Sioux City Journal: Dakota Access pipeline construction making economic impact

CHEROKEE, Iowa | The walk to get to dinner or a movie in downtown Cherokee has gotten a little longer since late spring, when parking became harder to come by.

With a number of construction workers involved with the Dakota Access oil pipeline and other major projects taking up temporary residence here, businesses in Cherokee and other Northwest Iowa cities and towns are seeing a healthy revenue boost.

“In the evenings, there are very few parking spots available,” Cherokee city manager Sam Kooiker said. “There are a lot of people downtown in the evenings. It’s been exciting.”

Hotels. Restaurants. Convenience stores. Laundry facilities. Mechanics. The list of services needed by temporary pipeline workers is long.

“When I drive in in the morning, I see all the construction rigs parked in hotel parking lots,” said Mark Buschkamp, executive director of Cherokee Area Economic Development Corp. “Our hotels are full. I see a lot of people in lines at the grocery store that I’ve never seen before.”

Prior to construction of the $3.8 billion crude oil pipeline, an independent study prepared for Dallas-based Energy Transfer Partners, Dakota Access’ parent company, said that Iowa would receive $628 million in direct economic benefits from construction.

An August report issued by Dakota Access estimated that construction in Iowa would generate an estimated $33.1 million in state sales tax revenue and $2.2 million in local sales tax revenue.

It’s not easy to put an exact dollar amount on the economic impact of the pipeline construction, local leaders say, but it’s not hard to find evidence that those workers are spending money in the area.

“It’s always hard to gauge the direct economic impact, but you can see those people around,” said Curt Strouth, community development director at Sheldon, Iowa, Chamber and Development Corp. “We definitely noticed the workforce that came through. It’s been a definite influx.”

The Iowa Utilities Board approved Dakota Access’ permit application for the pipeline in March. When completed, it will stretch 1,172 miles and transport up to 570,000 barrels of crude oil daily from western North Dakota’s Bakken region to a shipping terminal in Patoka, Illinois. In Iowa, the pipeline follows a 348-mile path diagonally northwest to southeast through 18 Iowa counties, including Sioux, O’Brien, Cherokee, Buena Vista and Sac.

It wasn’t long after pipeline construction began that businesses saw evidence that workers were in the area, an impact that continues as construction progresses.

“I know our campground is full. I know a lot of those people, when they come off of work, are in our restaurants and bars,” said Gary Lalone, executive director of Storm Lake United, a business development organization in the Buena Vista County seat.

Economic Development director Steve Simons said that although there are no concrete figures, pipeline workers provided a boost to the county’s economy, especially businesses in Inwood, which is near the pipeline route.

“They did see a nice bump in business during the construction process,” Simons said.

For three years now, Sheldon has seen scores of temporary workers in town for O’Brien County wind farm construction projects. In Cherokee County, wind farm workers and construction crews working on the U.S. Highway 20 expansion project to the south have added to the business boom.

Since pipeline construction began in the late spring and continued through the summer and fall, it’s been obvious that pipeline workers were giving businesses more than the usual summer construction boost.

“We’ve definitely seen more traffic this summer,” Buschkamp said.

That added traffic is leading to unprecedented action in Cherokee. On Tuesday, the City Council will consider leaving the Spring Lake Park campground open during the winter. The campground’s 46 spots have been filled much of the summer by workers paying the city $15 per night or $320 per month for a place to park their campers.

Pipeline workers staying in Cherokee likely need those camper hookups a little longer.

According to an Oct. 2 report that Dakota Access submitted to the Iowa Utilities Board, pipeline construction in Cherokee County is 63 percent complete and 35 percent complete in neighboring Buena Vista County. Work is 83 percent done in Lyon County, 80 percent finished in Sioux County and 96 percent complete in O’Brien County.

In Iowa, the pipeline is 64 percent complete, and 75 percent finished along the entire four-state route.

Dakota Access anticipates the pipeline will be ready for service by the end of 2016, spokeswoman Lisa Dillinger said.

With a few more months of construction ahead, those parking spots in Cherokee should remain filled. No one’s complaining, Kooiker said, joking that with all the activity it may be time to bring back Cherokee’s nickname from years past, “Hub City.”

“The impact is significant,” Kooiker said. “As a community, it’s been a net positive.”

To view the article on the Sioux City Journal website, click here