Prairie Business Oct. 2012 by Prairie Business Magazine

October 2012

Getting Bigger Sanford Health continues to expand throughout the region

pg. 28

ALSO

Help Wanted

Strong local economies demand more quality workers

pg. 32

Gathering Gas

New opportunities in the Bakken as natural gas production increases

pg. 36

www.prairiebizmag.com

|INSIDE|

OCTOBER ISSUE 2012 VOL 13 ISSUE 10

FEATURES

DEPARTMENTS 6 Editorâ&#x20AC;&#x2122;s Note BY KRIS BEVILL

Thanks to technology 8 Business Advice

BY MATTHEW D. MOHR

What about EBITDA? 10 Finance

BY RICK CLAYBURGH

Good credit skills put dreams within reach 12 Research & Technology BY DELORE ZIMMERMAN

Designing a STEAM-powered economy 14 Economic Development BY ALAN ANDERSON

Empowering energy diversity

28 32 36

16 Prairie News

HEALTH CARE

The Benefits of Bigger

Sanford Health executives discuss how the nation's largest rural health care provider manages quality care across a vast region JOBS

Help Wanted

States and businesses aggressively recruit new workers to the northern Plains NATURAL GAS

Prepare to Gather

Increased natural gas production in the Bakken opens up the opportunity for new ventures

20 Prairie People 24 Business Development Google brings website mastery to local level 42 Red River Valley Groundbreaking marks new beginning for tiny town 44 South Dakota Joining forces 46 Western North Dakota Mandan-led consortium gets $9.7 million for business loans 48 Energy 54 Business to Business

On the Cover

The Sanford Aberdeen Medical Center is the first project Sanford Health has built from the ground up. The facility began offering services to patients in July. PHOTO: SANFORD HEALTH

Prairie Business Magazine October 2012

Next Month

Scan this with your smartphone's QR Reader to visit our website.

November's agribusiness and higher education issue will explore new energy-related courses and degrees at area colleges. The issue will also include a profile of a Fargo, N.D., satellite imagery company focused on providing its services to farmers and insurance companies to improve the efficiency of farming and assist in calculating crop losses.

|EDITOR’S NOTE|

Thanks to technology

F KRIS BEVILL

Editor kbevill@prairiebizmag.com

or those of us who can remember the days before such everyday conveniences ascell phones or computers became engrained in our lives, it is worth it to take a step back and think about how our jobs would change without technology. For example, I’m writing this column on my laptop computer as I work remotely from the magazine’s main office, a feat made possible by a speedy Internet connection and an equally speedy information technology (IT) support staff. I checked the latest headlines on my phone earlier today and tweeted an update to our Twitter followers (@PrairieBiz for those of you not yet in the loop), and I’ll be setting up interviews via email later today. For journalists, technology enables us to do our jobs more efficiently and we in turn, are able to provide the world with news at a faster rate than ever could have been imagined just a few decades ago. But communicators are hardly the only ones affected by technology. For this issue, I spoke with executives at Sanford Health, the largest rural health care system in the nation, to learn how the organization is able to manage its vast network and still provide quality care. Not surprisingly, technology is a major factor in the organization’s operations. It has invested in developing an electronic medical records system, which will allow providers at any of the organization’s locations to access a patient’s chart, thus enabling more efficient, higher quality care, according to Sanford Health leaders, who say the system is well worth the millions of dollars spent to develop it. Additionally, because the geography of this region often means that small town doctors are serving a large number of patients with varying afflictions, Sanford Health is utilizing technology to connect physicians in remote locations with specialists at larger facilities, allowing patients in smaller towns access to expert input without necessarily having to travel long distances to visit the specialist in person. For businesses and economic development agencies, the Internet has become a vital promotional tool. In this issue, we highlight a group of economic development agencies in rural northeast South Dakota that has embraced technology to spread the word of the area’s business-friendly offerings through a dedicated website and social media marketing campaign. We also report on Google’s efforts to increase the creation of websites by small businesses. This summer, the search engine giant brought its Internet expertise to the area with a series of hands-on training seminars designed to help small businesses create websites and utilize them to their best potential. While most consumers turn to the Internet for information related to goods and services, a surprisingly large number of small businesses still do not have websites. Google aims to help change that. Of course, reliance upon technology in the workplace also creates a strong demand for IT professionals. While IT is just one of many fields in need of qualified workers in our area, both states project significant growth rates for IT positions over the next several years.

Prairie Business Magazine October 2012

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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|

What about EBITDA? BY MATTHEW D. MOHR

n financial articles, especially those concerning mergers and acquisitions, the acronym EBITDA often is used. EBITDA stands for “earnings before interest, taxes, depreciation, and amortization.” Many acquisitions are often based on this measure because, in practice, it will approximate the annual cash flow of a stable enterprise. Before our current financial crisis, when borrowing was easily available, EBITDA was used to support a request for a business loan. Unfortunately, if capital improvements were needed or if costs changed or sales were not stable, too much debt was often incurred, especially when “leveraging” a business during an acquisition. Looking back, it is easy to see that EBITDA was overused for business acquisitions and loan support. It seems foolish today that our financial community thought loans were safe if a business produced no profits but was theoretically able to support a loan because of depreciation and the loss of a tax liability. But even though EBITDA may

have once been over-used, it is still a prominent benchmark during financial negotiations. As an entrepreneur seeking financial gain, the objective is to show growing profits and cash flow, not to carry a business to “break-even.” Fluctuations in sales, profits and cash flow occur with all economic enterprises, and it is very hard to predict what will occur economically day to day and over time. EBITDA will go up and down. Minimizing debt can help stabilize cash flow over time, especially if the debt has variable interest rates or is used for operating purposes. Only through positive cash flow over time can debt be repaid, and investors rewarded with dividends. EBITDA is a good benchmark and provides useful information, but understanding true cash flow will lead to much better decisions, especially in regards to debt and long-term financial rewards. PB

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Prairie Business Magazine October 2012

Matthew D. Mohr CEO, Dacotah Paper Co. mmohr@dacotahpaper.com

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|FINANCE|

Good credit skills put dreams within reach BY RICK CLAYBURGH

sk the average teen what they know about “credit” and the response is usually something about credit cards. Yet there’s so much more to credit than simply cards. Young adults need to understand how budgeting plays a role in managing credit wisely, that reading and understanding their credit report can mean the difference between landing a job or holding them back before their career begins, and why identity protection is everyone’s responsibility. Today’s young adults are not prepared for financial responsibilities. Some 48 percent of teens are not sure how to manage a credit card and 46 percent don’t know how to create a budget, according to Junior Achievement and Capital One. In addition, Charles Schwab’s 2011 Teens and Money Survey showed only 31 percent of teens know what a credit score is. With these staggering figures, it is not surprising to learn that only 13 states require students to take a personal finance course as a high school graduation requirement. Teens are not getting as much of their money management information in school as they used to. According to Junior Achievement, in 2011, 58 percent of teens reported learning how to manage money in school or from teachers. In 2012, that number dropped drastically to 24 percent. To combat this problem, bankers across the country have taken a proactive approach by participating for the past 10 years in a program sponsored by the American Bankers Association called “Get Smart about Credit Day.” This is a national campaign of volunteer bankers who help young people develop responsible credit habits. This year, Get Smart about Credit Day will be celebrated on Oct. 18, giving bankers an opportunity to get out of the bank and

Prairie Business Magazine October 2012

into a classroom. Throughout the month of October, bankers will raise awareness about the importance of financial education and position themselves as trusted partners in helping young people thrive. Last year more than 3,300 bankers reached over 122,000 students with Get Smart about Credit lessons. Bankers are passing the message along that, no matter your age or financial stance, it’s never too early to get smart about credit. Learning the basic fundamentals of credit provides students and adults with a foundation that will prove invaluable throughout their lives. There is another statewide organization, the North Dakota Jump$tart Coalition, whose members and partners strongly believe that having good financial skills is vital for a successful and prosperous life. Established in 2006, North Dakota Jump$tart is a nonprofit organization that actively works to improve the financial literacy of the state’s citizens. Coalition members educate the public through speaking engagements and workshops, provide financial literacy resources and training materials, and collaborate with public and private organizations and lawmakers on projects throughout the state. The coalition can provide tools and connections for assistance in personal or business money management as well as classroom education. Anyone can join the organization. For more information, visit www.ndjumpstart.org. PB Rick Clayburgh President and CEO, North Dakota Bankers Association rick@ndba.com

|RESEARCH & TECHNOLOGY|

Designing a STEAM-powered economy BY DELORE ZIMMERMAN

pple’s ascendancy to the pinnacle of the business world comes as no big surprise to me. I’ve been using Apple products since the 1980s, starting with the ill-fated LISA computer at work and my McIntosh 512k, now tucked away in the basement at home. Today I have bonded with my iPad and eagerly await the next must-have from Apple — the iPhone 5. The reasons for Apple’s staying power and success in the techno-communications-entertainment world are complex. Apple survived several mammoth failures, including the Next computer and the Newton PDA. Under the leadership of former CEO Steve Jobs, Apple institutionalized a culture and practices that foster relentless innovation. Beyond the user-friendly gadgets, the technological breakthroughs and the potent business model, Apple’s key to success — the magic if you will — is its genius for design. Apple’s logo is recognized everywhere on the planet, but what Apple’s customers most fervently look forward to is the cavalcade of thrilling innovations in “minimalist design plus unusual style.” Technology and art go hand-in-hand. Apple has proven that elegant design results in highly marketable products, which in turn has meant higher profit margins and a company that is a global force for change. There’s considerable discussion here in the region and across North Dakota about taking our economy to the next level. An important part of that discussion is about intensifying efforts to prepare people for careers in science, technology, engineering and math (STEM). Since the competitiveness of every economy — from the local to the national level — will rely on developing or attracting a STEM-prepared workforce, this issue must be a centerpiece of our strategies and invest-

Prairie Business Magazine October 2012

ments. Fortunately our region has been at the forefront of STEM initiatives, including the nationally recognized Great Plains STEM Education Center at North Dakota’s Valley City State University. But as the success of Apple demonstrates, a flair for and competency in the design arts can mean the difference between a functional technology product and one that generates excitement among a devoted customer base spanning decades and continents. A STEAM-powered economy, one that integrates the arts with STEM, can generate high-impact benefits. Studies show that training in the arts and music boosts attention, cognition and working memory; it leads to tangible improvements in math and reading fluency. Participation in the arts can improve teamwork. We are fortunate in this region to have many vibrant arts programs at a time when other parts of the country are forced to put theirs on the chopping block because of fiscal constraints. A recent story on Scientific American’s website characterizes such cuts as “educating young Americans out of creativity,” and being short-sighted for any growth-oriented economy. Continuing to make the arts a priority in our schools and communities and becoming more intentional about integrating the creative and design arts into our products and services will yield meaningful advances in innovation and competitiveness. By enhancing these two essential pillars of a robust economy and society we will be able to go full STEAM ahead into the 21st century. PB Delore Zimmerman President, Praxis Strategy Group Executive Director, Red River Valley Research Corridor delore@praxissg.com

|ECONOMIC DEVELOPMENT|

Empowering energy diversity BY ALAN ANDERSON

artnerships between traditional energy industries and the emerging renewable industries are a central component of North Dakota’s approach to energy development. This strategy recognizes that in order to meet our state and country’s energy needs, all players in the energy industry need to be engaged in the process together. Prior to the establishment of Empower North Dakota, a comprehensive energy policy strategy, each energy sector would show up at the Capitol with their legislative agenda every other January and, often times, conflict would occur, resulting in less than perfect legislation for everyone. With EmPower, these groups are at the same table on a regular basis, learning and questioning each other on best practices and how to work together to deliver better results for North Dakota. Because of this approach, energy projects resulting in significant investments in all sectors of the energy industry are underway across the state. Following are a few examples: • North Dakota is the second largest oil-producing state in the nation with production of 660,000 barrels per day as of June 2012. • The state supports 4,000 megawatts of lignite and other coal generation at seven locations providing low cost, reliable electric power to 2 million customers in North Dakota, South Dakota, Minnesota, Montana and Iowa. North Dakota is one of the country’s top 10 coal producing states, mining approximately 30 million tons every year since 1988, which results in an annual economic impact of $3.5 billion and 17,000 direct and indirect jobs. • North Dakota leads the nation in the production of nine different agricultural commodities, including

Prairie Business Magazine October 2012

two commodities used for liquid fuels. • From 2007 to 2010, North Dakota increased its energy production by 65 percent and is well on its way to doubling statewide production by 2025. • North Dakota continues to develop a thriving ethanol industry, which contributes more than $300 million annually to the economy and supports more than 10,000 direct and indirect jobs. • By the end of 2012, natural gas processing in North Dakota will have increased 383 percent over six years. With the addition of a facility coming on-line later this year, there will be 17 plants processing Bakken natural gas. The state, through the Oil and Gas Research Council and its private partners, has invested more than $2 million in new technologies to capture and use natural gas at well sites. • In 2012, North Dakota ranked tenth in the nation in installed wind energy capacity. The North Dakota Public Service Commission has permitted over 2,900 megawatts of wind generation. • The state’s only oil refinery has expanded by 20 percent or 10,000 barrels per day. In addition, three new refineries were announced and are at various stages of planning, permitting and construction. North Dakota is proactive and aggressive in addressing energy development and serves as a model for America in fostering innovative, long-term energy development to meet our nation’s growing energy demand and need for energy security in an environmentally responsible manner. PB Alan Anderson Commissioner, North Dakota Department of Commerce alranderson@nd.gov

Prairie News

Industry News & Trends

PHOTO: UNIVERSITY OF SOUTH DAKOTA

Sanford Health gives $20 million to University of South Dakota Sanford Health has provided a $20 million donation to the University of South Dakota to assist in building a 6,000-seat basketball and volleyball area that will serve as the cornerstone of a $70 million project. When complete, the complex will include track and field and soccer facilities, and foot-

Cirrus signs strategic aircraft supply deal

Cirrus Aircraft has agreed to become a key strategic supplier partner for Southern California-based sport plane manufacturer ICON Aircraft. As part of the agreement, Cirrus will produce composite airframe components for ICON’s A5 amphibious light sport aircraft exclusively at the Cirrus factory in Grand Forks, N.D. Production will begin at the end of 2012. The first production aircraft is scheduled to be completed next summer. Dale Klapmeier, CEO of Cirrus Aircraft, says his company believes light sport aircraft and sport pilots are “critically important” to the growth of aviation. “Cirrus and ICON share the common vision that exciting, innovative and safe new aircraft are a key to unlocking the enormous potential within our industry,” he said in a statement.

NDSU alumnus provides $1 million gift

North Dakota State University alumnus Harry McGovern has given $1 million to the university’s development foundation to support the

Prairie Business Magazine October 2012

ball and basketball practice facilities. The project cost also includes planned renovations to the DakotaDome. As of early August, the university had received commitments totaling $9 million for the project in addition to Sanford’s donation. A portion of Sanford’s $20 million gift will be used to sup-

NDSU Alumni Center, which will bear his name in honor of the donation. McGovern earned a bachelor’s degree in civil engineering from NDSU in 1966 and is now the co-owner of MCM Construction Inc., a major bridge and highway contractor with offices in Sacramento and Los Angeles, Calif. The company has constructed more than 1,500 bridges throughout California and consistently ranks within the top 200 heavy engineering contractors in America. The NDSU Alumni Center is a 30,520 square foot facility that houses Alumni Association offices, a banquet facility and other various conference rooms and offices. It was officially dedicated on Oct. 8, 1999.

Minnesota facility gets grant for home med study

The Minnesota Department of Human Services has awarded PioneerCare of Fergus Falls a $116,000 grant to assemble a community collaborative and study electronically monitored medication management. The grant will allow 100 participants in west-central Minnesota to trial the MedSmart Home Medication Management sys-

port scholarships, faculty and the university’s health services program. Sanford Health will also serve as the exclusive sports medicine provider for the university’s athletics programs for the next 15 years. It has been the university’s sports medicine provider since 2005.

tem for three months. The system can be loaded with medications and programmed for up to six doses per day and can transmit dispensing history through a phone line. It was designed as a strategy to help elderly people stay in their homes rather than move to nursing homes, according to PioneerCare.

$1 million grant to aid ND rural health care efforts

The Health Resources and Services Administration has awarded $1 million to the Department of Family and Community Medicine at the University of North Dakota School of Medicine and Health Services to fund curriculum development, learning enhancement and faculty development to train physician’s assistants who provide care for rural communities. The goal of the grant is to help faculty develop curriculum that will enrich and expand the knowledge and skills of graduates to deliver high-quality primary care in rural and underserved areas of the state. Nearly 95 percent of North Dakota counties have been deemed as either health professional shortage areas or medically underserved areas,

|PRAIRIE NEWS| indicating that patients must travel significant distances to receive health care services.

SD tourism department selects marketing firms

Sioux Falls, S.D.-based Lawrence & Schiller and Kansas City-based MMGY Global have been selected to serve as the marketing firms for the South Dakota Department of Tourism. Lawrence & Schiller’s three-year contract, up to $5 million, includes development of the department’s overall creative strategy, production of traditional media and traditional media planning and placement. MMGY Global’s three-year contract, up to $2.5 million, includes digital marketing strategy and placement, market research and communications strategy. Each contract includes the option of two, one-year renewals.

Minot, ND, clinic completes expansion

St. Alexius Medical Clinic in Minot, N.D., has completed an expansion and renovation project, increasing its medical space by 50 percent. The clinic now houses 21 patient rooms and has increased its services to include technology to test for osteoporosis and ultrasound capabilities. The clinic has also hired two additional providers, bringing the total number of providers to seven.

Eide Bailly adds cost segregation practice

Certified public accounting and business advisory firm Eide Bailly LLP has acquired Minneapolis-based Cost Seg Associates LLC, a cost segregation practice. Rod Axtell, certified public accountant and managing partner of Cost Seg Associates, has joined Eide Bailly as a partner. Other Cost Seg Associates staff joining the firm include Robert Lehmann, business development senior manager; and Kris Peacock, Travis Mlodzik and Joe Sawatske, construction engineers. Eide Bailly has previously provided cost segregation services to its clients, but the addition of Cost Seg Associates will provide a higher level of services to clients by bringing those services in-house, according to Ron Hecht, head of Eide Bailly’s national tax office. A cost segregation study can improve a client’s cash flow and minimize their taxes through proper tax planning, he says.

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|PRAIRIE NEWS| Audubon National Wildlife Refuge receives energy award The Audubon National Wildlife Refuge has received a 2012 Federal Energy and Water Management award from the U.S. Department of Energy in recognition of the building’s outstanding performance in energy efficiency and use of renewable energy. Completed in 2010, the $6.1 million visitor center and office building uses 40 percent less energy than buildings of similar size and use. It features a 37-ton hybrid ground-source heat pump system that includes passive solar elements. Hot water is provided by the system with an electric back-up. Mechanical ventilation is treated separately by an energy recovery unit that contributes to the energy savings. Widseth Smith Nolting, a multi-disciplined firm with offices in Grand Forks, N.D., and Alexandria, Baxter, Bemidji, Crookston, East Grand Forks, Red Wing and Rochester, Minn., led the design team as the architect for the project and provided various engineering and land surveying services. Fargo-based Martin Mechanical Design Inc. designed the heating and cooling systems. The building was certified LEED(r) Gold in 2011. Deb Parrott, an architect with Widseth Smith Nolting managed the LEED administration process. The Audubon National Wildlife Refuge is located near Coleharbor, N.D., approximately halfway between Bismarck and Minot along U.S. Highway 83 in the Prairie Pothole region of North Dakota.

Unit train crude terminal opens in Trenton, ND

Savage, a Utah-based supply chain solutions company, has completed work on a crude petroleum terminal near Trenton, N.D., that will connect directly to Burlington Northern Santa Fe Railway Co.’s main line track. The terminal has been transloading crude from truck to rail on a manifest basis since December 2011, according to Savage. The fully complete terminal is now capable of loading unit trains and will operate 24 hours per day. A double-loop track at the terminal can hold two 118-car unit trains. The terminal also provides inbound gathering access through truck receiving stations, pipeline connections and crude oil tankage. The terminal has been designed and constructed with future expansion plans in mind. Savage says the terminal will grow to accommodate continued Williston Basin expansions and the increasing need for receiving and handling.

Altru pledges $10 million to UND

Altru Health Systems will provide $10 million to the University of North Dakota over 30 years to support a new UND athletics complex on the university campus and replace the football turf at the Alerus Center in Grand Forks, N.D. According to UND, $9 million of the gift will be dedicated to the new sports complex, which will include a practice and training facility for football, track and field and soccer teams, a studentathlete academic center and sports medicine space for all UND Athletics

Prairie Business Magazine October 2012

PHOTO: WIDSETH SMITH NOLTING

teams. The facility will also serve as a host site for youth athletics camps and college and youth track and field meets. Altru has served as UND’s sports medicine provider for more than 20 years. The indoor sports complex will include space for academic and clinical studies on human performance and conditioning, which UND President Robert Kelley says will enhance both the university’s and Altru’s roles in sports medicine.

SD to fund air base water treatment plant

South Dakota’s Board of Water and Natural Resources has approved a $16 million low-interest loan to the South Dakota Ellsworth Development Authority to construct a regional wastewater treatment system. The system will meet the needs of both Ellsworth Air Force Base, located about 10 miles northeast of Rapid City, and the nearby community of Box Elder, according to state officials. Existing separate wastewater treatment facilities at the air base and Box Elder are in need of upgrades to comply with surface-water discharge standards. The decision was made to construct a regional facility after a feasibility study concluded that about $8 million in cost savings could be had by building one regional water treatment compared to constructing and operating two separate systems. The state loan will cover the total estimated cost of the treatment facility. Financing is being provided by the state’s clean water revolving fund, which provides loans for wastewater, storm water, and non-pointsource pollution abatement projects.

|PRAIRIE NEWS| Air medical equipment manufacturer recognized for job growth

Fargo, N.D.-based Spectrum Aeromed, a designer and manufacturer of custom air medical and air ambulance equipment for fixed and rotor wing aircraft, has been named to the Inc. 5000 Fastest Growing Companies list for the second consecutive year. In 2011, the company was recognized for having achieved a nearly 800 percent growth rate in three years. Company President and CEO Dean Atchison said in a statement that recognition on the list proves customers in the fixed wing and rotorcraft markets throughout the world continue to demand Spectrum Aeromed products. The Inc. 500/5000 list ranks privately held, U.S.-based companies that have a revenue of more than $2 million in 2011 by overall revenue growth over a threeyear period.

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|PRAIRIE PEOPLE| Avera exec earns fellow status

Rochelle Reider

Rochelle Reider, vice president of patient services at Avera Queen of Peace Hospital in Mitchell, S.D., recently became a fellow of the American College of Healthcare Executives, a national professional society for healthcare leaders. Reid fulfilled multiple requirements to obtain fellow status, including passing a comprehensive examination, meeting academic and experiential criteria, earning continuing education credits and demonstrating professional and community involvement. As a fellow of the society, she will undergo recertification every three years and has committed to ongoing professional development.

Bismarck Cancer Center appoints board of trustees member

Mike Schumacher

Mike Schumacher recently joined Medcenter One in Bismarck, N.D., as the chief financial officer and has been appointed as the newest member to the Bismarck Cancer Center board of trustees. He replaces Paul Morth, who retired from his position as the vice president of finance at Medcenter One in July after 29 years of service. Schumacher previously worked for Eide Bailly LLP in Fargo, N.D., for 21 years, serving most recently as an audit partner for the firm. The Bismarck Cancer Center, a radiation therapy center, is a cooperative venture of Medcenter One and St. Alexius Medical Center.

Chamber names Bruce Furness 2012 legacy leader

Bruce Furness

Former Fargo mayor Bruce Furness is the recipient of the Fargo Moorhead West Fargo Chamber’s 2012 Legacy Leader award. The award recognizes and emphasizes the important role and contributions of long-time local leaders in shaping and serving the chamber, the community and the region. Furness served as the mayor of Fargo from 1994 to 2006 and is the city’s fourth longest-serving mayor. During his time as mayor, Fargo undertook the redevelopment of its downtown and endured the Red River flood of 1997.

Gary McDaniel

Sean O’Brien

Joe Talago

Prairie Business Magazine October 2012

Aaron Skattum

Ulteig welcomes 4 new hires

Houston Engineering adds employees

Houston Engineering, an engineering, consulting and environmental consulting firm based in Fargo, N.D., has added two new employees to its Fargo office. Sean O’Brien has joined the company as a geographic information system (GIS) technician. O’Brien worked previously as a GIS intern in the planning and economic development department for St. Paul, Minn. He earned a bachelor’s degree in geography and a master’s degree in GIS from the University of Minnesota–Twin Cities. Joe Talago has joined the firm as a designer. Talago is a certified professional engineer in North Dakota, Wyoming and Indiana. He previously worked for the North Dakota Department of Transporation, Yellowstone National Park and the Indiana Department of Transportation.

David Landecker

Eileen Hess

Engineering, surveying and consulting firm Ulteig recently added four new employees at two of its eight offices. David Landecker has been hired to serve as market leader in land services in the Fargo office. He is a licensed professional land surveyor in North Dakota and Minnesota and previously owned his own business. Gary McDaniel is a survey technician in land services in the Bismarck, N.D., office. McDaniel worked previously for the North Dakota Department of Transportation after spending several years as a high school science teacher. Aaron Skattum accepted the position of land surveyor at the Fargo office. He is a licensed professional land surveyor in the Dakotas and worked previously for Kadrmas, Lee & Jackson. Eileen Hess has taken on the role of market development manager — power industry in the Fargo office. Hess has more than 20 years of professional technical sales experience in industrial, commercial, utility and construction industries.

|PRAIRIE PEOPLE| AE2S adds to staff

Sanford Case

Jared Heller

Alec Bry

Advanced Engineering and Environmental Services Inc.(AE2S) recently added engineers at three of its offices in North Dakota. Sanford Case joined the firm as a senior project manager and will be based at its headquarters in Grand Forks.Case previously worked for more than 20 years as a vice president and senior project manager at HuittZollars Inc. in Dallas. He is a licensed professional engineer in 15 states and is Leadership in Energy and Environmental Design certified. Jared Heller has joined the firm’s Fargo office as a project manager and will be responsible for overseeing several projects in Fargo-Moorhead, Minn., as part of the firm’s water group. Heller specializes in hydraulic modeling and water infrastructure management issues and worked most recently at Moorhead Public Service as a water distribution engineer. Alec Bry will serve as an engineer in the firm’s Williston office. Bry will be a part of the firm’s western area water supply project team and will be responsible for performing construction observation and design. Bry recently earned a bachelor’s degree in civil engineering from North Dakota State University and interned in Florida, where he participated in the construction and upgrade of a water reclamation facility.

Prairie Business Magazine October 2012

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|BUSINESS DEVELOPMENT|

Google representatives offer hands-on website training to small business owners at a Get Your Business Online event in Sioux Falls, S.D., in August. PHOTO : GOOGLE

Google brings website mastery to local level

Internet giant offers state-by-state website training for small business owners BY KRIS BEVILL

s consumers’ lives become increasingly entwined with technology and the Internet,having a website versus not having one can be the difference between success and failure for a business. Given that most people use the Internet every day, the number of businesses that have yet to embrace the technological age is surprisingly high. Research funded by Internet powerhouse Google recently determined that while 97 percent of consumers search online for information about products and services, nearly 60 percent of businesses nationwide do not have websites. Armed with those statistics, Google launched a state-by-state program known as Get Your Business Online about a year ago

Prairie Business Magazine October 2012

with the goal of assisting small businesses in improving their web presence. This summer, Google brought its road show to the prairie, hosting events for a total of about 800 participants in Bismarck, N.D., Sioux Falls, S.D., and Bemidji, Minn. Attendance at the events exceeded Google’s expectations, according to Joe DeMike, head of small business advocacy at the company, who attended the Sioux Falls event and has been involved with Google’s BYOB events in all 50 states. In Sioux Falls, both sessions were standing room only, totaling more than 300 attendees. Bismarck’s event also provided training to about 300 business owners. According to DeMike, the primary reason continued on page 26

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|BUSINESS DEVELOPMENT| continued from page 24 small business owners don’t have websites is because they think they don’t have enough time to do it. However, by not having a website, the business is also virtually shutting the door on a large customer base. “If you are a small business without a website, you become invisible to people who could potentially purchase from you,” DeMike says. Many business owners also believe establishing and maintaining websites will be too complicated, or that if they choose to hire an agency to complete those tasks it will be too expensive. “So we designed the program literally to be fast, easy and free in order to counteract those things,” he says. Each event lasts about three hours and includes information on search engine optimization, search engine marketing, analytics and cloud computing. Ninety minutes of each session is devoted to providing attendees with hands-on help to build websites. Paul Ten Haken, president of Sioux Falls, S.D.-based

online marketing, website design and digital strategy firm ClickRain Inc., assisted in promoting Google’s South Dakota event and says he found the hands-on training to be the most unique aspect of the session. “It’s one thing to sit by your computer and watch tutorial videos and try to figure this stuff out, but for a small business owner to actually have someone standing over their shoulder, pointing at the screen, saying ‘This is how this works,’ … I think that was pretty cool,” he says. “You just don’t see that kind of personal interaction from such a large brand very often.” In addition to hands-on training, websites have been created for each state — northdakotagetonline.com; southdakotagetonline.com; minnesotagetonline.com, etc. — that offer a full year of complimentary website training for any interested business person. Google doesn’t track the types of businesses that register for its events, but DeMike

has noticed a mix of service providers, product developers and typical Main Street businesses at each event. About half of the attendees already have websites, he says, but they want to learn how to improve them and increase traffic to their sites. Google plans to return to communities approximately every six months to offer similar training, according to DeMike, so he expects to return to the northern Plains this winter. “These events are not just a one-time thing,” he says. “We want to stay a part of the community.” Google partners with local and national groups for each event, including Intuit Websites, SCORE, which is a nonprofit association focused on providing education to entrepreneurs, and small business development centers. PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

%41"+0("2// (2!-*1(21* For years Trinity’s CancerCare Center has been a destination of hope, providing exceptional care to our patients. Today, Trinity Health is growing to meet the needs of the region, and our new CancerCare Center offers even greater access to the most advanced Cancer ﬁghting technology available. Trinity Health offers a supportive environment for both patients and their families, along with exceptional care delivered by an experienced team that will never give up on you. Together we’re making cancer history in North Dakota.

Prairie Business Magazine October 2012

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|HEALTH CARE |

The Benefits of Bigger

Sanford Health executives discuss how the nation's largest rural health care provider manages quality care across a vast region BY KRIS BEVILL

The Sanford Aberdeen Medical Center is the first project Sanford Health has built from the ground up. The facility began offering services to patients in July. PHOTO: SANFORD HEALTH

Prairie Business Magazine October 2012

ealth care mergers can be scary prospects for communities but the fears associated with merging are oftentimes unwarranted. Such is the case with Sanford Health, according to the organization’s leaders. The blue lights of Sanford Health have become a common sight on an increasing number of buildings across the northern Plains in recent years as the organization steadily expands its network, often through mergers with existing health care providers. But while the deals may have been met initially with contention by some community members, the mergers have so far proven to be beneficial to those communities. Hesitation and skepticism are natural reactions to health care mergers considering the emotional investment communities make in local health care facilities, says Dave Link, senior executive vice president at Sanford Health. And health care facilities are often the largest employer in a community so it is important that communities make the right decision. Becky Nelson, chief operating officer at Sanford Health, compares concern with health care mergers to the concern often displayed when small schools consolidate. “People’s financial and emotional attachment in schools in communities is significant,” she says. “And there is a misconception that ‘we’re going to merge so we’re going to lose our identity.’” But in fact, when it comes to health care mergers, communities are often enhanced by the change because a large system allows for operational enhancements that wouldn’t otherwise be possible. In Fargo, N.D., for example, nearly $20 million has been saved in supplies and services since the merger between

|HEALTH CARE| Sanford Health and Meritcare in 2009. “It’s been our experience in all of the communities that we’ve been a part of throughout the region that we can provide more services to these communities over time by leveraging the value of our entire health system,” Link says.

Keeping it Local

Sanford Health is the largest rural health care provider in the nation and the largest employer in the Dakotas. The vastness of the region which it services also makes Sanford the largest health care system in contiguous geography in the country, encompassing more than 200,000 square miles and 126 communities. Despite its size, Sanford Health is committed firmly to retaining health care services in small communities. “We really mean it when we say we want to keep health care close to home,” Nelson says. “We believe that health care is every community’s asset. As a health care system, we don’t need everything in the larger towns. It’s just fine to be in the small communities. That’s what we’re about.” Servicing such a widespread region may be Sanford Health’s greatest commitment but it is also its biggest challenge. Nelson says the organization has developed a unique structure to bring all of the separate pieces under one umbrella, the cornerstone of which is technology driven. “We couldn’t do what we do today without that electronics connectivity,” she says. Video conferencing and telemedicine programs are utilized to connect doctors in outlying areas with specialists at larger facilities, for example. The connectivity also allows hospital leadership to share ideas and operational updates with ease. Another technological feat being carried out by Sanford Health is expected to revolutionize the way health care is provided throughout the area. The organization has been rolling out its electronic medical records (EMR) system for the past five years. The system basically creates one electronic chart for each patient and can be accessed at any Sanford facility. Earlier this year, Sanford Health performed what Nelson calls “the big bang” in Fargo — everyone was brought into the system simultaneously. The system is expected to improve the quality of health care by streamlining the method in which medical records are

stored and accessed. Gone will be the days of patients carrying x-rays from room to room or caregivers at one facility having to spend time tracking down the history of care given to a patient at another location. “It’s going to have a profound change on what’s available to the patient,” says Nelson, who compares the significance of the switch to EMR with the move from landlines to cell phones. The technological advancement doesn’t come without a hefty cost, however. Sanford Health’s annual IT (information technology) budget weighs in at more than $100 million, which is another reason why consolidation can benefit smaller communities, Nelson adds. The significant financial investment necessary to make EMR a reality is simply beyond the reach of smaller organizations, but by being part of a large system, they can gain access to the latest advancements.

Construction and Consolidation

To date, the majority of Sanford Health’s growth has come in the form of mergers. The most recent consolidation has been in Bismarck, N.D., where Sanford and BismarckMandan-based MedCenter One celebrated their merger on Aug. 29 with a celebration and unveiling of the 228-bed hospital’s new signage, symbolizing the final step of a union that was officially forged earlier in the summer.

Sanford Health plans to make BismarckMandan the epicenter of western expansion for the organization as providers work to keep pace with oil and gas-related development activities. The organization plans to break ground on a super clinic in Dickinson, N.D., this fall, a project which Nelson says stems from energy industry growth in the area, adding that the expansion is being made easier by the recent merger in Bismarck. A completion date for the super clinic had not been set by mid-September, but preliminary infrastructure work was being conducted at the site. Despite its massive size, new construction is a fairly new undertaking for the organization. Sanford Health’s network includes 34 hospitals, but the first project to be built from the ground up just opened in July. The Sanford Aberdeen Medical Center, a $60 million project, opened July 16 in Aberdeen, S.D., after approximately two years of construction. The 48-bed medical center connects to Sanford Health’s previously existing clinic and has exceeded the organization’s expectations since opening, according to Nelson. The center plays a key role in connecting the system’s offerings, serving as a convenient halfway point between the organization’s dual headquarters in Sioux Falls, S.D., and Fargo. In Fargo, Sanford Health made headlines earlier this year when it held an official ground

Updates at Sanford Health's existing Fargo medical center are expected to be carried out after construction of the organization's new medical center is complete in 2016. PHOTO: SANFORD HEALTH

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|HEALTH CARE | mer, Sanford Health expects to have five clinics in operation at locations throughout Ghana. In West Dublin, Ireland, a children’s clinic is expected to be operational in 2013, also as part of Sanford Health’s world clinic initiative. A children’s clinic in Israel is scheduled for completion in 2014. A total of $1 billion in construction projects are planned over the course of the next five years, according to the organization. Nelson says Sanford Health will continue to evolve and grow domestically as needed, although no additional consolidation projWorkers unveil the new Sanford Health signage at the former MedCenter One building in ects are in the immediate plans. “We’ve had a Bismarck, N.D., on Aug. 29, marking the final step in the health care providers' merger. lot of inquiries because it’s happening in the PHOTO: SANFORD HEALTH industry,” she says, adding that health care systems across the nation are realizing that breaking ceremony for what is said to be the largest private construction project in North Dakota’s history. In 2016, the Fargo Medical consolidation can achieve necessary economies of scale in order to Center is expected to open its doors to serve more than 4,200 control costs. Sanford Health does not seek out consolidations, patients each day in a facility that will cover 1.3 million square feet, however, according to Nelson, who says the organization instead equivalent in size to 22½ football fields. The project is estimated to simply “answers knocks at the door.” From there, merger discussions continue depending on the circumstances of each unique scecost $541 million and will employ 2,000 staffers when finished. While construction in Fargo is just beginning, another $60 nario. “Sometimes we ask them to stay for dinner, sometimes we million medical center is further along in Thief River Falls, Minn. don’t,” she says. Sanford Health President and CEO Kelby Krabbenhoft said That facility will include a 25-bed critical access hospital and will expand upon services offered at the organization’s existing clinic. recently that the organization’s $3 billion in annual revenues allow More than 500 people will be employed at the medical center when it to take on the long list of development projects. The organization it is complete in 2014, according to the organization. In September, also benefits from a sizeable piggy bank provided by its namesake, Sanford Health also began constructing a 45,000-square-foot clinic Denny Sanford, who has donated nearly $700 million since 2007, in Moorhead, Minn., which is scheduled to open in July 2014. That and holds the title of delivering the largest gift ever to a U.S. health facility is set on 27 acres of land along Interstate 94 and will include care organization — $400 million in 2007. Sanford’s donations have lab services, a pharmacy, gift shop and deli, in addition to various enabled the expansion of the Sanford Research division, which employs about 230 researchers focusing on specific areas including medical services and programs. Various projects are being undertaken elsewhere in Sanford diabetes, breast cancer, cardiovascular health, children’s health, Health’s network. A 160,000 square foot sports complex known as sports medicine and health outcomes and prevention. Researchers The Pentagon is being constructed at the Sanford Sports Complex working on The Sanford Project, a quest to cure Type 1 diabetes, in Sioux Falls. Billed as a “game-changing destination,” the five- recently completed enrollment for a clinical trial which will test two sided facility will house nine basketball courts of varying sizes and medicines to determine their effectiveness in controlling blood gluwill serve as the epicenter of the larger complex that includes foot- cose levels with less or no insulin. Fulfilling enrollment for this study was a significant milestone because the study required recentball, tennis and soccer amenities. In Bemidji, Minn., Sanford Health broke ground April 12 for ly diagnosed children to participate, a demographic which is usualan orthopedics and sports medicine center which is expected to ly difficult to fill. The Edith Sanford Breast Cancer Foundation is open in the spring. The $9 million construction project encompass- dedicated to curing the disease to which Denny Sanford lost his es a two-story expansion to the existing hospital. When complete, mother, Edith, when he was a small child. A devotion to research and advancement is evident elsewhere integrated services and clinicians from applicable departments will be centrally located within the hospital. The medical center also throughout the Sanford Health network, notably among some of the recently received a $100,000 donation from Friends of Sanford device inventions achieved by staff physicians. Earlier this year, Corey Health which will be used to support the facility’s advanced cardi- Teigen, chairman of Sanford Health’s interventional radiology ology program by establishing a dedicated cardiology suite and department, performed the first abdominal aortic aneurysm stent graft in the U.S. at Sanford’s Fargo medical center using a device he allowing for 24-hour cardiac care. Globally, the organization is also expanding. On Jan. 1, it began developed. Teigen had been developing the device for years, prior to operating its first clinic in Cape Coast, Ghana, Africa. By next sum- the Sanford-Meritcare merger, but he says Sanford has been very sup-

Prairie Business Magazine October 2012

|HEALTH CARE | portive of the research since the organization entered the pictutre. Link, who oversees Sanford Health’s research division, says the organization’s commitment to research and advancing overall care helps to attract and retain the most talented physicians, resulting in improved care and quality for the patient. Additionally, because the research centers are closely connected to treatment facilities, there is less lag time between break throughs and implementation, allowing patients more access to cutting-edge procedures. Despite the size of the network and the growing number of services and specialties, Nelson and Link both say the mantra of the organization is quite simple: provide the best care to people in the areas where they live. “We don’t grow big just for the sake of growing big,” Nelson says. “We focus on our core business and areas that are important to the people we serve.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|JOBS|

Help Wanted

States and businesses aggressively recruit new workers to the northern Plains

BY KRIS BEVILL

e’re all familiar with the saying,“good help is hard to find.” In our region, that sentiment has never been truer. The recent period of economic activity in the upper Midwest has spurred significant job creation, but the number of available workers in sparsely populated states like North Dakota and South Dakota hasn’t been able to support the number of available jobs, leaving some employers struggling to fill vacant positions. To cope with this unique situation, businesses, organizations and government agencies are employing a variety of methods to attract not just any candidates to the region’s workforce, but the right ones.

S.D. WINS

South Dakota’s leaders view the state’s shortage of adequately skilled workers as a long-term issue. This year, state agencies began implementing policies to address the workforce situation in the Mount Rushmore State. In January, Gov. Dennis Daugaard announced the launch of these initiatives, known collectively as South Dakota WINS, with the goal of attracting and developing a

Prairie Business Magazine October 2012

stronger, better-educated workforce. “Just as much of the rest of the country is experiencing, our population is aging and retiring from the workforce,” says Daugaard policy advisor Kim Olson. “That trend, in combination with South Dakota’s strong business growth and economy, means we have more jobs than workers. It’s a good problem to have, but we recognize the need to fill the gap to assist further business growth.” Twenty programs are housed under the S.D. WINS umbrella, each categorized into one of four goals: preparing youth, skilled jobs training, rural health occupations and recruiting new South Dakotans. The programs are geared toward alleviating ongoing shortages in sectors that are expected to be most in need of workers — engineering, financial services, health care, information technology (IT), manufacturing and STEM (science, technology, engineering and math) teachers. Some of the programs required legislative action during the 2012 session and so were not launched until the new budget began in July, according to Olson, but all programs presented to legislators were approved.

|JOBS| A variety of approaches are being taken to make the initiative successful, but money always talks, so a number of the programs will utilize cold hard cash to achieve their goal. For example, under the Preparing Our Youth program, the state awarded six university-public school partnerships with about $50,000 each to improve science and math education. The state also plans to offer bonus pay to STEM teachers. To improve the skills of available workers, approximately $1 million of South Dakota’s federal Community Development Block Grant allocation has been distributed to fund localized job training efforts. Other recruitment strategies have more of a grassroots feel. Former state residents, people who were raised in South Dakota but moved away for college or a job opportunity, for example, were an early target group for potential recruitment so the South Dakota Department of Labor and Regulation created www.DakotaRoots.com, a website designed to entice out-of-state workers to return home. This summer, the labor department also collaborated with South Dakota universities to issue a mailer to alumni who have moved out of the state, reminding them that jobs are available in South Dakota. Response to both campaigns has been impressive. DakotaRoots.com boasts more than 13,000 registrants since its launch, representing individuals from every state in the nation. Traffic to the website nearly quadrupled after the alumni mailer, according to Dawn Dovre, public affairs director at the state labor department. Of the registrations received as of early September, approximately 2,500 people had accepted positions in the state, she says. But considering that the average age of employees being placed in jobs through the program is 36, it is likely that the returning workers are bringing families with them, thus boosting the state’s population and future workforce pool even further. The labor department has also targeted older workers and stay-at-home parents as existing groups that could contribute to the workforce. South Dakota is projected to have more jobs than workers through 2020, according to Dovre, so every nontraditional group within the state is being examined for its potential. Dovre and the governor’s office suggest that businesses in need of employees utilize the state’s resources to help them fill the positions. They recommend posting job openings with the labor department and reviewing the department’s list of job seekers to find a potential match. Olson says many South Dakota businesses also work directly

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|JOBS| cific focus of a recent gathering in Fargo, N.D. The one-day conference, subtitled “The Next Generation of Jobs in North Dakota,” was hosted by the Fargo Moorhead West Fargo Chamber of Commerce and included speakers from several of the metro area’s cutting edge technological companies who offered their insights into recruiting employees in the highly competitive technology jobs market. Speakers at the event agreed that despite the challenge of recruiting workers, Fargo is an attractive location for businesses because it offers employees a quality of life not found in other states and has a strong economy to support business Many South Dakota counties are in need of more workers to meet growing demands from businesses. activities. An increasing number of technology and State officials and recruitment specialists agree that while the state may be losing some prospective biotechnology firms are basing their operations in workers to North Dakota’s oil and gas industry, it also gains workers who have been in the Bakken region and want to escape the rigorous demands of oil field work. Fargo, a scenario which can assist in recruiting IMAGE: SOUTH DAKOTA DEPARTMENT OF LABOR AND REGULATION qualified workers to the area, according to Michael with post-secondary schools to ensure students pluses, but other benefits can tip the scale in the Chambers, president and CEO of biotechnology are receiving adequate training for fields in need employer’s favor. For example, Brown says several firm Aldevron. “It’s hard to bring people in if of workers. Manpower clients have added health centers to their there’s only one game in town,” he said. Many company leaders said Fargo’s close proxAnother S.D. WINS program, called 1,000 facilities; others offer relocation plans. “Any extra New South Dakotans, provides a unique opportu- thing you can do in this environment can go a long imity to multiple universities assists their recruitnity for businesses to recruit needed workers in the way,” he says. “Companies are realizing that if they ment efforts and they like that they are able to work areas of manufacturing, IT, engineering and finan- have some good fringe benefits along with a good directly with the colleges to groom new crops of workers for the industry. They also utilize social cial services. The state contracted national recruit- wage, they will attract good employees.” ment firm ManpowerGroup to fill 1,000 jobs in If South Dakota is to meet its need for work- media, specifically the professional networking webthose sectors by May 2014, focusing on in-state ers, an increasing number of people need to be con- site www.LinkedIn.com, to quickly and cost-effecrecruitment for the first 30 days of a job listing and vinced that the move will be worth it. The number tively spread the word when seeking new employexpanding the search nationwide afterward, specif- of nurses and IT positions in the state is expected to ees. Jim Traynor, director of client management at ically targeting surrounding states and areas with increase by 20 percent from 2010 to 2020. health care software firm Intelligent Insites, said depressed economies. By early September the firm Manufacturing jobs, financial positions and engi- social media sites such as LinkedIn are a great way had recruited more than 1,200 possible workers neering professions are also expected to increase for the company to connect with people who may have left the state and want to return. His compaand submitted 655 people for potential positions, significantly over the next decade. according to Clinton Brown, program manager for Manpower is predicting similar scenarios in ny is aggressively recruiting new employees to its Manpower’s Sioux Falls office. some of the same sectors on a wide-spread scale. Fargo headquarters using a variety of methods, Brown says the biggest hesitation for out-of- “There is a talent shortage that is global and it will including social media. Traynor said the firm has state workers considering South Dakota is simply continue that way,” Brown says. He attributes the doubled in size to about 70 employees since the relocation. However, once the firm provides peo- long-term issue to inadequate education. There beginning of the year and expects to employ more ple with an analysis of wages and cost of living may be enough people in the U.S. to fill the short- than 100 workers next year. Sen. John Hoeven, R-N.D., co-sponsored the comparisons between their current location and ages, but they lack the necessary skills for the availdaylong event and offered words of praise for the South Dakota, “we’re usually pretty successful at able jobs. “You can’t just go to high school and that point,” he says. Brown, who is himself a trans- think that you’re going to work these jobs,”he says. state during his welcome speech, noting that plant to South Dakota, believes strongly that when “You’re going to have to get the skills necessary to North Dakota has succeeded in building a strong people do make the decision to move to the state, work in those jobs.”He commends South Dakota’s legal, tax and regulatory environment that is they don’t regret it. “Midwest states have great efforts to boost offerings at technical colleges to attractive to businesses. He credited the energy benefits, (such as lower income tax rates) and once train workers for in-demand jobs and says its ini- industry in the western part of the state for a large people come here and realize the quality of life, tiative to address the overall workforce shortage part of the state’s economic growth, but said the they stay,” he says. situation sheds light on an issue other state leaders eastern part of the state boasts a healthy technology sector with ample potential for growth. In his experience as a recruiter, Brown has are choosing to ignore. Companies at the event represented a “glimpse found the companies that are the most successful into the technology development that is driving in attracting new employees are those with creative ‘The First Fargo’ The growing technology sector was the spethis country,” he said. “This really is the future.” perks. Insurance packages and flex accounts are

Prairie Business Magazine October 2012

|JOBS| Jeff Davis, manager of enterprise evangelism for Google, told the event’s 300 attendees that as technology advancements are more readily incorporated into businesses, the most desirable qualities in potential employees are also changing. Jobs are faster-paced than they used to be and often require a “mash-up of skills,” which increases the value of a person’s creativity and problem-solving skills versus an educational degree, he said. From the employee’s perspective, Davis said research has shown that while salary and benefits may have traditionally been the main drivers for employment, the next-generation of employees rank access to technology, such as smart phones or other devices, over salary when choosing an employer. Doug Burgum, entrepreneur, venture philanthropist and founder of Great Plains Software-turned-Microsoft campus, delivered a keynote speech on how to utilize technology and make companies more attractive to future employees. He encouraged businesses to confront assumptions related to business structures and re-evaluate those ideas. For example, many businesses assume that when a new employee is hired, that person must have space within an office. In fact, that employee may not need to work in an office setting because technology exists to maintain connectivity and collaborative efforts from anywhere. He warned employers that the younger generation is inherently more tech-savvy and urged business leaders to embrace advancements or “be run over by the next generation.” Following Burgum’s speech, his son, Joe, who also happened to be the youngest attendee of the conference, asked what Fargo can do to make itself known in the technology realm as “the first Fargo” rather than a second Silicon Valley. Burgum cited the state’s wealth and supportive leaders as being two unique aspects, but settled on the strengths of the people living and working in the area as being its most valuable assets. “We have an opportunity to think about creating our own future,” he said. “But we can’t be complacent. We need risk takers.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|NATURAL GAS|

Prepare to Gather

Increased natural gas production in the Bakken opens up the opportunity for new ventures BY KRIS BEVILL

Natural gas is flared at an oil well in Williams County, N.D. SOURCE: AMY DALRYMPLE/FORUM COMMUNICATIONS

Prairie Business Magazine October 2012

ust as businesses and residents of western North Dakota were beginning to catch their breath after half a decade of unprecedented petroleumrelated development and settle in for an anticipated two decades of boom times, a recent study predicts that the next wave of development is soon on its way in the form of natural gas production. According to energy market analysts at Bentek Energy LLC, the amount of natural gas produced at well sites in the Williston Basin could triple in the next 10 years, making vital the need for expanded gas gathering pipelines and processing facilities throughout the area. The needed expansion work will likely usher in a new period of opportunity for construction projects, service providers and fossil fuel energy workers. Because the supply of gas will be so abundant, it also provides the opportunity for demonstrations of ingenuity by those developing unique ways to utilize

natural gas. North Dakota is ready for this new challenge, says state Agriculture Commissioner Doug Goehring, who points to a history of self-sufficiency and the innovative nature of Midwesterners as proof that new strategies are likely to be deployed in order to put the abundant resource to its best use. “We are truly pioneers in many respects, so I think there are opportunities and I think people will continue to look for areas we can improve upon,” he says. “The sky’s the limit.” Goehring, along with the governor and attorney general, serves on North Dakota’s three-member Industrial Commission, a group tasked with overseeing certain state interests, including the renewable energy program, the lignite energy program, oil and gas research and the North Dakota Pipeline Authority. Earlier this year, the Pipeline Authority and the Industrial

|NATURAL GAS|

“We are truly pioneers in many respects, so I think there are opportunities and I think people will continue to look for areas we can improve upon. The sky’s the limit.” - North Dakota Agriculture Commissioner Doug Goehring

Commission asked Bentek to analyze future natural gas productivity in the region and explore what pipeline infrastructure, if any, would be needed to accommodate the supply. Justin Kringstad, director of the North Dakota Pipeline Authority, says the commission’s interest in a natural gas study was prompted by increasing natural gas ratios currently being experienced at older A map of existing natural gas plants and pipelines in the Bakken region offers an indication of what areas have yet to be developed and will likely become Bakken oil wells in Montana. North Dakota leaders targets for expansion. SOURCE: NORTH DAKOTA PIPELINE AUTHORITY wanted to know if the younger oil wells in their state could be expected to perform the same. “The conclusions came back that, yes, we can expect to see growing gas-to-oil ratios as these wells age, and that has a significant impact once place later to handle gas production in response to supply and demand you start looking at another 30,000 wells in North Dakota,” Kringstad metrics. While dry natural gas prices are at historic lows, the Bakken’s says. “The volume adds up very quickly and so the infrastructure — the natural gas is “liquids-rich,” meaning it contains other valuable liquids such as propane and ethane, and therefore commands a higher market number of gas plants and pipelines — will be affected greatly.” price, making infrastructure investments worth the cost. However, it takes time to install natural gas gathering pipelines once a well site has Connecting the Sites Natural gas processing infrastructure already lags behind the supply been deemed worthy and oil wells have been drilled at a rapid pace, cresimply because of the nature of the production process. Of the two major ating a situation which has made gas flares a common sight in the westsources tapped at well sites — gas and oil — oil is the more desirable ern North Dakota sky. If there are no pipelines to collect the gas, proproduct and can be captured and trucked from the well site to process- ducers simply burn it off. Thousands of miles of small-diameter gathering pipelines are ing facilities whereas natural gas, which is considered a secondary prodalready in place in areas of the Williston Basin, but they do not stretch far uct, cannot be gathered for processing without pipelines. Therefore, wells enough into all areas of the region to adequately handle increased proare initially drilled for oil and if the well is fruitful, pipelines are put in

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|NATURAL GAS| about 900 million cubic feet per day. As of August, proposed projects were expected to boost that capacity to approximately 1.4 billion cubic feet per day by 2014. However, the Bentek study found that as much as 3 billion cubic feet of natural gas could be produced each day in the region by 2025, suggesting that natural gas processors must expand their capabilities even further. “That’s what the industry is working on right now — trying to understand the production growth, what the timing would need to be for new plants or infrastructure,” Kringstad says. “We don’t need enough plants today for 3 billion cubic feet, but when is the appropriate time to get these projects moving forward? That’s one of the big questions right now.” Oklahoma-based ONEOK Partners LP currently operates four natural gas processing facilities in the Williston Basin and is the largest operator of natural gas gathering and processing facilities in the area. It is expected to bring three additional processing plants online by 2014 and will install additional pipeline infrastructure to gather the gas, increasThe current capacity of North Dakota’s natural gas processing facilities is ing its total processing capacity to 490 million cubic feet per approximately 900 million cubic feet per day. As of August, proposed projects day and bringing its total investment in the region to for the Bakken region will bring that capacity up to about 1.3 billion cubic feet approximately $4 billion. “We’re there for the long term and per day by 2014. However, a recent study suggests that the amount of natural gas produced in the region could be more than double that amount by 2025, will be there as long as our services are necessary,” company leaving a significant gap for processors to fill. spokesman Brad Borror says. Borrer admits the industry is SOURCE: NORTH DAKOTA PIPELINE AUTHORITY always playing catch-up to accommodate natural gas production and says the Bakken region is no different than other gas plays in the nation in that respect. “We work with duction rates. According to Kringstad, the sheer size of the area is the producers to time it as best we can to connect to their rigs as they industry’s biggest challenge as it begins to expand its gathering and come on-line,” he says. “Sometimes there’s a delay.” processing capabilities. “We’re looking at an oil field that is 15,000 ONEOK is no doubt one of many processors evaluating the need square miles,” Kringstad says. “Prior to the Bakken, that was simply for expansion in the Williston Basin. Established players such as unheard of, to have an oil field of this size.” The harsh climate of the ONEOK may have some advantage for future projects, but Kringstad northern Plains also means that construction activities are difficult to says he’s seen a few new players enter the field recently and he expects execute during the winter months. Additionally, in order to place more to come. “It’s very competitive,” he says. “There are numerous pipelines companies must negotiate with landowners for easement companies that are looking for opportunities in North Dakota.” The areas, some of whom may have become skeptical of further developindustry’s anticipated new investment in natural gas pipelines and ment if they have had bad experiences with oil and gas developers in processing plants over the next few years is already approaching $4 bilthe past. Goehring says he is sympathetic to landowners’ concerns and lion, he says. encourages companies to limit their impact on the land as much as possible, but he also reminds landowners that increased pipeline infra- Unique Opportunities structure will limit the amount of flaring at wells and will add to North Perhaps the most intriguing aspect of increased natural gas proDakota’s growing role in providing energy for the entire nation. duction, according to those involved at the state level, is the opportuKringstad also emphasizes reduced flaring as a positive aspect of the nity for value-added production projects. Goehring says he has had growth, pointing out that as more pipelines are put into place, new oil multiple conversations with companies interested in producing variwells may not flare gas at all because there will be an existing pipeline ous products derived from the liquids in natural gas, such as plastics network to gather gas, allowing for the immediate hook-up to freshly or polyurethanes. “There are so many things that can be done with drilled wells. “We’re getting the snowball rolling down the hill,” he says. petroleum products,” he says, adding that he is encouraging of those “As this footprint grows, as we expand our reach of these gathering sys- types of projects but none have moved beyond preliminary discustems, each new well drilled in the future is going to be that much clos- sions at this time. er to a pipeline system.” Two proposals that are on the table, however, would utilize gas for

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Prairie Business Magazine October 2012

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|NATURAL GAS| continued from page 38

affordable price than current options. One of the projects is being spearheaded by Northern Corn Development Corp. and calls for a $1 billion investment from the region’s farmers to establish a cooperative-type plant in the Oil Patch that could produce enough dry product fertilizer per year to service 10 million acres. So far the state has provided two small grants to assist in the development of this project. Another proposal, suggested by N-Flex LLC, would utilize natural gas at the wellhead by locating mobile processing units at sites to produce up to 3.3 tons of anhydrous ammonia per day per unit. The product could be sold within a small radius of the plants, reducing transportation costs and lessening traffic on overworked Oil Patch roads. Company founder Neil Cohn has requested a $1 million grant from the Industrial Commission to offset some of the costs of the initial unit. The unit would need to be modified to accommodate North Dakota’s harsh winter climate, therefore the first few mobile processing plants could cost more than $4 million each, but future units could cost closer to $1 million as the design process is perfected, according to Cohn. The Industrial Commission had not yet approved Cohn’s request for funding by late August but the state was supportive of the project and Cohn expected to eventually receive the green light to commence development.“We’re pretty confident this project will move forward and we’re very confident that this project makes sense,” he said. Goehring says both projects offer potential to benefit the entire region. The projects will produce different fertilizers which are both in high demand from farmers in the area. The Northern Corn Development project would service a massive area, which makes it desirable for the agriculture industry throughout the northern Plains and into Canada, whereas the N-Flex project offers reduced environmental impact because it isn’t reliant upon pipeline infrastructure. “That’s a big plus because if we don’t have time to get gathering lines into wells, this provides an opportunity to immediately reduce flaring, collect the gas, turn it into fertilizer and create revenue for the mineral owner and the state,” Goehring says. “It has a lot of positive attributes to it.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

Prairie Business Magazine October 2012

|RED RIVER VALLEY|

Groundbreaking marks new beginning for tiny town Ag equipment manufacturer expands to Mapleton, ND

BY KRIS BEVILL

Company and government officials participate in a ceremonial groundbreaking Aug. 25 at the site of Horsch Anderson LLC’s 100,000-square-foot manufacturing facility in Mapleton, N.D. Left to right: Kory Anderson, president, Horsch Anderson; Traugott Horsch, director, Horsch Maschinen GmbH; N.D. Gov. Jack Dalrymple and Mapleton Mayor Eric Hillman. PHOTO: HORSCH ANDERSON LLC

n Aug. 25, agriculture equipment manufacturer Horsch Anderson LLC broke ground on a 100,000 square-foot manufacturing facility in Mapleton, N.D., marking the start of what is expected to be a time of significant growth for the town of about 800 people. “This company is going to be a game changer for our town,” says Mapleton Mayor Eric Hillman. “It’s one of the things we’ve been working on for some time, is to get somebody in that can help our city grow.” Mapleton is a bedroom community for nearby Fargo and has experienced some difficulty retaining its individual identity over the past several years. The town’s school, which has about 100 students in grades kindergarten through 12, has narrowly avoided the chopping block three different times, according to Hillman. Now, the potential for an increasing population means the school may need to consider expanding in a few years as opposed to shutting down. Indeed, with an anticipated workforce of up to 300 in five years, Horsch Anderson has the potential to provide a major boost to the town and would be considered a “get” for a city of any size, Hillman says. “Fargo is even jealous,” he adds. Workers at the Horsch Anderson plant could live in Fargo and commute the five miles to Mapleton, but Horsch Anderson President Kory Anderson hopes his company will breathe new life into the small town. “We want to be a part of their growth and development,” he says.

Prairie Business Magazine October 2012

Anderson began his relationship with Mapleton last year when he purchased an existing manufacturing business to serve as a parts manufacturing plant for the current Horsch Anderson assembly facility in Andover, S.D. When Horsch Anderson determined the criteria for an additional location — proximity to a major city with available skilled workers, convenient interstate access and good visibility — he knew Mapleton was an ideal candidate. “It’s right off the interstate [I-94] and it’s only a few miles west of Fargo so it’s kind of the perfect situation for having a business,” Anderson says. Anderson informed Hillman of his company’s interest in Mapleton and the city formulated a tax increment financing package to assist with infrastructure costs for the $12 million project. Now that construction has begun, the project should move ahead quickly. Some management positions have already been filled and the plant is expected to begin production by June 1. The facility will initially employ 40 to 50 workers but will quickly ramp up to 80 full-time employees. In the first year of production, Anderson expects 400 machines could be produced in Mapleton, increasing the company’s sales by 50 percent from 2011’s total of $20 million. The company expects to expand the facility within a few years and employ 200 to 300 workers. Anderson attributes Horsch Anderson’s steady growth to innovative products that increase farmers’ profitability and efficiency.

When the company was launched in 2000 through the combined efforts of Anderson Industries, Germany’s Horsch Maschinen GmbH and Harper Industries of Harper, Kan., its initial focus was air seeding equipment, which is marketed mainly to small grain farmers in the Dakotas and Canada. The introduction of a tillage tool called the Joker in 2009 expanded the company’s market area and is responsible for much of its current rate of growth. “It really expanded our business into new markets and has taken off very quickly in the past few years,” Anderson says. “We have a huge demand right now for our production and we have to make a move quickly to increase our production to keep up.” Anderson, whose family farms 5,000 acres near Andover, says farmers have become more interested in innovative equipment as land prices have skyrocketed in recent years. “When a farmer has to pay so much more for his land or the cash rent, he has to do everything possible to maximize his efficiency and his profitability so he can make money farming that land,” he says. Even in down times, such as nationwide droughts, “farmers are still going to be farming and the successful farmers are still always looking at ways to be more efficient and maximize their profitability.” PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|SOUTH DAKOTA|

Members of South Dakota Prairie Gateway include:

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· Aberdeen Development Corporation · Absolutely! Aberdeen · Campbell County Economic Development · Clark County Economic Development · DeSmet Economic Development Corporation · Deuel Area Development Inc. · Eureka Community Development Company · Faulkton Economic Development · Glacial Lakes Area Development · Grant County Development Corporation · GROW South Dakota · GROW Spink · Ipswich Community Economic Development · On Hand Development Corporation · REED Fund · Sisseton Economic Development Corporation · Webster Area Development Corporation

Economic development groups launch regional website to attract and expand business BY KRIS BEVILL

or rural community leaders, the task of promoting their towns to prospective businesses in a global landscape can easily make one feel as though they are the needle in the proverbial haystack. There may be a number of project developers and businesses seeking compatible sites that would make a great fit with the community, but drawing site selectors’ attention to lesser known regions of a state with minimal resources can be a gargantuan challenge. Many economic development divisions in rural communities consist of just one person working with a tiny operating budget. How can they compete with more populated regions of a state and stand out from the crowd? In northeastern South Dakota, 16 small communities stretched across 30 counties and GROW South Dakota have come together to combat that challenge through a collaborative web-based economic development portal designed to entice site selectors to their region. The South Dakota Prairie Gateway website — www.SDPrairieGateway.org — provides information related to real estate,available work force and incentives packages for the entire region as well as for each individual community. It is believed to be the first project of its kind in the U.S. to promote an entire region through the combined efforts of the area’s communities. Communities involved represent an extremely rural region of the state. Aberdeen, with an approximate population of 25,000, is the largest community affiliated with the project. Funded in part by a $149,000 grant from the USDA Rural Development agency, South Dakota Prairie Gateway’s mission is to attract and expand businesses in areas that may not otherwise have the means to effectively promote their strengths to prospective businesses, according to Paula Jensen,

Prairie Business Magazine October 2012

Development agencies in rural northeast South Dakota have joined to promote the area's overall business potential. SOURCE: SOUTH DAKOTA PRAIRIE GATEWAY

funds development director for GROW South Dakota. GROW South Dakota served as the project developer for SDPrairieGateway.org. Little Falls, Minn.-based Golden Shovel Agency was selected to create and manage the website and social marketing plan. Jensen says Golden Shovel won the project because it is focused solely on economic development. “Golden Shovel has a network of national and regional economic development partners, years of experience in the industry and tailor their web development to economic development organizations,” she says, adding that because the majority of site selectors seek initial information about communities from the Internet, a website is a community’s most important business recruitment tool. Social media has become a crucial aspect of a web marketing plan and that phase of South Dakota Prairie Gateway’s project began in late July with the launch of a Facebook page and Twitter account. In late August, Jensen said the impacts of those efforts had been growing weekly. Ultimately, Jensen and others involved the Prairie Gateway project would like it to serve as a model for other rural regions of the prairie to emulate. “It’s obviously something that can be replicated,” she says. Prairie Gateway developers are willing to provide guidance and documents to economic development groups in other regions to give them a head start with their own plans. “There’s no need to create the wheel again,” she says. PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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|WESTERN NORTH DAKOTA|

Mandan-led consortium gets $9.7 million for business loans

Funding designed for business owners with good credit, lack of equity BY KRIS BEVILL

y December, businesses in at least 38 municipalities throughout North Dakota will have the opportunity to apply for a small business loan program that could, for some, make the difference between starting up and giving up. The State Small Business Credit Initiative, signed into law in 2010, is a $1.5 billion federal program designed to provide support for small businesses by awarding states funds for programs which can be used to assist credit-worthy small businesses that may not qualify to receive loans on their own. In August, a consortium of municipalities led by the city of Mandan finalized an agreement to receive $9.7 million from the U.S. Department of the Treasury under the program. The Lewis and Clark Regional Development Council in Mandan will serve as the program administrator and is currently putting the finishing touches on the details, according to Ellen Huber, business development and communications director for the city of Mandan. “We anticipate having the loan participation program up and running and available to businesses no later than the beginning of December,” she says. Eligible businesses must have no more than 750 employees and emphasis is given to businesses with 500 or fewer employees. “It does exclude some North Dakota businesses, but the vast majority of our existing businesses and start-up businesses would be eligible,” Huber says. Funding can be used for any aspect of business, including property purchases, expansion projects, operating expenses or inventory costs. The average loan amount is anticipated to be about $100,000, but the program is able to accommodate loans ranging in size from $10,000 to $1 million.

Prairie Business Magazine October 2012

Both start-up companies and potential expansion projects can apply for funding through the federal program. However, it can be especially helpful to start-ups because those business owners often do not have the equity banks require in order to approve loan requests, Huber says. Banks typically ask business owners to provide 30 percent equity. This program can reduce that amount to just 10 percent. Huber expects that up to 265 loans could be awarded before the federal portion of the program ends in 2017. However, the program is designed so that municipalities could continue to provide funding past the federal end date if they choose to do so.“As long as the funds are used responsibly, the program could go on in perpetuity,” Huber says, adding that the program also does not require matching funds from the local community, which made it attractive to consortium organizers. Municipalities in the Mandan consortium include: Almont, Beach, Beulah, Bismarck, Bowman, Carson, Casselton, Crosby, Dickinson, Dodge, Dunn Center, Fargo, Garrison, Glen Ullin, Halliday, Hazelton, Hazen, Hebron, Hettinger, Killdeer, Lincoln, Linton, McClusky, Minot, Mott, New England, New Salem, Regent, Sentinel Butte, Steele, Turtle Lake, Underwood, Watford City, West Fargo, Williston and Wilton. A total of $13.1 million was available for North Dakota. Funds were divided between the Mandan consortium and a consortium led by the city of Carrington based on population. PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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Freedom’s Frontier digs in Additional dragline at lignite mine allows access to deeper coal BY KRIS BEVILL

Freedom’s Frontier, one of three identical massive draglines used at the Freedom Mine near Beulah, N.D., to remove the layer of earth above lignite sources, stands 215 feet tall and has a boom length of 340 feet. PHOTO: NORTH AMERICAN COAL CORP.

Prairie Business Magazine October 2012

n July, Beulah-N.D.-based Coteau Properties Co. welcomed a new dragline into operation at the nation’s largest lignite coal mine, Freedom Mine, north of Beulah. The 13-million-pound Bucyrus Erie Model 2570 walking dragline, dubbed Freedom’s Frontier, had been purchased in 2003 but sat unassembled for several years, patiently waiting to be called into duty when the need to access deeper seams of coal required its use. And now its time has come. Coteau Properties, a subsidiary of Texas’ North American Coal Corp., has operated the mine since 1983 and supplies 15 million tons of coal annually to Basin Electric Power Cooperative’s Dakota Coal Co., which in turn markets the product to several North Dakota power plants as well as to the Great Plains

Synfuels Plant in Beulah. Ultimately, those 15 million tons of coal produce a combined 1,600 megawatts of electricity each year as well as natural gas and other products. Prior to July, two draglines identical to Freedom’s Frontier had been able to efficiently move the massive amounts of clay material at the mine — known as overburden in the mining industry — to access the coal that rests below, but shallower seams of coal have been mined through over the past two decades and additional equipment has become necessary in order to efficiently mine deeper sources of coal. “We’re getting to a point in time where demand from Dakota Coal is still at 15 million tons but the amount of overburden is growing, so we’ve got to move more earth to get the same

|ENERGY|

number of tons out of the ground,” says David Straley, manager of government and public affairs at North American Coal. “By far, when you look at the number of yards that we move, the best and easiest option is the dragline.” Each of Coteau Properties’ draglines can scoop up 150 tons of earth per minute in massive buckets that hold the equivalent of four 4-wheel drive Suburbans. Without Freedom’s Frontier, Coteau would need to employ a truck and shovel fleet or some other type of moving equipment to remove the additional overburden, but that option wouldn’t be as economical, Straley says. He declined to release the cost of the Frontier, which is not a new model and was previously used at a coal mine in Illinois, but says new draglines could cost as much as $180 million. The two draglines already in use at Freedom Mine were purchased for $40 million each in the 1970s, according to Coteau Properties. Even though shallow seams of coal have been mined through, Freedom Mine is far from being depleted of its lignite. According to Coteau Properties, North Dakota is estimated to have enough lignite to last 800 years at the current rate of use. The current 15 millionton-per-year supply contract with Dakota Coal runs through 2035 and the addition of Freedom’s Frontier will allow Coteau Properties to meet that demand at the best cost, Straley says. Life of mine plans offer an indication of how deep the coal will be 25 years from now and Straley assures it won’t be a situation where deeper digging is continuously required to meet supply demands. “Even though it’s deeper than it was in the past few years, it’s not going to be so deep that it will make it uneconomical to mine,” he says. “We’ve got access to coal for as long as they would ever want.” Fifteen new employees were hired in direct relation to the commissioning of Freedom’s Frontier. Coteau Properties entire staff includes nearly 400 employees. PB

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|ENERGY|

Scientists explore biotechnology to clean up frack water

Federal grant will assist in development efforts

BY UNIVERSITY OF MINNESOTA

racking, the use of hydraulic pressure to release natural gas and oil from shale, has the potential to meet energy demands with U.S. resources and stimulate the economy. However, the practice also carries possible environmental and public health risks, most notably water contamination. A University of Minnesota research team is addressing this challenge by developing innovative biotechnology to purify fracking wastewater. Headed by Larry Wackett, a professor in the College of Biological Sciences, the team includes Alptekin Aksan, professor in the College of Science and Engineering, and Michael Sadowsky, professor in the College of Food, Agriculture and Natural Resource Sciences. The effort has earned a new $600,000 grant from the National Science Foundation’s Partnerships for Innovation (NSF-PFI) program, which pairs academic researchers with companies to transfer academic knowledge to the private sector and produce innovative technologies that benefit the public. This is the first NSF-PFI grant awarded in Minnesota. Wackett, Aksan and Sadowksy, as well as CBS Dean Robert Elde, are co-investigators. Elde’s role is to lead interaction between the researchers and the companies. If the project is successful, the team will be eligible for additional NSF funding. The three scientists, all members of the university’s BioTechnology Institute, are using naturally-occurring bacteria embedded in porous silica materials to biodegrade contaminants in fracking wastewater, a technology they originally developed to remove agricultural pesticides from soil and water. They now have the ability to customize the technology to degrade chemicals in water used for fracking.

Prairie Business Magazine October 2012

Their goal is to make the water suitable for reuse in fracking of other wells and significantly reduce the amount of water used by industry. The team will work with Tundra Companies of White Bear Lake, Minn. on silica encapsulation technologies, and Luca Technologies of Boulder, Colo. on a related effort--using encapsulated microbes to recover natural gas from depleted coal beds. Neither company is involved in fracking. However, they see a business opportunity in helping the U.S. meet its energy needs domestically in an environmentally responsible fashion. The university’s role is to further develop a platform technology that could be used by these and other companies. Evaporation and filtration, the current frack water treatment methods, are expensive. Moreover, they don’t eliminate chemicals; they simply reduce them to a concentrated form. Industrial scale evaporation and filtration are energy intensive, and both methods leave behind a chemical residue that presents a disposal challenge. The research team understands public concerns about the environmental impact of fracking, as well as industry concerns about misinformation related to risks, Elde says. The University of Minnesota has reached out to the business community, via its large alumni network, to work together on these issues. “The University of Minnesota is not taking sides in the fracking debate, but as a land-grant research institution, it is uniquely positioned to carry out necessary and beneficial research,” Wackett says. “There are many efforts ongoing to improve the treatment of water used in fracking and we feel that biotechnology can play a significant role in the overall effort.” PB

|ENERGY|

Manufacturers regroup in face of wind credit expiration Uncertainty regarding the future of federal production tax credit affects local production BY KRIS BEVILL

Prairie Business Magazine October 2012

tter Tail Corp. is getting out of the wind industry. The diversified energy producer announced Sept. 6 a deal to sell DMI Industries, its wind turbine manufacturing division, to Texas-based Trinity Industries Inc.for a mere $20 million. The sale includes all property, plant and equipment at DMIâ&#x20AC;&#x2122;s facilities in West Fargo, N.D., Ft. Erie, Ontario, and Tulsa, Okla. Otter Tail will fill tower orders set for delivery in 2012 before the sale to Trinity Industries is complete. The sale is expected to close no later than Jan. 3. The transaction for DMIâ&#x20AC;&#x2122;s West Fargo plant, which employs more than 700 workers, is scheduled to be complete in November. Trinity Structural Towers Inc., a subsidiary of Trinity Industries, currently operates wind tower manufacturing facilities at two locations in Texas, as well as locations in Illinois, Iowa and Mexico. Otter Tail attributes its decision to exit the

|ENERGY|

“In 2013, demand in the U.S. drops by more than 80 percent as the PTC expires and key markets for Grand Forks become export oriented—Canada, Mexico, Panama, Brazil and Uruguay.” - Richard Pettifor, commercial director, LM Wind Power

industry to the looming expiration of a federal tax credit for wind turbine production. The Production Tax Credit provides 2.2 cents per kilowatt hour for the production of electricity from wind turbines and was established in 1992 to help wind energy producers compete with cheaper fossil fuel energy. The credit was meant to provide assistance until the wind industry matured and could compete on a level playing field with other forms of energy. However, while the industry is not quite there yet, the credit may be allowed to end this year. According to Otter Tail, uncertainty surrounding the credit’s future has reduced demand for wind towers and significantly impacted the market value for DMI’s assets, contributing to the company’s decision to sell and refocus its efforts on utility growth. “Our decision to divest DMI is consistent with the course we’ve set to optimize our portfolio of companies, reduce risk and create a more predictable earnings stream to support the dividend and future growth,” Otter Tail President and CEO Jim McIntyre said in a statement. The entire wind industry strongly supports Congressional action to establish a long-term tax credit. Some manufacturers remain confident that demand for turbines will continue without the credit, just not from U.S. producers. Denmark-based LM Wind Power is one of those manufacturers. It employs approximately 630 people at its blade production facility in Grand Forks, N.D., to produce approximately 1,800 blades annually, equating to 20 percent of

the company’s global production. Bill Burga, head of manufacturing, Americas, for LM Wind Power, says he is “confident” blade manufacturing will continue at the company’s U.S. plants, although it is adjusting its capacity to reflect anticipated demand changes. To date, most of the demand for LM Wind Power’s products has come from the U.S., Canada and Brazil, but company officials expect destination markets will shift elsewhere without the U.S. tax credit. “In 2012, demand has focused on the U.S. market due to the rush to finalize installations before the end of the year because of the expiration of the PTC,” Richard Pettifor, commercial director, says.“In 2013, demand in the U.S. drops by more than 80 percent as the PTC expires and key markets for Grand Forks become export oriented — Canada, Mexico, Panama, Brazil and Uruguay.” One potential beneficiary of increased exports from Grand Forks are the twin ports of Duluth, Minn., and Superior, Wis., known collectively as the Port of Duluth-Superior. LM Wind Power has been utilizing the port to export blades from the Grand Forks facility for several years, according to Pettifor, who says Duluth’s port is attractive because it is efficient and can be less expensive than shipping to Houston. Blades sent through the Port of Duluth-Superior reach Brazil in just 16 days shipping time. PB Kris Bevill Editor, Prairie Business 701-306-8561, kbevill@prairiebizmag.com

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To Advertise: John Fetsch

701.238.9574 • jfetsch@prairiebizmag.com

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Shelly Larson

701.866.3628 • slarson@prairiebizmag.com 54

Prairie Business Magazine October 2012