Prairie Business August 2012

August 2012

Progressive Partnerships More businesses forming research and development collaborations with colleges, universities

pg. 24

ALSO Tech School Trends Two-year schools making accommodations to meet workforce needs

pg. 28

Oil Boom Origin Hydraulic fracturing, horizontal drilling key to Oil Patch success

pg. 32 www.prairiebizmag.com

Photo courtesy of Great River Energy

North Dakota. Doing Business Better.

Great River Energy chose North Dakota as the site of three power plants for two primary reasons: the state’s ample energy sources and its business-friendly environment. This has helped Great River Energy generate and transmit reliable, competitive and environmentally friendly electricity over four decades. Learn how the North Dakota Department of Commerce and companies in the state are doing business better at www.NDBusiness.com

|INSIDE| AUGUST ISSUE 2012 VOL 13 ISSUE 8

FEATURES

DEPARTMENTS 6 Editor’s Note

BY ALAN VAN ORMER

Research and Development bring private companies, universities together 8 Business Advice

BY MATTHEW D. MOHR

Looking for smart employees who want to work 10 Finance

BY DAN HANNAHER

SBA launches renewed, simplified loan products 12 Research & Technology

BY BRUCE RAFERT

Public, private partnerships tied to business success 14 Economic Development

24

BY PAT COSTELLO

HIGHER EDUCATION

GOED renews focus on international markets

Meeting of the Minds Research and development partnerships between private companies and universities benefit both

16 Prairie News 20 Prairie People

28

WORKFORCE DEVELOPMENT

Tracking the Job Market Ag, energy, health care, social media marketing and welding popular areas of study at tech schools

22 Business Development Marketing plan showcasing Grand Forks 34 Red River Valley Red River Valley in the‘cloud’

32

TECHNOLOGY

Game-Changing Technology Hydraulic fracturing and horizontal drilling driving profits in the Oil Patch

36 South Dakota Avera plans to expand 38 Western North Dakota Housing/business project planned in western N.D. 40 Energy 46 Business to Business

On the Cover Aditi Kondhia, a graduate student in the Applied Crop Genetics and Genomics laboratory and in the Winter Wheat Breeding Program (or SDSU Wheat Group) at SDSU, harvest seed from a wheat population developed to study the genetics of resistance to orange wheat blossom midge in wheat.

PHOTO: ALAN VAN ORMER

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Prairie Business Magazine August 2012

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Next Month In September's transportation issue, Prairie Business will offer an update on the expanding air travel and railway infrastructure throughout the region, including new airline carrier services in Williston, airport expansions throughout the region and newly built rail amenities to accommodate increased demands from multiple industrial sectors. The issue will also include an examination of plans to expand Dickinson, N.D., as a result of booming oil production, and how lessons learned from past growth cycles will influence the latest build-out.

|EDITOR’S NOTE|

R&D brings private companies, universities together t’s that time of year when Prairie Business magazine discusses what is happening in the higher education environment. This month’s cover story is about how companies are utilizing colleges and universities to help with their research needs.

Using higher education institutions such as North Dakota State University in Fargo, the University of North Dakota in Grand Forks and South Dakota State University in Brookings, is becoming common for companies that are looking for faculty and staff to help bring their products to commercialization.

It is occurring across the nation, as well. Dwaine Chapel, executive director of the SDSU Innovation Campus, attended a national bioconference in Boston recently. During that conference, Chapel learned that 39 percent of companies will be merging and doing research together, while 41 percent were turning toward university relationships and 20 percent were still doing their own research and development.

Our region is seeing that growth. For example, the South Dakota Board of Regents has been keeping track of research awards since 2000. In 2002, there were 920 awards submitted, 702 awarded for more than $172 million. In 2011, the latest data gathered as of July 6, there were more than 1,100 awards submitted, 772 awarded for more than $426 million. The total research expenditures from grants and contracts in 2007 were more than $74 million. In 2011, that number jumped to more than $124 million.

At NDSU, the campus has been seeing a high volume of companies involved with research and technology for at least a decade.

In the past six years, NDSU has developed more than 330 research contracts with the private sector and more than 1,800 federal contracts. In addition, there are significant numbers of students involved in some type of research with companies on campus. The school has had or has 35 private sector research partners. In addition, NDSU ranks in the top 108 universities in the nation with high research activity, according to Carnegie Commission on Higher Education.

And the companies are benefitting. Many will tell you that the reason they are choosing a region or a community is because of the expertise and knowledge that are available at universities in the region. It provides them an opportunity to float ideas by faculty and staff, work with universities to improve a product, use the research expertise and hire quality graduates and use the technology and equipment available on campus to test those products.

As you can tell, it is working. Now, the challenge is to continue this success with the challenges that lie ahead in the future.

I

ALAN VAN ORMER Editor avanormer@prairiebizmag.com

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An SBA Award Winning Publication

MIKE JACOBS, Publisher ALANVAN ORMER, Editor TINA FETSCH, Production Manager BETH BOHLMAN, Circulation Manager JEN BRAATEN, Marketing Manager JOE GREENWOOD, Multi-Media Consultant KRISWOLFF, Layout Design, Ad Design Sales Director:

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BRAD BOYD - western ND/western SD 800.641.0683 bboyd@prairiebizmag.com SHELLY LARSON - eastern ND/western MN 701.212.1026 slarson@prairiebizmag.com Editor: ALAN VAN ORMER 701.371.9578 avanormer@prairiebizmag.com Editorial Advisors: Dwaine Chapel, Executive Director, South Dakota State University Innovation Campus; Bruce Gjovig, Director, Center for Innovation; Lisa Gulland-Nelson, Communications Coordinator, Greater Fargo Moorhead EDC; Tonya Joe (T.J.) Hansen, Assistant Professor of Economics, Minnesota State University Moorhead; Dusty Johnson, Chief of Staff for South Dakota Gov. Dennis Daugaardâ&#x20AC;&#x2122;s office; Brekka Kramer, General Manager of Odney; Matthew Mohr, President/CEO, Dacotah Paper Company; Nancy Straw, President, West Central Initiative Prairie Business magazine is published monthly by the Grand Forks Herald and Forum Communications Company with offices at 375 2nd Avenue North, Grand Forks, ND 58203.

Qualifying subscriptions are available free of charge. Back issue quantities are limited and subject to availability ($2/copy prepaid). The opinions of writers featured in Prairie Business are their own. Unsolicited manuscripts, photographs, artwork are encouraged but will not be returned without a self-addressed, stamped envelope.

Subscriptions Free subscriptions are available online to qualified requestors at www.prairiebizmag.com Address corrections Prairie Business magazine PO Box 6008 Grand Forks, ND 58206-6008 Beth Bohlman: bbohlman@prairiebizmag.com Online www.prairiebizmag.com

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|BUSINESS ADVICE|

Looking for smart employees who want to work

BY MATTHEW D. MOHR n the spring we conduct graduation ceremonies for our students who complete a level of their formal education.

Graduation is a milestone and a stepping stone for a future career. In the fall, our schools are filled with the excitement of new students seeking bright futures. The better educated are usually rewarded through life with larger incomes and what are considered better jobs and lifelong careers.

Unfortunately, our strong reliance on formal education has led many to believe a degree is what is needed to command an income regardless of what the education may have entailed. What one knows (education) does matter, but it is what one does (produces) with that knowledge that provides economic gain.

A large part of why Midwesterners are valued as employees is because of their strong work ethic. In addition to the willingness to work, we have also accelerated our general level of education. Midwesterners are viewed as both smart and hard working. Although one person

I

may know more than another; pay is based on what is produced.

A person can be the most knowledgeable in the world about the color of eyes in fish, but unless the knowledge is worthwhile in raising, catching and marketing those fish, the knowledge is worthless. If a person uses their fish eye knowledge to raise better, more valued fish or create better fishing lures, then a good income can be earned. Pure knowledge of fish eye colorization is of little value.

Although someone may know more about something than someone else, smart employers pay for the use of that knowledge to produce bigger, better results.

When looking for employees, look for those who are smart and want to work. PB Matthew D. Mohr CEO, Dacotah Paper Co. mmohr@dacotahpaper.com

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Prairie Business Magazine August 2012

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|FINANCE|

SBA launches renewed, simplified loan products

BY DAN HANNAHER

ur district offices located in the high plains region are all committed to one common goal: market Small Business Administration loan products to as many urban and rural lenders and small businesses as possible. We find that once the benefits of working with guaranteed loans are fully understood, lenders often jump on the SBA bandwagon.

At SBA, we have created loan products in response to grassroots private and public sector input. In particular, we exchange ideas with banks, credit unions, certified developmen companies, chambers and various lender associations daily, resulting in collaborative products and services demanded by small business.

The lesson we learned over the last couple of years: keep it simple and in line with what the lending community knows works best for their customers.

One of our most popular lending programs in the region is SBAExpress. Providing a 50 percent guarantee, it gives small business borrowers an accelerated turnaround time for SBA’s review. You will receive a response to your application within 36 hours. In addition, lower interest rates are often available when banks underwrite through an Express program. For this fiscal year, as of June 15, SBA has guaranteed the following: · 85 express loans valued at $6.58 million in Montana · 71 express loans valued at $6.34 million in North Dakota · 39 express loans valued at $2.98 million in South Dakota · 29 express loans valued at $2.37 million in Wyoming Heather Knutson, loan officer for Vision Bank in Fargo, N.D., says SBAExpress is an easy and simple loan program because it can be used with the bank’s own underwriting documents. Vision Bank has processed loans ranging from $3,000 to $350,000; many of them start-ups.

Other lenders have said that SBAExpress increases

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Prairie Business Magazine August 2012

the flow of capital in rural communities because the guarantee mitigates risk.

Myron Aune, business service manager of Capital Credit Union in Bismarck, N.D., says SBAExpress is a good fit because it is quick, convenient and allows the credit union to meet the needs of small businesses and manage the risk to the credit union. The program also plays a pivotal role in rural development because it increases the credit union’s ability to help local businesses, including start-ups.

It can be tough for small businesses to manage their cash flows. They’ve got payrolls to meet, inventory to buy and customers to please. A revolving line of credit could help small businesses manage their cash cycle.

This is why SBA re-engineered the Capital Lines (CAPLines) program based on advice from hundreds of different lenders around the country.

The CAPLines provides a path for these small businesses to finance contracts while avoiding highinterest rates through an SBA revolving line of credit.

We expect demand for this product to increase as more lenders are trained and grasp its benefits. Early fiscal 2012 numbers for CAPLines as of June 15: ■ Six CAPLines for $3.7 million in total loans in Montana ■ Three CAPLines for $4.15 million in total loans in North Dakota ■ Two CAPLines for $650,000 in total loans in Wyoming SBA is here to help, and we are constantly looking for ways to provide access and opportunity to the American small business owner. We encourage potential borrowers to connect to SBA Direct to find SBA lenders in your geographic area: www.sba.gov/sbadirect/. PB Dan Hannaher Regional Administrator, Region VIII, SBA 303-844-0505, Daniel.hannaher@sba.gov

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|TECHNOLOGY|

Public, private partnerships tied to business success

BY J. BRUCE RAFERT

ublic and private partnerships have provided a stalwart way to achieve innovation, while promoting economic development and business success. Research discoveries, coupled with determination in laboratories, classrooms, dorm rooms, basements and garages, have led to scientific advances and business innovations. Many people define public and private partnerships as those based on research collaborations. Research universities are in a position to increase the breadth of that definition.

In “A Stronger Nation” report by the Lumina Foundation, North Dakota ranks in the top 10 states in the U.S. for degree attainment at 44.95 percent as of 2010.

Nearly 45 percent of North Dakota’s working-age adults, age 25 to 64, hold at least an associate degree. Other states on the list include Massachusetts, New Hampshire, Connecticut, Minnesota, New Jersey, Maryland, New York and Vermont.

Statistics from Job Service North Dakota show more than 20,000 job openings here, many requiring advanced education or training. With public and private partnerships, there are critical ways we can contribute to the region’s economic success. These include research, training the future workforce and helping businesses’ current workforce prepare for ever-changing markets.

Public and private research collaborations promote economic development. The Centers of Excellence program established by the North Dakota Legislature provides a critical pathway that enables universities and private sector partners to promote technology-based economic development, increase global visibility of the region’s products and businesses, create new employment opportunities and bring university-based scientific discoveries to the private sector for commercialization.

For example, North Dakota State University’s Centers of Excellence and private sector partners engage in market-driven research and development ranging from

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Prairie Business Magazine August 2012

life sciences to advanced electronics to biopharmaceuticals and agricultural biotechnology. These centers have assisted local companies such as Appareo Systems LLC and Triton Systems-ND in accelerated, innovative product development. Others, such as Pedigree Technologies, have partnered on advanced electronics and software research and development. NDSU research partnerships with Caterpillar Inc. have assisted with laser-cladded coatings for mining and energy applications, while other projects have led to product technologies for SpaceAge Synthetics and for Technology Applications Group, to name a few.

Economic development isn’t restricted to research.

There are other critical roles that we should serve.

Colleges, universities and technical schools prepare the future workforce. By proactively meeting with companies, we are asking them what capabilities they need in future employees. These discussions fuel potential partnerships, help us better prepare current students for the job market and meet ever-changing needs of those already in the workforce, as businesses strive to compete globally. Landgrant institutions such as NDSU understand the multiplicity of these roles.

Public and private partnerships are a powerful tool to foster research and development, to access a trained workforce, and to help current workers keep pace to be better prepared for the future. We all may be in a position similar to the one mentioned by hockey legend, Wayne Gretzky, who said, “I skate to where the puck is going to be, not where it has been.” Building and expanding public and private partnerships already underway in North Dakota and elsewhere will result in compelling benefits for both business and education. Let’s work together to make it happen. PB Dr. J. Bruce Rafert Provost, North Dakota State University 701-231-7131, bruce.rafert@ndsu.edu

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|ECONOMIC DEVELOPMENT|

GOED renews focus on international markets

BY PAT COSTELLO

hough the world purchases more than $1 billion in goods from 400-plus South Dakota companies each year, we at the Governor’s Office of Economic Development think there is still room for growth. That is why the GOED has recently renewed its focus on international trade.

Exporting is just one area where we see potential.

It offers both the state and the businesses operating within our borders stability and additional markets — both of which are crucial to growth.

Exports accounted for 9 percent of South Dakota’s gross domestic product in 2009. When the economy was down, having external markets helped some companies bridge the gap when sales were ebbing domestically.

The state of South Dakota would like to see that number much larger than 9 percent. We believe it will get there.

So, just who is buying South Dakota products, and how can the state export more?

This spring, a delegation of officials and business leaders from South Dakota — including Gov. Dennis Daugaard, myself and Secretary of Agriculture Walt Bones — along with North Dakota Lt. Gov. Drew Wrigley and other trade officials, completed a trade mission to China. China is one of South Dakota’s primary focuses and one of the state’s top five export partners.

China, which has 1.2 billion people with a growing middle class that is demanding higher-quality protein, expressed an interest in South Dakota pork, making it one of the areas South Dakota could expand in. Additionally, South Dakota companies that accompanied the delegation were able to further their relationships, secure sales and gain contracts while we were there.

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Prairie Business Magazine August 2012

It was extremely beneficial to have Gov. Daugaard present. Having top leaders present plays a key role in making these connections, and speaks volumes about the state’s level of commitment. Trade missions have been done in the past without gubernatorial presence, but that presence makes for a more successful trip. The North Dakota Trade Office has really set an example of how a successful trade organization can make a difference by helping businesses reach new markets, and the state of South Dakota really appreciates its support.

However, taking all of South Dakota’s business leaders to China is neither practical nor feasible, so we are taking on additional initiatives at home.

This spring, in conjunction with the Governor’s Economic Development Conference, the GOED collaborated with the International Trade Center to host a workshop titled “Exporting 101,” which was open to South Dakota companies that wanted to learn about opportunities in exporting.

The International Trade Center, which was established in July 2011, is located in the U.S. Customs building in Sioux Falls.

The GOED has also designated one of its business development representatives to focus on the state’s international efforts and serve as a resource for companies looking to branch out.

Looking forward, we are striving to create additional partnerships and continue to offer more opportunities like events, workshops and trade missions.

These approaches exemplify the South Dakota spirit, which I believe will ultimately contribute to our state’s continued success. PB Pat Costello Commissioner S.D. Governor’s Office of Economic Development 605-773-3301, pat.costello@state.sd.us

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Prairie News

Industry News & Trends

Sanford Health Moorhead campus under construction Sanford Health Moorhead, Minn., campus is being built to expand medical services and provide the latest in health care design and technology.

The $13 million project will include pediatrics, women’s services, behavioral health, orthopedics, occupational medicine and outreach services for

N.D. hospitals receive grants to improve health care Garrison Memorial Hospital and Altru Health System will receive more than $380,000 in grants to expand health care services in rural communities. The Distance Learning and Telemedicine Program provided the funding.

Garrison Memorial Hospital in Garrison, N.D., received $119,833 to deliver telepharmacy services. Altru Health System, based in Grand Forks, N.D., was awarded a $266,900 grant to implement digital imaging into a telemedicine network between their clinics in five rural communities: Cavalier and Drayton in North Dakota; and Fertile, Red Lake Falls and Warroad in Minnesota.

BCBSND signs contract with Altru, Sanford Blue Cross Blue Shield of North Dakota has signed Total Cost of Care contracts with Altru Health System, Grand Forks, N.D., and Sanford Health, Fargo, N.D., and Sioux Falls, S.D. These contracts are part of an effort to reimburse medical facilities with an emphasis on quality of care rather than volume of services delivered, while improving care coordination and holding down member health care costs.

Pilot child care facility project started The North Dakota Board of University

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Prairie Business Magazine August 2012

Photo courtesy of Sanford Health

specialty care, a retail pharmacy and gift shop. This expansion means major growth for Sanford Moorhead; 16 physicians are expected to be added at the clinic with several more offering outreach services, more than tripling the current number.

and School Lands is allocating $500,000 for a pilot program to help communities in the state’s oil-producing counties establish more child care facilities.

Political subdivisions in child care deficient counties can apply for matching grants to establish a community-owned child care facility to be publicly operated or leased to nonprofit or forprofit operators. The funds can be used to purchase a modular child care facility, to expand an existing publicly owned child care facility or to build a new publicly owned facility.

St. Alexius, Linton Hospital reach agreement St. Alexius Medical Center in Bismarck, N.D., has entered into a management agreement with Linton Hospital in Linton, N.D. According to Spencer Larson, Linton Hospital board chair, ownership will remain with Linton Hospital. “We will continue to utilize our board of directors combined with the added resources and leadership of St. Alexius Medical Center to provide high-quality patient care to the people we serve.” St. Alexius will assist Linton Hospital with the placement of a chief executive officer and help with physician recruitment.

Onsharp expanding to Texas Onsharp, a web strategy, design and development company in Fargo, N.D., is opening an office

in Sugar Land, Texas, to provide services for a growing number of online marketing and development customers.

Houston’s pro-business culture and world class workforce and educational institutions is allowing Onsharp to become even stronger in product and service offerings to current and potential clients, according to Onsharp. The new office will allow Onsharp to continue expanding to provide customer experience for each client.

NISC named one of best places to work in IT National Information Solutions Cooperative, a provider of information technology products and services to utilities and telecommunications organizations, has been listed by IDG’s Computerworld magazine as one of the 100 best workplaces for IT professionals in the United States for the 10th time. This year, NISC is ranked 54th overall. Computerworld has recognized NISC as one of the best places to work in IT for 10 of the past 11 years.

MnSCU receives $3 million NSF grant The Minnesota State Colleges and Universities Manufacturing and Applied Engineering Center of Excellence have been awarded a National Science Foundation grant for nearly $3 million to educate and train manufac-

|PRAIRIE NEWS| turing technicians.

The MnSCU Manufacturing and Applied Engineering Advanced Technological Education Regional Center of Excellence is a partnership of 10 institutions led by Bemidji State University.

Partner institutions include Central Lakes College, Lake Superior College, Minneapolis Community and Technical College, Northland Community and Technical College, Northwest Technical College, Pine Technical College, Riverland Community College, Saint Paul College, and St. Cloud Technical and Community College.

Alerus launches mobile app Alerus Retirement Solutions, a division of Alerus Financial N.A., introduced a mobile app, available for both iPhone and Android devices.

With the Alerus Retirement Solutions mobile application, retirement plan participants receive fast and secure inquiry access to their account information. The app allows Alerus Retirement Solutions to build a closer relationship with the participants on a day-to-day basis. Participants can view account activity, current balance by investment and source, rate of return and recent contribution information.

N.D. tops Enterprising States rankings The U.S. Chamber of Commerce’s 2012 Enterprising States report ranks North Dakota as the nation’s top performing economy along key growth measures for jobs, productivity and income.

Enterprising States: Policies that Produce assesses the economic performance of the 50 states and polices in five key areas — entrepreneurship and innovation, infrastructure, talent pipeline, exports and international trade, and taxes and regulation. North Dakota ranked No. 1 in long-term growth, short-term job growth, gross state product growth, per capita income growth, science, technology, engineering and mathematics job growth and business closure rate.

Dickinson hotels being planned Roers Development is planning to build four hotels west of Dickinson, N.D., after approval from the Dickinson Planning and Zoning Commission. The hotels will have four stories and will be constructed on 210 acres of land north of Interstate 94.

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|PRAIRIE NEWS| Sanford receives $12 million grant The Centers for Medicare/Medicaid (CMS) has awarded Sanford Health a $12 million Health Care Innovation grant.

CMS grants are exclusively given to applicants who will implement the most compelling new ideas to deliver better health, improved care and lower costs to people enrolled in Medicare, Medicaid and Children’s Health Insurance Program, particularly those with the highest health care needs.

Sanford Health is receiving this award to transform health care delivery through the full integration of primary and behavioral health care in South Dakota, North Dakota and Minnesota.

Video Guidance, Connecting Point form strategic partnership Bloomington, Minn.-based Video Guidance, a visual communications company, has formed a strategic partnership with Watertown, S.D.-based Connecting Point Computer Center, which provides information technology solutions to businesses, schools and government agencies throughout North Dakota and South Dakota.

The partnership will help Video Guidance grow by increasing its sales presence in its current markets and expanding its geographic reach across North Dakota and South Dakota.

S.D. Arts Council awards grants The South Dakota Arts Council, an office of the South Dakota

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Prairie Business Magazine August 2012

Department of Tourism awarded nearly $1.2 million in fiscal year 2013 grants and special initiatives. The council provided funding for more than 225 artists, arts organizations, schools and art projects across the state.

Funds for Arts Council grants are provided by the National Endowment for the Arts and the state of South Dakota.

Community Foundation ranks in top 100 Sioux Falls Area Community Foundation has earned spots on two of three prestigious community foundation top 100 lists.

For 2011, the community foundation earned recognition as one of the most active community foundations in the nation in terms of grant making and contributions received.

The lists were released by CF Insights, which compiles and distributes data and information on finances, operations and best practices for community foundations nationwide. CF Insights was established by the national Council on Foundations and FSG, a consulting firm that helps foundations accelerate their social impact.

State Bank & Trust wins workplace awards State Bank & Trust, headquartered in Fargo, N.D., has received two awards from Minnesota business publications.

State Bank & Trust was named the second most highly ranked large company among the “100 Best Companies to Work For” by Minnesota Business magazine, and was also recognized for the second straight year

|PRAIRIE NEWS| by the Minneapolis StarTribune, and was named to the top 10 of the “Top 100 Workplaces in Minnesota.”

Land board commits $25 million The Board of University and School Lands has committed an additional $24.8 million in grant funding to help counties, cities, school districts and other political subdivisions in the Oil Patch offset the impacts of rapid development. The state appropriated $135 million in Energy Impact funds for the 2011 to 2013 biennium and about $9.3 million remains to be allocated.

The funding will be used to support improvements in emergency services, to provide more housing for teachers, for upgrades to municipal water and sewer systems, street improvements, school infrastructure improvements and to address other impacts of rapid growth.

S.D. tax system ranks first The Small Business & Entrepreneurship Council ranked South Dakota the best tax system in their “Business Tax Index 2012.” The report, which analyzes the best tax systems in the nation for small businesses, start-ups and entrepreneurs on an annual basis, states that taxes matter in terms of a state’s competitiveness, economic growth and job creation.

South Dakota rated“best”in last year’s analysis also. The index ranks states on the costs of their tax systems based on 18 different tax measures.

Burlington, N.D., adding housing Two developments are being planned on 700 acres of recently annexed land in Burlington, N.D. One housing subdivision — Point of View Third Subdivision — is being created on 187 acres. The other — Highlands Ranch Subdivision project — is being built on 535 acres. Both are in the early stages and homes are slated to be completed in the spring of 2013. The two developments combined have the potential to more than quadruple the population of Burlington by adding approximately 5,000 residents to the current population of 1,100.

Minnesota exports have record first quarter Minnesota exports of agricultural, mining and manufactured products reached a first quarter record of $4.9 billion, up 2 percent from the same period a year ago, according to figures released by the Minnesota Department of Employment and Economic Development.

Manufacturing represented the largest share of state exports during the quarter, ringing up $4.5 billion in sales, also up 2 percent from a year ago. Asia was the state’s largest export region, accounting for 35 percent of all sales, followed by North America (33 percent) and the European Union (20 percent).

N.D. exports climb 35 percent in first quarter For the first time North Dakota exports have exceeded $1 billion in (continued on page 21)

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|PRAIRIE PEOPLE| Andreson joins Altru

Laura Andreson

Wendy Devier

Keeney new alumni director for U of Mary

Laura Andreson has joined Altru Health System’s obstetrics and gynecology department in Grand Forks, N.D. Andreson received a clinical laboratory science degree at the University of North Dakota and then earned her doctor of osteopathy degree from Des Moines University Osteopathic Medical Center in Des Moines, Iowa.

Paul Keeney has been named director of alumni at the University of Mary, America’s Leadership University, in Bismarck, N.D. Keeney was previously employed for five years with the Hazelton-Moffit-Braddock Public School in Hazelton, N.D., where he was a science instructor, secondary principal, assistant football coach (Linton-HMB), and HMB Public School athletic director.

Paul Keeney

Wells Fargo hires fiduciary advisory specialist

Sanford exec chosen for national leadership award

Wendy Devier has been named fiduciary advisory specialist and assistant vice president for Wells Fargo Private Bank in Fargo, N.D., Bismarck, N.D., and western North Dakota.

The previous seven years she worked for Bank of the West as a senior trust officer and assistant vice president.

H. Eugene Hoyme, chief academic officer for Sanford Health and president of Sanford Research, has received the 2012 Excellence Award from the National Organization on Fetal Alcohol Syndrome, joining the ranks of almost 40 past recipients that include Sen. John McCain and the late Sen. Ted Kennedy.

H. Eugene Hoyme

Doolittle named associate VP of research

James Doolittle

James Doolittle, with 32 years of experience in research, has been named associate vice president for research at South Dakota State University in Brookings.

Since 2004, Doolittle has served as director of the North-Central Sun Grant Center, where he annually managed a $57 million research portfolio on bioenergy with more than 75 subcontracts.

Strinden joins NEW TEC Matthew Strinden has been hired as executive director of North Eastern Work and Technical Education Center (NEW TEC) in Aberdeen, S.D. Strinden was assistant state superintendent with the N.D. Department of Public Instruction, where he coordinated school health, child nutrition and food distribution, management information systems and teacher and school effectiveness.

Matthew Strinden

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Prairie Business Magazine August 2012

Taketo Baba

Shoshone Richardson

Two join Altru’s physicians emergency medicine department Taketo Baba and Shoshone Richardson have joined Altru Health System’s emergency medicine department in Grand Forks, N.D. Baba earned his degree in medicine from Tohoku University School of Medicine in Miyagi, Japan. He completed a transitional internship at the U.S. Naval Hospital in Okinawa, Japan and completed his residency in emergency medicine at Orlando Health in Orlando, Fla. Richardson began her education at Arizona State University where she received a nursing degree. She earned a degree in medicine from The Ohio State University College of Medicine. Following that she completed her residency in emergency medicine at The Ohio State University Medical Center. Richardson is board certified in emergency medicine.

|PRAIRIE NEWS| (continued from page 19)

one quarter, according to the North Dakota Trade Office.

In the first quarter of 2012, exports increased 35 percent over the same January through March period of 2011. Since 2000, exports from North Dakota have increased more than 400 percent, from approximately $626 million in 2000 to more than $3.3 billion in 2011.

North Dakota exports grew in many of the state’s top destinations. Exports increased 56 percent to Canada, 120 percent to Australia, 330 percent to Russia, 69 percent to Venezuela and 120 percent to Kazakhstan.

the businessof energy

MBA–Energy Management

Medcenter One, Sanford Health merge Medcenter One and Sanford Health are stronger together. On July 2 they officially merged, and Sanford Health now features more than 1,200 physicians and 25,000 employees in seven states.

Sanford Health will invest $200 million over the next 10 years to enhance health care services in Bismarck-Mandan and throughout western North Dakota, including a new super clinic in Dickinson, the gateway to the region’s bustling oil fields.

The clinic will feature all the current services provided in Dickinson along with space for additional physicians, a walk-in clinic, an ambulatory surgery center and diagnostic services.

Medcenter One will operate under the Sanford Health name. Bismarck-Mandan will become the epicenter of the new western region of Sanford Health, joining Sioux Falls, S.D., and Fargo as a regional center for the vast network of clinics and hospitals covering approximately 200,000 square miles in seven states a geography larger than North and South Dakota combined.

The energy business is booming and needs leaders with the expertise and education to meet the challenges of a thriving, constantly changing industry. In addition to vital administration skills, the University of Mary MBA – Energy Management provides a solid background in industry-related: / .++1(2*"2% .2) &"2.2+'

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21

|BUSINESS DEVELOPMENT|

Marketing plan showcasing Grand Forks 125-acre business park among assets for western N.D. expansion needs

BY ALAN VAN ORMER Photo courtesy of JLG Architects

he first phase of a marketing plan is underway to showcase what Grand Forks, N.D., has to offer for companies looking to do business in the west, but expand east.

Community leaders have been discussing ways to increase Grand Forks’ exposure and, as the community developed its marketing plan, realized that one of the most exciting economic areas was western North Dakota, says Steve Burian, president of Advanced Engineering and Environmental Services (AE2S). “It was an opportunity to capture some of the economic impact, realizing that there was an overload and leaders were embracing help from North Dakota partners,” he says. “We wanted to be sensitive to western North Dakota’s needs.”

Klaus Thiessen, Grand Forks Region Economic Development Corp. president and

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Prairie Business Magazine August 2012

CEO, says it is imperative that it is understood that the region is supporting western North Dakota and helping take the pressure off.“If they are able to expand in western North Dakota that is great; if they are looking for other locations, we hope they will think Grand Forks,” he says.

While the first actual concerted marketing strategy started in May at the Williston Basin Petroleum Conference in Bismarck, N.D., the Grand Forks community has been part of an east meets west strategy for the past two years.

Twice, Grand Forks representatives have traveled to western North Dakota and once western North Dakota leaders met in Grand Forks to discuss opportunities to work together.

Grand Forks is along Highway 2, a major access route to Williston, N.D. The community is positioning itself to support expansions into

western North Dakota. A recently developed 125-acre business park with infrastructure provides immediate space for companies to build.

Marketing campaign The petroleum conference launched the campaign to raise Grand Forks’ profile. The community — public and private entities — raised $130,000 for the marketing campaign, which is expected to run for at least two years.

This campaign includes placing ads in specific oil industry trade publications, talking to direct contacts made at the conference, a mix of public relations, news coverage, radio and billboards.

There are more than 70 Grand Forks companies doing business out west.

AE2S has had an office in Williston since

|BUSINESS DEVELOPMENT| 1998 and has been able to develop a local presence. “Engineering services is unusual because it takes long-standing relationships,” Burian says. “It takes effort, work and nurturing to be successful.”

He adds that the need for goods and services in western North Dakota are so significant that it can’t be met by that region alone.

JLG Architects has been doing business in western North Dakota since 2002. In 2012, Minot, N.D.-based Davison Larson Associates merged with JLG because of the firm’s expertise in western North Dakota.

Lonnie Laffen, who co-founded JLG, says the campaign makes sense. “There just aren’t enough people out there to get the job done,” he says. “I like the idea of keeping as much in North Dakota as we can. We can service the west side as it grows. Our strategy is to grow permanently into that area. The state needs the help. The connection between east and west is becoming very close.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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|HIGHER EDUCATION |

Meeting of the Minds Research and development partnerships between private companies and universities benefit both

BY ALAN VAN ORMER

South Dakota State University in Brookings has increased its research capabilities in ag technology, ag biotechnology, renewable energy, pharmaceutical sciences and electrical engineering. PHOTO: ALAN VAN ORMER

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Prairie Business Magazine August 2012

hen Triton Systems Inc. was looking to develop and commercialize its surface treatment products, the company discovered that North Dakota State University in Fargo had expertise in the surface engineering technology that it was creating.

Triton, headquartered in Chelmsford, Mass., is a material-based product development company that takes ideas from a laboratory and moves those ideas to the commercial world.

The company conducts a majority of its business with government entities. For example, Triton is currently working with the military on a bed net to protect soldiers from insects while in the field.

“With its extensive testing and characterization capability, NDSU has been a logical partner for Triton as we develop and evaluate various products. Additionally, NDSU has provided networking opportunities in the Red River Valley Research Corridor,” says David Zupi, director of operations for Triton in the NDSU Research and Technology Park.“Working with a university helps us get out of our comfort zone and hopefully get exposure and experience by bringing in different skill sets and perspectives on the varied surface treatment that we are working on.”

Kevin Cooper, business instructor at the University of Minnesota Crookston and director of its Center for Rural Entrepreneurial Studies, says that companies increasingly look to universities for research assistance. “Traditionally universities tended to be somewhat removed from this type of engagement with the private sector. Now there is a more proactive orientation toward collaboration with research-based private firms,” he says.“For the university it is a source of revenue at a time when federal research funding has reached a plateau, providing new opportunities for research personnel and the possibility of jobs for college graduates. For the business, it helps accelerate their research agenda by gaining access to university experts in a particular field, often less expensively than if they did it on their own.”

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|HIGHER EDUCATION| Philip Boudjouk, vice president for research, creative activities and technology transfer at NDSU, says companies are cutting back on research in the United States.“Companies often look for short-term results,” he says.

“Long-term initiatives are more difficult to invest in.”

Phyllis Johnson, vice president for research and economic development at the University of North Dakota in Grand Forks, says companies come to UND because of the university and the thought that they can hire graduates who have the qualifications they are looking for. “We have cooperative relationships going on between companies and faculty that involve students,” she says. “Then there are situations where we’re working with other folks to further develop technology that was created at the university.

All those pieces are important and seem to be happening.”

Dwaine Chapel, executive director of the South Dakota State University Innovation Campus in Brookings, agrees that more companies interested in doing research and development are moving toward universities. He recently attended a national bioconference in Boston. During that conference, Chapel learned that 39 percent of companies will be merging and doing research together, while 41 percent were turning toward university relationships and 20 percent were still doing their own research and development.

Chapel says he is not sure what the percentage was five years ago, but believes that companies moving toward working with higher education institutions have increased. “The higher portion will continue to develop university relationships because the higher portion, in my opinion, is going

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|HIGHER EDUCATION | forward because of the university’s young talent and knowledge.”

Working relationships Zupi of Triton is one of the first to say that being located next to a higher education facility is working. In August, the company will have been located in the NDSU research park for a year. During that time frame, Triton has added two NDSU graduates and is working with several products in a 4,000square-foot surface treatment facility.

“NDSU has very capable testing labs,” Zupi says. “We work with NDSU scientists very closely because we want an objective look at our products.”

One of the main product lines Triton is focused on commercializing at its Fargo facility is its Invexus line of surface treatment for textiles. Invexus technology creates engineered functional surfaces without changing bulk properties or general characteristic of substrates.

Avianax LLC, which is in the REAC 1 building on the UND campus, is another company that has found being located near a university a blessing when developing its products. Avianax is researching and developing antibodies for treatment of viral and bacterial diseases and possibly cancer.

Avianax has been doing research since 2006 and currently has four employees, along with the use of six other UND researchers.

“It has become a cooperative venture,” says Richard Glynn, chief operating officer of Avianax.“Avianax is trying to make this into commercial sales in animal and human markets.”

Avianax is collaborating with the UND Medical School and receiving advice and guidance on how to carry through with this project, Glynn says.“It is becoming a trend to go to universities to develop these types of products because of the facilities that are available,” he says. “The key components are labs and people that understand the process. In addition, there are knowledgeable research staff and access to a wealth of information and trained people.”

Glynn adds it is important to work with universities because biotech companies are different than other types of companies and take specialized knowledge and facilities to move forward; something that universities have on campus.

Partnering is key Johnson says a big reason why companies are looking at universities is because they are places where companies can find a lot of smart people.“When you partner with a university you find faculty members that have knowledge or skills to help you solve a particular problem or move your business forward,” she says. “Universities also have sophisticated equipment and people that operate that equipment and interpret the results. Some companies couldn’t buy that type of equipment because it wouldn’t be used enough.”

At NDSU, the campus has been seeing a high volume of companies involved with research and technology for at least a decade. In the last six years, NDSU has developed more than 330 research contracts with the private sector and more than 1,800 federal contracts. In addition, there are significant numbers of students involved in some type of research with companies on campus.

Boudjouk says that the major benefit for universities working with private companies in research is that students have an opportunity to get a degree and discipline plus experience with the commercial aspect of the business during courses they are taking at the school.

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Prairie Business Magazine August 2012

“Twenty years ago the research portfolio was less than one-half of what it is now,” Boudjouk says. “Companies are on a growth path in North Dakota and NDSU can contribute to that success. The state has become a more attractive place for companies. NDSU’s scientific capabilities, its technology, faculty and students are key partners in that success. NDSU is among the top 108 universities in the country with very high research activity, as determined by the Carnegie Commission on Higher Education.”

In Brookings, SDSU is seeing an increase in research also with a more than 30 percent increase in research expenditures since 2005. In 2005, SDSU had $17 million in expenditures in research. In 2011, that increased to $70 million.

SDSU has increased its research capabilities in ag technology, ag biotechnology, renewable energy, pharmaceutical sciences and electrical engineering. SDSU currently works with 70 to 100 companies on various researches.

“South Dakota has had the highest research rate increase in the country for the last several years,” says Kevin Kephart, vice president for research at SDSU. “A lot of it has to do with our willingness to work and connect with these organizations.”

Kephart says organizations such as the South Dakota Wheat Commission help to fund the university’s research efforts.

Future challenges Funding, facilities, competition and maintaining a skilled workforce are perennial challenges for businesses. They are areas in which universities and industry can partner for mutual benefit, Boudjouk says.

NDSU is adding 35,000 square feet of scientific labs to an existing Research 1 building in 2013 to assist in bringing university research discoveries to the commercial sector.

The National Institute for Standards and Technology and a North Dakota Centers of Excellence enhancement grant are funding the additional labs. Research in the addition will augment activities in seven existing public and private company buildings in the NDSU Research and Technology Park, which opened in 2011. Park tenants directly and indirectly generate an estimated $10.9 million per year for state and local governments.

SDSU is infrastructure restricted, but is working to increase that for research capabilities. The campus is converting some of its labs for research space, updated its agricultural halls, developed a new dairy plant for research, and new chemistry and pharmaceutical labs and a new building and labs for electrical engineering. In the past three to four years, SDSU has spent nearly to $100 million in investments for research.

Universities have also had to educate faculty in learning how to protect intellectual property. “In the past people would have an idea or invention and start working with a private company without any written agreement. This opens you up to the possibility that the company would take the idea, make a profit and the university wouldn’t get anything from it,” Johnson says. “Now our faculty has a better idea of what they do in those situations — come to the tech transfer office and make sure there is an agreement between company and university. This protects both the companies’ confidential info and any contributions the university makes.” PB Alan Van Ormer

Advertorial

|WORKFORCE DEVELOPMENT|

Tracking the Job Market Ag, energy, health care, social media marketing and welding popular areas of study at tech schools

BY ALAN VAN ORMER

Lake Area Technical Institute in Watertown, S.D., added a commodity merchandising degree in response to a growing demand for people who can understand commodity markets.

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Prairie Business Magazine August 2012

ake Area Technical Institute in Watertown, S.D., has seen enrollment increase more than 50 percent during the past seven years and more than 1,700 students are now taking various two-year courses.

“People are finally figuring it out,” says Debra Shephard, president of Lake Area Technical Institute. “Everybody had a friend or relative that left and pursued a degree (at a college or university) and didn’t finish that degree but see people going to a technical school and coming out after two years and getting good jobs. People are starting to understand that this is not a secondrate choice.”

One of Lake Area Tech’s foundation programs of study is agriculture. It

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has become one of the largest in student population. There are eight different options and more than 200 students are enrolled. In the fall of 2013, a $10 million agriculture center will be completed to accommodate the growth and to house three other programs.

“The ag industry is booming,” Shephard says. “There are excellent jobs and there is a demand for the workers.

Seven or eight years ago there weren’t as many ag opportunities and students were concerned about entering that field. Now it is exciting to see students able to sustain that industry.”

Lake Area Tech continues to diversify its ag program. For example, because of a demand for employees in the agricultural commodities area, Lake

Area Tech responded by adding a commodity merchandising degree. “The ag industry needs people that can understand the markets and can buy and sell,” says LuAnn Strait, director of institutional relations.

Other growing programs At Bismarck State College in Bismarck, N.D., one of the fastest growing programs is the school’s bachelor of applied science (BAS) in energy management. The program is geared toward students with an associate degree in an energy technical field who want to advance in their career to become a manager or supervisor. BSC’s two-year associate degree program allows graduates to work in a power plant, refinery, ethanol plant or other similar facilities.

“The BAS program was added in 2008 because of workforce needs in the energy industry,” says Kari Knudson, vice president, National Energy Center of Excellence at BSC. In addition, BSC added a petroleum production technology program in 2011 in response to the growing needs of oil and gas companies in western North Dakota and began a petroleum engineering technology program in January 2012.

“The new petroleum programs will prepare students to work for an oil company, service company or others associated with oil and gas development,” Knudson says. “We anticipate strong demand for our energy programs. Many people are starting to retire and as the economy strengthens and the stock market does well, there will be a growing need for entry-level and mid-level positions in energy companies.”

Western Dakota Tech in Rapid City, S.D., is starting a social media marketing program in the fall. It is expected that as many as 25 students will be in that first class.

“We’ve done research that shows social media marketing is one of the fastest growing career fields in the country,” says Steve Buchholz, marketing director for Western Dakota Tech. “As businesses start to expand their marketing efforts, the web is where it’s at. Businesses are seeking trained experts to help them take advantage of those marketing opportunities.”

Buchholz adds there is a need for welltrained people for social media marketing.

“The new generation is growing up as digi-

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|WORKFORCE DEVELOPMENT| tal natives,” he says. “It’s exciting for students to think about careers using YouTube and Facebook.”

Western Dakota Tech offers 25 different one- and two-year programs with major emphasis on health care, transportation, energy, general education and technology. More than 1,000 students take courses at the school.

Health care continues to grow in popularity. The school offers 10 programs in health care. The largest is practical nursing where 54 students take courses that allow them to assist registered nurses and physicians in hospitals and clinics.

Welding is also popular. The number of welding jobs correlates with work in the coal fields of Wyoming, oil fields of North Dakota and industry growth in western South Dakota. There are 45 students in the program this year.

“Students see that and are seeking training so they are qualified for those jobs,” Buchholz says.

Keeping up with demand Like most two-year schools, Lake Area Tech is always scanning and tracking business trends. They have developed advisory councils for all their programs to help keep up with the trends. Businesses also will request programs be developed to meet workforce needs.

Two-year schools also have learned to re-tool programs, as industry and business evolve. At Lake Area Tech, diesel technology has always been one of the stronger programs size-wise.

This fall there will be 145 students enrolled, overfilling their new diesel lab, which opened in January 2010. When the ag center is completed, diesel will gain additional lab space so the program can continue to expand.

“That program is popular because people see the opportunities in that industry,” Shephard says. “It is interesting how savvy students are becoming. They are coming with a plan, doing their homework and know-

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Prairie Business Magazine August 2012

ing what kind of job they want. They are seeking out schools that are emphasizing the hands-on skills.”

Technical schools are also focused on training and are driven by the marketplace.

Partnerships are essential and two-way communication is important. In addition, high school counselors and parents are more aware of the opportunities that two-year schools can provide.

In South Dakota, technical schools adhere to a policy of no unnecessary duplication of instructional programs. Programs with a high need for graduates, such as diesel technology, are offered at more than one of the tech institutes. Other programs might be unique to only one location.

Also, a majority of the students going to a technical school are from the region where the school is located and many remain in the state after graduation. For instance, Lake Area Technical Institute draws 90 percent of its students from within a 100-mile radius and 91 percent of its

graduates stay in South Dakota.

Government downsizing and decreased budgets are a major concern for two-year schools. Up-to-date equipment acquisitions are the biggest challenge to staying current.

For example, at Lake Area Tech, 10 years ago the automotive technology program was able to purchase a car for training purposes annually and the auto manufacturers frequently donated vehicles for training purposes, but that doesn’t happen anymore.

The current equipment budget for 2012 to 2013 at Lake Area Tech is $232,000.

“That doesn’t even touch it for what we need,” Shephard says. “Some partners have stepped up to help, which is invaluable to us, and we need them to continue to step up if we are going to create the workforce South Dakota needs.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

|TECHNOLOGY|

Game-Changing Technology Hydraulic fracturing and horizontal drilling driving profits in the Oil Patch

BY ALAN VAN ORMER

Halliburton performs a hydraulic fracturing operation in the Bakken formation of North Dakota.

PHOTO: COURTESY OF HALLIBURTON

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Prairie Business Magazine August 2012

he combination of hydraulic fracturing and horizontal drilling has opened up the Bakken oil field in western North Dakota in ways that couldn’t even be imagined a dozen years ago.

Lynn Helms, director of the North Dakota Department of Mineral Resources, says it all has to do with the geology. “Rocks we are producing oil from cannot produce at economic rates without hydraulic fracturing,” he says.

Susie McMichael, spokesperson for Halliburton, says hydraulic fracturing is a game-changer in oil and natural gas production. “It, along with horizontal drilling, is driving the oil boom,” she says.

“Without the combined technologies, companies would not be able to economically produce the oil and natural gas that is providing millions of well-paying jobs, billions in state and federal revenue and a real path to a more affordable energy future.”

Halliburton performed the first experimental fracturing operation for Stanolind in 1947, followed by the first commercial fracturing operating in 1949,

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McMichael says.

Today, Halliburton performs fracturing treatments in both the Bakken and Three Forks formations throughout the Williston Basin in northwest North Dakota and northeast Montana.

Technology increasing production Before 1990, when oil companies drilled vertical wells and attempted hydraulic fracturing, those initial wells produced 35 barrels of oil per day and one out of 10 were making money. In the 1990s, horizontal drilling became available and the wells drilled during that time frame produced approximately 150 barrels of oil a day and one out of four wells were making money.

Then about a dozen years later, oil companies found out how to marry hydraulic fracturing and horizontal drilling, Helms says. That increased the volume to 1,000 barrels per day and three out of four wells were economically viable.

“That means you can really drill a

|TECHNOLOGY|

lot of wells because three out of four are making money,” he says. “That technology evolution took us from 35 barrels of oil per day to 1,000 barrels of oil per day and less than one well out of 10 making a profit to three out of four wells making a profit.”

McMichael says the oil and gas industry has long known that shale formations contain vast amounts of oil and natural gas, but it was extremely difficult and expensive to extract it using traditional drilling and production methods, due to the low relative permeability of the reservoir rock.

“When fracturing and horizontal drilling technologies were first combined in the Barnett shale in North Texas in the mid-1980s, it opened up drilling and production in many unconventional reservoirs, including the Bakken,” she says.

Nearly nine out of 10 onshore wells — natural gas and oil — require fracture stimulation to remain or become viable. Hydraulic fracking uses water and sand and thousands of pounds of pressure, along with additives to create tiny fissures in the rock. The flow of the water helps the sand hold the cracks open and creates a passageway in which natural gas and oil can travel to the wellbore where it is captured. It takes on average three to 10 days.

program, students study the mechanical properties of rocks, learn the strength of rocks and how the rocks behave under different forces that are applied to them. The study also includes opening up pores in the rocks to let the oil flow out.

In the petroleum engineering program, students can receive a bachelor’s degree in petroleum engineering, a master’s degree in geological engineering and a doctoral degree in engineering with petroleum tracks.

The bachelor’s degree program started in 2010 and there were less than 10 people participating. The first graduates are expected in the spring of 2013. Today, there are almost 100 students taking courses in the program.

“After graduation they will have the skills to work in jobs ranging from exploration to refining,” Benson says. “They can work with geologists to help oil companies understand the rock formation and to optimize drilling technology, become part of a hydraulic fracturing crew to understand and enhance the fracturing of the formation, completions and the produc-

tion side and can also work to move products to the market.”

Benson says the industry is supporting UND. “They are giving us advice on what the needs for students are and helping us with curriculum development and funding for faculty and equipment needs.”

Helms says the UND engineering program is the future of Bakken production. “A 1 percent increase in recovery factor will yield 3 billion barrels of oil,” he says.“Our hope is that the engineers at the petroleum engineering program will find those techniques that give those 1 percent increases.

“It is mind-boggling how valuable something like this is,” he adds. “We need a lot of talent, but a very few extremely talented people will make a big difference.” PB Alan Van Ormer Editor, Prairie Business 701- 371-9578, avanormer@prairiebizmag.com

UND providing expertise Now that the technology is being used in the Bakken, oil companies need experts in handling the hydraulic fracturing and horizontal drilling techniques. The University of North Dakota in Grand Forks has started a petroleum engineering department that includes hydraulic fracturing and horizontal drilling methods in the course work.

Steve Benson, chair of the petroleum engineering department, says the need for petroleum engineers is increasing due to an expansion of the industry and retiring petroleum engineers.“The opportunities for petroleum engineers are expanding, their work includes exploration, production, transportation and refining,” he says. “We haven’t spent time marketing the program and the program is growing. We are currently hiring faculty and developing laboratories.”

In the hydraulic fracturing technology

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|RED RIVER VALLEY|

Red River Valley in the ‘cloud’ Microsoft’s Fargo, N.D., campus anticipates growth over the next five years

BY ALAN VAN ORMER

ith Microsoft focusing on cloud computing, the Fargo, N.D., office anticipates growth over the next five years to help with this transformation in several areas of technological expertise in the region.

Microsoft’s Fargo campus site leader Don Morton says there will be new jobs created but at this point the company is not sure exactly what types of jobs. “We know there is going to be a tremendous premium on customer service,” he says. “We know there is going to be tremendous premium on cloud engineering.”

Over the past several years, Microsoft has gradually incorporated cloud computing into its system. Many Microsoft products are available in the cloud today; with the option to also use the products on-premise if customers prefer this model.

“We will continue to see technology that integrates better. We will continue to see new functionality and new features that allow you to do more,” Morton says. “Deployment via the cloud makes it so much easier.”

According to a new study by the analyst firm IDC, spending on public and private information technology (IT) cloud services will generate nearly 14 million jobs worldwide from 2011 to 2015.

The research, commissioned by Microsoft, also found that IT innovation created by cloud computing could produce $1.1 trillion a year in new business revenues.

Locally, cloud computing is driving growth and causing the Fargo office to begin to consider various expansion options to accommodate the projected employee growth. Currently, there are 1,700 employees and vendors in Fargo. When the Microsoft campus is fully built-out it will have the capacity for up to 2,700 people on its campus in southwest Fargo along Interstate 29. Today, infrastructure is in place for an additional two buildings if needed.

James Gartin, president, Greater FargoMoorhead Economic Development Corp., says he is not concerned about workforce issues because Microsoft has such a strong ability to attract workers.

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Prairie Business Magazine August 2012

“This reinforces Microsoft’s commitment to this market,” Gartin says. “They feel this facility offers some outstanding opportunities for them. They have always told me that the biggest positive is the workforce that they have here.

They can get a lot accomplished with the workforce that they’re able to attract.”

Business in the cloud Cloud computing is changing the way companies do business. Microsoft’s business model has changed along with this industry shift. In the past customers only could purchase Microsoft solutions for deployment on-premise. The software was purchased and paid for upfront. Now, Microsoft also offers hosted options, deploying the software through the cloud and billing customers for a monthly subscription. Customers now have a choice of deployment options and can pick the option that works best for their company.

Morton says under the on-premise scenario companies would have the option to upgrade their solutions every 18 months to two years. “When large corporations go through major upgrades it is a significant investment for the corporation,” he says. “With the cloud there are continuous upgrades that should be seamless to the customer.

The latest technology, latest features and latest functionality are made available and easily deployed through the cloud which will lead to productivity gains. IT professionals can focus on strategic technology that adds value to their business.”

What it means to the employees on the Microsoft campus in Fargo is an even greater focus on customer service. “The Fargo campus has a great reputation for delivering outstanding customer service,” Morton says. “Locally we have teams that touch every part of the cloud solution life cycle.”

Microsoft’s Fargo campus is home to teams developing the next,cloud-enabled versions of several of Microsoft’s enterprise resource planning (ERP) products, and components of Microsoft Visual Studio, and Microsoft Windows Phone. Sales teams based in Fargo work with customers interested in

Don Morton Campus Site Leader Microsoft, Fargo N.D.

signing up for free trials of Microsoft’s cloud-based solutions and work with them during the purchasing process. Operations teams in Fargo manage the billing process once customers choose to purchase any of the cloud services Microsoft offers and has support teams in Fargo who work with customers using cloud-based solutions in order to make sure they have the best possible experience.

“We are re-engineering our existing products to enable them to be deployed via the cloud,” Morton says. “We are building new functionality and features specifically designed for both onpremise and cloud deployment and streamlining our customer service processes to support the cloud model.”

Morton adds that cloud computing is making it easier for the businesses to deploy technology solutions to increase business productivity and to add features and functionality as it becomes available instead of having to wait for the next major upgrade.

“Anytime you can increase productivity, get people to embrace new technology, new features and new functionality, your people become much more valuable employees,” Morton says. “Because of the increased speed of diffusion of these technology innovations you are going to generate more revenue without having to add people.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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|SOUTH DAKOTA|

Avera plans to expand Corporate complex to be developed on 82 acres in Sioux Falls

BY ALAN VAN ORMER

s the health care industry continues to grow, Avera Health System is purchasing land in Sioux Falls, S.D., to develop a corporate complex and other building needs specific to keep pace with the ever-changing health care atmosphere.

An estimated 82 acres of land is being aquired in south Sioux Falls adjacent to Avera Heart Hospital and Avera Behavioral Center.

Purchase of the land is expected to be completed in September.

Daryl Thuringer, vice president of marketing and public relations for Avera Health System, says having property adjacent to each other provides a nice flow for patients and customers who come to Avera for administration or medical care needs.

“It provides both patients and employees easy access to administration in the other facilities,” he says.

Dick Molseed, senior vice president for strategy and governance at Avera Health, says there will be more pressure on health care in the future and Avera needs to find areas that it can become more efficient and productive.

A

E-services growing One of those changes is occurring in e-services. Avera is active in e-services. This includes e-emergency where at the push of a button in hospitals across the region physicians and nurses immediately respond.

There is also e-pharmacy. Regulations state that when a physician orders a drug for a hospital patient it has to be viewed by a pharmacist.

Many hospitals in the region do not have pharmacists and e-pharma-

36

Prairie Business Magazine August 2012

cy allows immediate notification to a clinically trained pharmacist.

“Right now we are developing a central location for e-services,” Molseed says. “Moving into the future, e-services could find a unique home on our corporate campus.”

The land will allow Avera to add other buildings to the corporate campus. “The Sioux Falls metro area and southeast South Dakota is a strong growth area and has been for years,”Molseed says.“Our campus is just about full and this gives us an opportunity in the other part of the city to expand our clinical services if we decide that is necessary.”

The Avera McKennan campus, at Cliff Avenue near downtown Sioux Falls, houses many of the health care networks programs, which includes the main hospital and specialty clinics.

Molseed adds that the health care industry is continuing to grow at a rapid pace and with Avera developing a futuristic plan, it needed space to work.“This was one of the very last tracts of land that size,” he says. “We think it is imperative to have because it allows us to respond to changes in the future.”

Avera is just starting the process of looking at how to develop the land once it is purchased. “Once we have the land we can start asking questions on what we want to go into it,” Molseed says. “We have to make sure we control the land and it is zoned the way we need it to be.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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37

|WESTERN NORTH DAKOTA|

Housing/business project planned in western N.D. $300 million complex will be built in Watford City

BY ALAN VAN ORMER o keep up with housing demand in the Oil Patch, Bakken Housing Partners is developing a project called Fox Hills Village in Watford City, N.D. The $300 million project, which will require more than 300 acres, will consist of 10 apartment complexes, townhomes, a shopping center, full-service hotel and office buildings.

Construction of the first two apartment complexes is expected to start in September. The project will be built in eight phases over the next four years.

Mark Bragg, president of Bakken Housing Partners in Watford City, says the speed of the project depends on the demand. “There has been a lot of interest, but we have been fairly low-key about it,” he says. “When we start building there will be more interest. People know about the project, but don’t know our plans or our schedule.”

Gene Veeder, executive director for the McKenzie County Job Development Authority, says the community needs more housing for its residents.

“That is what is hindering retail growth, our commercial growth and our workforce,” he says. “This is a multi-project combination of everything we need to expand. These types of projects can actually double or triple the size of our community.”

Hills Village will be located near the airport and across from the city’s golf course.

“It makes it an easy commute in any direction for long-term workers,” Bragg says. “Our whole objective is to provide family housing. We’re satisfied that the demands for long-term community family housing are strong.”

Bragg adds that the demand is obvious. “So many folks are living in temporary housing,” he says. “The town was really welcoming about the prospect of having long-term housing.”

The first phase of the project will consist of 10 apartment units. Each unit will have 47 two-bedroom apartments. The mass grading and infrastructure, which have to be built first, will be started within the next month.

Bragg says that once construction on the apartments starts it will move quickly.

The second phase will be 250 townhomes.

Phase three is expected to be a shopping center that will include a bowling alley, rifle, pistol and archery shooting range, grocery store, clothing store, dry cleaner, department store and restaurants.

Subsequent phases of the project are yet to be determined but will include 1,200- to 2,500-squarefoot single-family homes with private garages, storGreat location age and backyards. There will also be a build-to-suit Bakken Housing Partners chose Watford City office building with 400- to 14,000-square-foot because it is in the geographical center of the Bakken, options, conference area and technology center.

Bragg says. Watford City is at the crossroads of two Bragg says the final phase will be a 200-suite hotel. PB major arteries — Highway 85 that runs north and Alan Van Ormer south and Highway 23 that runs east and west. Fox Editor, Prairie Business

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701-371-9578, avanormer@prairiebizmag.com

38

Prairie Business Magazine August 2012

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Wind, ethanol capacity increasing Long-term energy policy should include renewable fuels

BY ALAN VAN ORMER orth Dakota has an opportunity to help lead the way in renewable fuels, however, a lot still depends on whether Congress can develop a long-term energy policy that includes renewable fuels.

Phyllis Cuttino, director of the Clean Energy Program for the Pew Environment Group, who provided the keynote address at the 2012 Renewable Energy Action Summit in Bismarck, N.D., says there are opportunities in renewable energy for North Dakota and the country.

Cuttino says these opportunities include the production of advanced biofuels and wind energy.

“This region of the country is good for wind,” she said in an interview after her address. “All you need is transmission. I’m seeing a lot of advances in efficiencies across transmission lines.”

As the director of Pew’s Clean Energy Program, Cuttino advocates for national policies that promote the economic, environmental and national security benefits of the clean energy economy.

Cuttino told the more than 250 people present at Bismarck State College that renewable fuels investors are looking for a policy that is transparent, has longevity and is consistent. “Crafting an energy policy can be difficult because all states have different interests,” she said. “North Dakota has multiple resources here. Whatever kind of comprehensive energy strategy (is developed) will be a mix incentivizing different kinds of energy sources.”

Sens. John Hoeven, R-N.D., and Kent Conrad, D-N.D., and North Dakota Gov. Jack

N

40

Prairie Business Magazine August 2012

Dalrymple kicked off the sixth annual conference that included renewable energy leaders from around North Dakota and the country.

Renewable increase The North Dakota leaders said that in 2001 the state had less than one half a megawatt of wind power generation. By the end of 2011, however, North Dakota had grown to more than 1,400 megawatts, and today ranks ninth among states in wind-generated electricity. Further, North Dakota now produces 12 percent of its electricity from wind annually, ranking the state second in the nation.

Similarly, a decade ago, the state produced only about 30 million to 40 million gallons of ethanol a year at two small facilities and produced no biodiesel at all. Today, North Dakota has five ethanol plants with a rated annual capacity of more than 400 million gallons, and a large diesel facility with a capacity of 85 million gallons a year.

That’s a 10-fold increase in biofuels production.

Mike Seminary of Kadrmas, Lee & Jackson, says that renewable fuels have a long-term role in all these energy options in our country.

“The choices the consumers have are still a struggle,” he says. “At the end of the day consumers measure the effectiveness of the program and how much it costs them.”

He added that without the federal government providing effective incentives, renewable fuels will struggle. “We have a very significant long-term role and very important role as we move forward,”

Seminary said.

Kari Knudson, vice president of the National Energy Center of Excellence at Bismarck State College, says the renewable energy action summit was a good opportunity to showcase the renewable fuels industry. â&#x20AC;&#x153;North Dakota is positioned to respond to all types of energy,â&#x20AC;? she said.

During the keynote address, Cuttino said that since 2004 there has been a 600 percent increase in global clean energy investment including a record $263 billion invested in 2011. Of that number, the United States has invested $48 billion followed by China and Germany.

Cuttino said there are more opportunities for the U.S. because rising energy development presents export opportunities and 80 percent of the future energy generation will come from developing nations.

There were four breakout sessions that discussed wind energy as a pathway to sustainability, geothermal energy as an underground technology for the future, ethanol as a fuel for

today and tomorrow and biomass as a renewable fuel that leaves no potential energy source unturned.

During the discussion about wind energy, three challenges were brought to the forefront.

They included the need for timely construction of transmission lines, tight markets and the need for those same markets to recognize the environmental benefits of wind energy.

In the geothermal discussion it was noted that there are 147 confirmed projects in the United States; two in North Dakota.

There is potential for as much as 4,500 megawatts of geothermal energy mostly in California and Nevada.

The major challenges for the ethanol industry involve educating the public about the benefits of ethanol, marketing access and how to get the fuel to market. PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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41

|ENERGY|

Natural gas firm pumping billions into western N.D. Company building three processing plants and two pipelines

BY ALAN VAN ORMER

NEOK, a Tulsa, Okla.-based natural gas gathering and processing company, will invest up to $3.7 billion for natural gas, natural gas liquids and crude oil infrastructure in the Bakken Shale in western North Dakota in the next three years.

“There has been tremendous drilling activity by oil producers recently,” says Brad Borror, supervisor for external communications for ONEOK. “Currently, there is not the available infrastructure to capture all of the natural gas and natural gas liquids.”

The company’s plans include the construction of three natural gas processing plants, a natural gas liquids (NGL) pipeline — the Bakken NGL Pipeline — from Sidney, Mont., to northern Colorado and a 1,300-mile crude oil pipeline — the Bakken Crude Express Pipeline — from the Bakken to Cushing, Okla. Each natural gas processing plant and related gathering system is expected to employ approximately 100 workers.

“The Williston Basin is called a liquidsrich shale play,” Borror says. “The driving activity is oil production. Natural gas and liquids are associated with the oil production.”

O

42

Prairie Business Magazine August 2012

ONEOK is the sole general partner and owns 43.4 percent of ONEOK Partners LP, a publicly traded limited partnership engaged in natural gas gathering and processing, natural gas pipelines and NGL. According to a press release from North Dakota Gov. Jack Dalrymple announcing the start of ONEOK’s first natural gas plant, between January and November of 2011, North Dakota’s production of natural gas increased 53 percent, to a record 521 million cubic feet per day. That’s enough natural gas to heat 1.3 million homes. By the end of 2012, the state’s capacity to process natural gas is expected to reach 1.1 billion cubic feet per day.

Capture incentives To promote the processing of natural gas, the state of North Dakota provides sales and use-tax exemptions that may be applied toward the purchase of building materials, production equipment and other property used in the construction or expansion of a natural gas processing plant, the press release says. In addition, purchases of machinery and equipment needed to complete environmental upgrades may also

qualify for tax exemptions. The state, through the Oil and Gas Research Council and in partnership with private industry, also has invested more than $3 million, researching new technologies to expand the capture of natural gas.

Borror says that the estimates on Bakkenrelated oil and natural gas change monthly. “If there is natural gas needing to be captured, and it makes sense business and economic-wise to increase our infrastructure, we will evaluate additional opportunities as they become available,” he says. “We believe there is currently a sufficient supply of natural gas to fulfill our current investments.”

The natural gas stream is separated from the oil at the wellhead and, through its pipeline gathering systems, ONEOK sends it to one of its processing plants to process the natural gas and send it out to the marketplace where it can be used for home heating, business or commercial use or electric generation.

The NGL needs further processing, which is why a pipeline is being built to northern Colorado that will connect with an existing pipeline and move the NGL to storage and fractionation facilities in central Kansas. There

it will be converted into marketable products, including propane and butane.

In addition, ONEOK is addressing the concerns with natural gas flaring; a waste of a domestic energy source that Borror says can be used locally and affordably.

“We’re providing services that ultimately capture that flaring,” he says.

ONEOK’s first plant — Garden Creek Gas Plant — about 10 miles northeast of Watford City, N.D., is operating and can process 100 million cubic feet of natural gas per day. A second 100-million-cubic-feet plant — Stateline I — is slated to be finished later in 2012. The third 100million-cubic-feet plant — Stateline II — will be on line in the first half of 2013. Both will be in Williams County near the Montana and North Dakota border.

According to a recent press release from Sen. John Hoeven, R-N.D., with the new Garden Creek plant, North Dakota now has 16 plants processing

North Dakota Minnesota Michigan Missouri Alberta

Bakken Shale and Three Forks natural gas.

The natural gas liquids pipeline is under construction and is expected to be completed in early 2013. The crude oil pipeline is also slated to be completed in 2015.

“Weather is always a challenge in the winter time,”Borror says.“Our timelines for suitable construction because of the weather have shrunk. The weather provides its own challenges.”

Borror adds that the Bakken is a tremendous oil field that has potential to tap natural gas.

“We’re in the natural gas business,” he says.“There are huge quantities of natural gas and natural gas liquids available in the Bakken. It makes sense for us to build out these plants and infrastructure to get the natural gas to the market.” PB Alan Van Ormer Editor, Prairie Business 701-371-9578, avanormer@prairiebizmag.com

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|ENERGY BRIEFS|

1

Bank shares royalties with oil-impacted towns

A bank with mineral interests in western North Dakota is returning some of its royalty income to communities that are impacted by oil development.

AgriBank is the finance bank for Farm Credit Services.

The bank will make $500,000 available in grants for infrastructure, housing, medical facilities, education and other needs.

The mineral rights were acquired in the bank’s foreclosure activities in the Depression era.

2

N.D. diesel refinery permit approved The Stark County Commission has approved a permit for a proposed $325 million diesel refinery near Dickinson, N.D. The commission approved the request to rezone 274 acres of land between Dickinson and South Heart from agricultural to industrial for the refinery’s construction.

A subsidiary of Bismarck, N.D.-based MDU Resources Group Inc. is planning the refinery that could be completed in 2014.

Officials have said that it would produce up to 10,000 barrels of diesel per day.

Nominate Today!

Do you know a young professional who deserves recognition?

The 40 under 40 issue of Prairie Business magazine actively supports and celebrates young professionals. The award honors individuals who strive toward the highest levels of personal and professional accomplishments, who excel in their chosen field, devote time and energy to their community in a meaningful way, and forge paths of leadership.

Criteria: Professional Excellence: Demonstrate excellence, creativity and initiative in their business or profession.

Community Service: Local, state, national or international participation.

Charitable services, political pursuits, religious groups, chambers, merchant’s associations, etc.

Personal Leadership: Helping themselves and others reach their full leadership potential.

Prairie Business magazine’s 40 under 40 listing is slated to run in the December 2012 issue. We are seeking nominations for candidates from North Dakota, South Dakota and western Minnesota for this year’s 40 under 40. In order to be considered, candidates must be 39 years old or younger (and can’t turn 40 until January 2013 or later).

To nominate someone, please send your contact information along with your nominee’s age, name, title, company name and a short bio to editor Alan Van Ormer at avanormer@prairiebizmag.com.

44

Prairie Business Magazine August 2012

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