See first post on my initial observations in the Bakken, summer, 2011. This continues my observations.
First, this is the best time of the year in western North Dakota. The weather is wonderful; if the US Air Force has sprayed the mosquitoes larvae, it's great to be outside.
Second, the number one story remains affordable housing. After lots of driving around, specifically looking at all the construction that is going on, I am convinced that the housing situation will be resolved by the end of 2013. If the housing situation remains a problem after 2013, folks have seriously underestimated how huge the Bakken is going to be.
Before the boom, there were probably about 3,000 houses in Williston. The Kiewit subdivision alone will add about 2,000 more units, if completed. There are probably another several hundred or so units that have gone up in the last year or so (apartment units, duplexes, single family homes, etc). Again, these are just wild estimations. My hunch is that the vast majority of young men living in the man-camps will elect not to buy homes here in Williston; they will work here, but return to their own home elsewhere outside of North Dakota. I would not be a bit surprised if there is actually a slight excess of single family homes in 2014 based on the pace at which they are building now.
Third, it will be interesting to see if oil companies decide to frack during the winter or postpone until the spring. Even under the best of circumstances, the numbers suggest that fracking cannot keep up with drilling for the next six to twelve months. If oil companies do not frack during the winter, the backlog in the spring will be significant.
Oh yeah! One other advantage of my urban Minneapolis neighborhood. No mosquitoes!
ReplyDeleteI recall from the "Mad Money" Bakken special the "robo-driller" that can drill almost two wells per month and then "walk" to the next well point when these are drilled. On the "mega-machine" cable shows they have really huge open pit mining machines that use this "walking" technique. Basically, they have at least three pads on each side with rails so they can move forward and hydraulics to lift the pads up. Basically, the entire platform moves forward then one-by-one the "legs" reset. If they get really confident, they might lay oil and gas lines that are initially used for fracking and eventually for oil and gas.
A single rail car hold three times the crude oil of a semi-truck tanker. Larger oil pipelines can trump them both.
The point of this is the amount of "roughneck" labor can be dramatically reduced if the Bakken is not a "flash in the pan". Also, the "portable" housing tends to be inefficient and inherently unpleasant no matter how well it is run. As the Bakken matures you will get "man camps" more akin to extended stay motels.
The supply of "family housing" may indeed meet demand in a few years. It will be pricey but a lot of technical skills will be needed from people with families.
Also, there will be steady increase in remote operations. This could be done from anywhere.
You don't need someone in the Bakken to look at a computer screen. (I retired four years ago but the IBM mainframe I used to help operate just went "cloud").
Since cities in the Bakken have the upper hand they could require developers to put in infrastructure and assume any loan payment risk.
Those that do this should be given the equivalent of a partial "tax increment financing" rebate in defined future years. Some may say "corporate welfare" but if the developer rather than the city holds the "hot potato" of risk they should benefit.
Greg,
ReplyDeleteYou write very good notes and and add much to this site. Feel free to put your website address in your notes, so folks know that you also have a great blog.
http://fourfiftygas.blogspot.com/
Housing may be pricey by Williston standards, but not by "big city" standards. And again, my hunch is that there may be over-building by the end of 2013. I am not convinced that the majority of the men in man-camps really want to buy a house in Williston. Apartments might be nicer, but the larger and better man-camps provide meals 24/7 as part of the daily price.
Next to a Menards I shop at is an extended stay motel that I use as a model. I mostly check out the trucks parked there. The "man camps" should eventually evolve into permanent structures somewhat akin to a college dormitory.
ReplyDeleteIt's funny you mention that. There's a brand new dormitory here in Williston at the Williston State College.
ReplyDeleteThere are also a lot of young folks from around the world employed at our Williston stores; I would hope some of them enroll full time at the college, get a dorm room. Get their education in the US and work at the same time. College classes take up little time during the day, and employers are flexible in this "boom."