A “man-camp” erected to house incoming oil workers, 99% of whom are male. At this man-camp, each worker gets an 8’ by 10’ room including a lavatory and window. Beyond the front door is a security guard who frisks residents for alcohol and drugs. Also note the security perimeter fence. If it resembles a prison, it is only to keep oil workers sober enough to safely operate heavy machinery.
The U.S. Geological Survey estimates up to 503 billion barrels of oil in the U.S. portion of the Bakken formation, of which 7.4 billion barrels are recoverable using today’s horizontal drilling and hydraulic fracturing (“fracking”) technology. This shale also holds an estimated 6.7 trillion cubic feet of natural gas, too. North Dakota oil production alone is now up to 871,000 barrels per day, estimated to exceed 1 million barrels per day in 2014. 25% of the Bakken formation is on the Canadian side of the border, though.
Most of the major oil and oil service companies are scrambling to build space up here, which is why I was evaluating a business park on the North Dakota side of the border and receiving a glimpse into the distortions in real estate markets caused by sudden economic booms. Within the business park alone, for instance, all lot sales had been at full list price, a phenomenon I had not seen in a few years.
Typical industrial park
The first distortion in boomtowns, of course, is the extreme shortage of housing for incoming workers. This is a real worry for oil firms and oil service firms desperately in need of manpower. The most common solution has been the erection of employee “man-camps” such as in the photos above and below. Sometimes, employee housing is installed in available space within industrial buildings, including truck garages.
Each mobile home houses up to 5 men
Newcomers often arrive to find hotel rooms sold out at high rates, such as $250 for a weekday night at the Holiday Inn Express or $197 for the Microtel in Williston, 70 miles south of Canada and one of the worst affected North Dakota towns. Apartments are full and nonworking apartment residents have had to leave the community after seeing their rents quadruple. Some newcomers resort to living in their cars at first. Then comes winter. The morning temperature on the day of my arrival on the last day of fall was minus nine degrees Fahrenheit, and temperatures have been known to go below minus 20 in the winter.
Retailers and restaurants cannot find enough workers when the oil industry pays much better. McDonalds is paying employees up to $17 per hour, but some fast food restaurants, such as Carl's Junior, have now closed their dining areas and serve customers only through drive-through. There is not enough manpower to clean and maintain interiors. The local unemployment rate is 1.8%.
The Manitoban towns of Virden (population 3114 and known as “the oil capital of Manitoba”) and Waskada (population 225) are also experiencing boomtown conditions such as a severe shortage of housing and hotel rooms, with real estate developers turning empty buildings into employee lodging.
Hotel rooms are also in short supply in southeastern Saskatchewan, and the oil town of Estevan, population 13,000, now has housing prices that match those of Calgary, another city made rich by oil, and the local Best Western charges starting rates of $160 for a weekday night. Meanwhile, in the town of Killdeer, ND, where I was working, asking prices on wood-framed mid-century houses start at around $300,000.
PS: The loan on the business park was funded by Kennedy Funding Financial out of Englewood Cliffs, New Jersey.
The Bakken Formation, an entirely subsurface shale formation underneath North Dakota, Montana, South Dakota, Saskatchewan and Manitoba, has become the biggest oil find in North America in the last half century, and is bringing boomtown conditions to western North Dakota towns and cross-border Canadian towns.
The U.S. Geological Survey estimates up to 503 billion barrels of oil in the U.S. portion of the Bakken formation, of which 7.4 billion barrels are recoverable using today’s horizontal drilling and hydraulic fracturing (“fracking”) technology. This shale also holds an estimated 6.7 trillion cubic feet of natural gas, too. North Dakota oil production alone is now up to 871,000 barrels per day, estimated to exceed 1 million barrels per day in 2014. 25% of the Bakken formation is on the Canadian side of the border, though.
Most of the major oil and oil service companies are scrambling to build space up here, which is why I was evaluating a business park on the North Dakota side of the border and receiving a glimpse into the distortions in real estate markets caused by sudden economic booms. Within the business park alone, for instance, all lot sales had been at full list price, a phenomenon I had not seen in a few years.
Typical industrial park
The first distortion in boomtowns, of course, is the extreme shortage of housing for incoming workers. This is a real worry for oil firms and oil service firms desperately in need of manpower. The most common solution has been the erection of employee “man-camps” such as in the photos above and below. Sometimes, employee housing is installed in available space within industrial buildings, including truck garages.
Each mobile home houses up to 5 men
Newcomers often arrive to find hotel rooms sold out at high rates, such as $250 for a weekday night at the Holiday Inn Express or $197 for the Microtel in Williston, 70 miles south of Canada and one of the worst affected North Dakota towns. Apartments are full and nonworking apartment residents have had to leave the community after seeing their rents quadruple. Some newcomers resort to living in their cars at first. Then comes winter. The morning temperature on the day of my arrival on the last day of fall was minus nine degrees Fahrenheit, and temperatures have been known to go below minus 20 in the winter.
Retailers and restaurants cannot find enough workers when the oil industry pays much better. McDonalds is paying employees up to $17 per hour, but some fast food restaurants, such as Carl's Junior, have now closed their dining areas and serve customers only through drive-through. There is not enough manpower to clean and maintain interiors. The local unemployment rate is 1.8%.
The Manitoban towns of Virden (population 3114 and known as “the oil capital of Manitoba”) and Waskada (population 225) are also experiencing boomtown conditions such as a severe shortage of housing and hotel rooms, with real estate developers turning empty buildings into employee lodging.
Hotel rooms are also in short supply in southeastern Saskatchewan, and the oil town of Estevan, population 13,000, now has housing prices that match those of Calgary, another city made rich by oil, and the local Best Western charges starting rates of $160 for a weekday night. Meanwhile, in the town of Killdeer, ND, where I was working, asking prices on wood-framed mid-century houses start at around $300,000.
PS: The loan on the business park was funded by Kennedy Funding Financial out of Englewood Cliffs, New Jersey.