By Cole Boehler
Most business owners would prefer to operate in a booming economy as opposed to one going, or gone, "bust."
Lola Hansen of Sidney can tell you from first-hand experience, though, that a boom doesn't necessarily make operating a business any easier or even more profitable.
Sidney lies near the Montana-Dakota line not far from the confluence of the Yellowstone and Missouri rivers. It also lies in the heart of the Williston Oil Basin, an ancient seabed where once lush forests thrived and dinosaurs of magnificent proportions ranged.
Our junior high science classes explained how all that organic material was covered in mud and compressed to be converted to carbon, in this case crude oil up to three miles below the surface.
Oil was discovered in the region in the 1950s but development of the resource was slow back then, hampered by the expense of drilling 15,000-foot holes and low crude prices since the world supply was plentiful.
But after the OPEC oil embargo of the mid-1970s oil prices spiked and seismographic exploration, followed by deep drilling, began in earnest. Workers were scarce so wages rose and the local economy was flooded with money from big paychecks. Rents skyrocketed as too many workers and too few housing units forced prices up.
Service and hospitality businesses had to pay ever higher wages to lure workers out of the "oil patch" and had to raise prices to cover the higher labor costs. Despite these challenges, most existing businesses prospered, some expanded, new ones were launched. Some businesses never learned to operate efficiently--to control costs--and waste was rife.
But then came the 1980s. The embargo ended, oil glutted the market and crude prices plummeted from up to $46 per barrel down to the $18 range.
That 15,000-feet deep crude was too expensive to pump and ship. Exploration stopped and so did drilling. Many--perhaps most--of the wells were deemed too marginal to continue to produce so were capped.
Oil field workers left by the thousands. Housing was unbelievably cheap and banks owned hundreds of mobile homes. Oil field service and supply businesses were shuttered by the hundreds and many retail, service and hospitality businesses followed suit.
But the ones that were well operated--or got that way fast--survived.
Some of Lola Hansen's diverse enterprises did, some didn't . Sure, the vagaries of an oil economy had some impact, but simple business and economic evolution had a bigger bearing.
She originally opened a Montgomery Wards store in Sidney in the early 1970s, then added a health foods and supplements store. During the late 1970s she built and opened the South 40, an upscale dining establishment with a beer and wine license, later replaced with an all-beverage license.
Above the restaurant she opened an upscale women's wear store and bookstore. Her timing was excellent as the oil boom was steaming ahead full speed.
Not far away a mini-mall opened and Hansen launched a children's apparel store, men's wear and a second women's wear store.
But with the implosion of the oil economy, Lola and husband Arnie had to retrench. Eventually the Montgomery Wards store was closed, as were the apparel shops in the mini-mall. The South 40 Restaurant and women's wear and book store anchored the remaining businesses.
During the 1990s, the space once occupied by the Wards and health food businesses was converted to the 20-machine South 40 Lounge and Casino which operates there today.
The Hansens, never letting the grass grow under their feet, then launched 10 years ago the Winners Pub Sports Bar and Casino in a little space on Central Avenue. With solid management provided by long-time employee Kevin Johnson, the business prospered but was hampered by a lack of room to grow and very limited parking.
Hansen had her eye on a former service station building further south on Central Avenue that had most recently housed a Farm Bureau Insurance office and a saddlery. It would increase interior space from 1,200 square feet to 2,200.
When a Montana Tavern Times reporter visited Sidney last December, Hansen said she had acquired the new location and would likely have it open in February. When the same reporter passed through Sidney July 1, the business was celebrating its first day open.
That's right: the business opened about five months later than expected.
Why? Well, the trail leads back to crude oil again. Readers understand the oil economy has recently experienced roily seas again. Wars, hurricanes and other Middle East unrest have once again tightened supplies with crude nearing the $70 per barrel mark in recent times.
The effects on the Williston Basin and the businesses there are predictable: a shortage of labor, rising costs and prices, a scarcity of housing...the whole litany learned in detail the first time around.
But with subtle differences. Past experience has taught drilling companies and business owners to scrupulously resist over exuberance. Drilling companies, besides dealing with a shortage of rigs and workers, are just plain more cautious in where and how they punch holes. And support businesses are equally cautious in pursuing expansions.
New technology has drillers perforating an oil laden zone, then redirecting the drill bit to move horizontally through the formation allowing a much increased flow. Old capped wells are being refurbished or re-drilled.
Workers are more carefully selected and subject to regular urinalysis. Many work seven days on, then have seven off, so may work and stay at the rig for an entire seven-day span, then fly to wherever home is for the off-time.
Nevertheless, there is no available housing and one oil company recently bought an entire motel complex just to give its workers some beds and showers.
The housing crunch falls equally hard on oil companies and hospitality businesses. Hansen tells of locating and hiring a good manager, but being unable to bring her aboard because nowhere could be found for the employee to live. And leery builders are shying away from new housing starts, having been stung last time around, Hansen says.
Starting wages of $28 an hour on drilling rigs means pressure on wages in every other business sector. That cuts into profits and tends to drive prices up, even in businesses that must rely on local workers and customers. But oil royalties paid to mineral lease holders--many of them local ranchers and farmers--is also pouring into the economy, mitigating some of the strains.
As Yogi Berra said, "It's deja vu all over again."
This writer has known Lola Hansen for just over three decades. She is nothing if not spunky. And despite the continued challenges ("Staffing is just so tough; I'm really getting tired of it") she still exhibits her trademark smile and optimism... which explains the opening of a brand new establishment--even if five months late.
"We had contractor problems; they're all over-booked and over-worked," she begins. "Plumbers, electricians, painters, tapers... It's just 'get in line.' I finally found someone out of Miles City to do the insulation."
But get it done, she did. The new location has ample parking and in front it's shielded by a low fence to provide patron privacy. Inside the ceilings are high, lending the place a nice spacious feel.
Hansen continued the sports theme developed at the original Winner's location. She notes the emphasis remains on local high school sports and the walls are plastered with hundreds of mementos and photographs of local sports figures and teams.
Indeed, a picture of this writer as a 15-year-old catcher for the Fairview Babe Ruth team, snagging an errant pitch bouncing off the plate in a puff of dust, can be found under the glass on top of one of the five buddy bars. This explains why my knees crunch and pop today.
Five other tables with ample seating allow plenty of room for fans to enjoy a wide variety of domestic, imported and craft suds while watching their favorite sports event on one of the 20 flat-screen televisions strategically placed throughout the lounge. There is even a computer for patrons to use in checking e-mails or stock quotes while there.
A small kitchen resides between the pub and the casino where staff prepare tasty burgers (I enjoyed one), pizza, nachos, brats, dogs and sandwiches, all at reasonable prices. A double-pattie burger with trimmings only runs $4.95, for example, and the friendliness of wait staff comes at no extra charge.
On the separate casino side of the operation, 20 machines vended courtesy of Lohman Gaming and recently upgraded are cleverly arranged to allow players individual privacy, but also accommodates partner players. There were four or five players over the noon hour on this July Monday.
Hansen uses three (soon to be four) full-time and two part-time staff to man the operation.
On the second day of operation, Hansen told the Tavern Times that she was optimistic that she had not only moved her business, but had moved the regular patrons along with it, yet now has an opportunity--and the space--to add new customers as well.
Next on Hansen's agenda is a remodel of the South 40 Lounge and Casino. However, sadly just a few days before the interview, Hansen closed the South 40 Women's Wear store after two and a half decades. The changes remain constant.
While few business owners in the region are complaining about the revived oil field activity and economic boon that it is, few are betting all their chips on it.
Agriculture--specifically irrigated sugar beets--is still the mainstay, though even the ag economy is diversifying because of uncertainty surrounding sugar subsidies and the continued operation of the Sidney
sugar refinery.
Anheuser-Busch has made a substantial investment in a barley handling facility and is contracting with local farmers to grow its proprietary barley varieties, giving local farmers an alternative cash crop, though they have worked through an expensive learning curve there, too.
There is even some talk that AB may develop the facility into a full-fledged malting plant. Locals are keeping their fingers crossed.
Tourism has some potential but Hansen acknowledges the Lower Yellowstone and Big Opening confluence country is "off the beaten path," though the Fort Union historic site is a significant draw.
As for the Hansens, they continue to run over 300 cows on the family homesteads and run their businesses, forced evolution or not.
Has Lola considered retirement?
"No, I haven't looked at that yet. I can't imagine that...as long as our health stays good..."
Source: The Montana Tavern Times, September, 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.