2200 to about 1500 the kind of private industry is combined they still drop by by just 13% that's our Americas you see some up swing here in trip 2011-2014 that's because the state approved the start of mining of nickel in the you people and that actually has a lot of effect as we wanna see in the next few slides I wanted to look at you know the demographics of combining our workers and they are order they are predominantly male and they are in a prime working age than they are compared to other private sector private industries so for example other private industries combined the jobs are equally distributed among I across genders with a little bit of male 51% in mining 93 percent are male right the educational attainment is the same 45 percent have a high school diploma or less in the other private industry is 43 percent so it's the same distribution that's why but despite the low levels of employment and declining the wages in the mining industry in UT has been increasing dramatically between two thousand eighty two thousand two hundred eighteen all other private sectors combined the wages increased by only three hundred dollars and we're talking about no mean nominal values in in mining increased by one thousand dollars over this period the GDP the contribution to the GDP is just breathtaking and it has been rising over the past two decades so the GDP for example rose to about 1.13 billion in 2011 and it's now so that's today the mining is the fourth contributor to the UT GDP after real estate and in manufacturing so this is another really interesting chart if you look at the distribution of mining GDP a crude estate or third of it over third of it is producing more in one County of the upa that's Marquette that's our it over 700,000 dollars in 2018 it's followed by Wayne which sorry before by when in Southeast Michigan at 14% and another fact is that about four counties of Michigan provides 62% of my name GDP and two of them are in in India peanuts market and Schoolcraft and then we have two which is the wave and Monroe in Southeast Michigan actually that's where they mined salt that I just learned that because you know there was showing me that I died I got curious apparently we mined salt under the city of Detroit we didn't know that the six fact is that almost or occupational groups in mining pay above not only Rachael algorithm but also state average the gradient average in 2008 was about $16 59 cents the average wage for the state was eighteen dollars to cents and only two groups of occupations pay lower than this in the unity in the mining you pee construction and extraction is the largest occupational group in mining which it provides a part of third of mining jobs and it's it's also it provides about 40 percent of our new openings mostly to replace the workers that evening the industry we are aware the largest detail occupations are last abouts first line of attraction Supervisors in tetrahedra so certainly in mining but also more generally employment in Europe is expected to be flat at best these are projection to 2026 and in the U P jobs are projected to decline by 1.5 percent that's about minus 1800 by 2026 the only group that is predicted to grow is jobs are require more than a bunch of to grow higher and improve then the growth is about eight times lower than what is showing statewide so in a few sentence so despite declining population and rebel force the new people's wealth in natural resources such as copper I will night Nikko and others to be discovered represent a large contribution to the area in state GDP and the contribution has been rising over the past two decades while employment has been declining which suggests some sort of increasing productivity in the mining industry in the UT with that thank you for those presentations we we have a certain timeframe for questions and so I'd like to turn it over to the audience pretty quickly but I do have kind of one one common theme that struck me from your presentations is that particularly OBO in your slides I think it's interesting that even though we've seen an increase in new mining operations in kewpie in the last few years we've seen a decline in mining employment in spite of that and this is true also in the back end where even though industry is the oil output a stabilized actually increase in the last few years myname their employment in the industry is off of its peak and that presents challenges for how you think about the future development particularly you think about population projections I just kind of wonder how you think about the role of continued technological development in these fields and the long-term growth prospects well go ahead and take a stab at it yeah the you know we did lose a lot of jobs in the old patch 1 races cracks and crashed in 2014 about 15,000 and we would have thought that we would have seen some really terrible negative repercussions for losing 15,000 but what had happened is that the people that held those jobs just pack up their RVs moved out of their crew camps and went back home so well we did have a little action you know we didn't have negative repercussions and I think what we've seen is a stabilization we'll continue to see some efficiencies but I don't think I'm going to see those kinds of big contractions in terms of labor for starters we've got pipelines and without targeting everything anymore so I think what we saw in the past in terms of losing that many jobs and that short period of time was just a function of the one time anomaly where you had something that just went boom and then the bracelet forced everything to come back into place and I think that we'll see continued job increases out there despite technician sees maybe in the drilling side of it because long term for every thing that he needed cool people for every well drill so as we add wells we'll need to add that that workforce that will that will do the maintenance long term well in in the U P I think the mining industry is really adapting to the declining population so they are putting more technology not only because of the declining population yes that's one factor but also because they are being required to do more than just the traditional mining they have to really use technology to show that they are now going to it there what I have many more impacts in finance and so one when you look in this is the favor from yes I was advertising about going to Montana if you want to really see the stay a lot the arts of mining you need to come and visit new coal mining it's really state-of-the-art and so they they have to show to a state that they're not going to impact they and so they are bringing in a lot of Technology hiring very few people but really knowledgeable people and that being paid a lot and producing more so including productivity hey Nancy yes you said that you state your populations getting more diverse what's the driving force behind that is a low cost of living is it something else everyone just say I take a deep dive into it but I think we're just basically see we're seeing in migration because we're largely still have a pretty healthy economy so we've got people that are coming in from other places that are more diverse that that are coming into taking jobs we're also seeing increasing population in our in our Native American populations so I think it's just simply a function of that despite the fact we've got kind of a tale of two states we still have a pretty healthy economy in North Dakota right now we've got some fiscal issues but you know we've got more jobs we've got you so I think that's what's driving it right there Nancy has your neighbor to the south we felt some secondary effects of you guys's food so I guess the question I would have if there's any major price shock you know in oil would you expect that you would have a boom again or do you think with the infrastructure in place well I think if we see prices go up yeah you'll see exploration expand pass beyond that that pork producing area because if it's productive you're gonna pull it out and it's just about sure thing when you put a hole in the ground that they're going to get something out in terms of seeing that kind of boom again I don't think we're gonna see that again when when this all transpired you have to remember that that wasn't a part of the state that had been declining for decades I mean there was there were no roads there were no schools or no houses there was no anything so then when you have this huge influx yeah it just explodes and I think there's so much of that that's in place now we've got bypasses in Williston and Watford City and we've got you know refining capacity we've got homes and build so I don't know I don't think we're going to see a repeat in that that's a that's a one-time deal that that you know was kind of a perfect storm in my opinion so when Leo was up there it made me think you know we haven't heard anything today about hemp and cannabis so wondering you know how do you think that will affect the Michigan even in the U P and also just hemp production in general in this region and discussion going on about how they could not regulate it so he hasn't really actually you know I teach a course in public policy and program evaluation Michigan State and one of the projects I want to give to the students is evaluates the impact of that on different things of Michigan so maybe you know ask me the same question in some of the records I actually thought you might be prepared to ask about industrial hemp as as an agricultural product which I know is of interest in North Dakota just not familiar words that and that's I didn't do my homework on that question so okay do any other questions for a book there's one here at mark that said I I live in northwestern Minnesota and question for Leo we visit you be quite often snowmobiling motorcycling it's a great recreation area I'm wondering if the state could focus a little bit more on recreational development to help employment in that area because it's a wonderful place to visit yes and you know maybe when we go to we may focus on tourism because tourism is a human industry and in all seasons so they are able to switch from a summer creation activity to winter the thing is whe
you look at the tourism industry is greatly affected on what it depends on what is happening in there or finestra when the jobs are down in the opinions and people are not going up you know people from Minnesota and Wisconsin quote they're like yeah many Michiganders from the road and it'll go there I will ther every maybe through four or five times a year and so when the jobs are bad in a row a peninsula here takes the tourism but that's something that we can talk about the shameless plug for tourism in North I think we have time for one more question Alan Thomas from university Minnesota dr. guma two questions if I might I see some parallels between northern Minnesota mining and in Michigan the Upper Peninsula there's been a decline in employment it's tougher economic times is the state of Michigan developed any specific programs to help or encourage money and don't missile again it's it's policies but mine is is an interesting industry because it affects the environment and there are many groups not that really don't like it and so if you look at the approval of new coal mining which we know is very important in promoting energy varies right so it's something that the 3d to be three really wanted to see happening but it took a long time to approve because it really has a big impact on environment and this new groups are really making sure that if if it's approved it has minimal impact development so it's not just the state policy it's all this feed these groups that that get that and I think it's a good thing that yes it's employing fewer people but we see that it's paying more and it's really making sure that the the minds are really state-of-the-art thank you both for presentations and we're going to turn it over to my colleague Ron words to start our second panel but if we could just thank them really quick [Applause]
