Monday, May 21, 2012

Of mice and men-(camps) in the Bakken

It's another MH Bakken Monday:

As North Dakota leaps into second place in oil production amongst the 50 (or is that 57?) states, growing pains have come with the territory, most notably in housing for the thousands of workers needed to keep the drilling and pumping going. A recent article in the Billings Gazette addresses one of the most famous and visible solutions that have sprung up to meet this need -- so-called "man-camps," self-contained bedroom communities that provide not only places to sleep and rest between shifts, but in many cases amenities including "Internet cafes, satellite televisions, free laundry services, fitness equipment, (and) pillow-top mattresses."

While some North Dakota communities have put a moratorium on building more such facilities in their environs, citing understandable concerns about the support services necessary to handle such rapid increases in population, these facilities are entrepreneurial ventures that meet a real need. When one community says it has had enough man-camps (which is its right and duty,) another can step up and allow them. A crew-camp denizen has access to a place to stay that presumably meets one's basic needs while working away from home and family. They are also presumably safer and more comfortable than the cowboy, logging, mining, and railroad camps that housed the workers that made the West a place where enlightened sorts could eventually live in comfort.

While out in Bakken country recently, one heard stories of ways that workers have been attempting to make do -- flimsy campers with stacks of hay bales surrounding them to try to keep out the harsh ND winter winds, for instance. Besides man-camps, other innovative solutions have sprung up, such as the construction of a camper park housed in a huge steel building, giving hookups for workers to bring their personalized temporary living spaces and their families with them. Kids in winter can play "outside" without running the risk of frostbite. After the boom is over, such a building can be put to whatever other purpose is useful, all without contributing to the overbuilding of traditional housing that many locals fear.

The key is that market forces, in conjunction with state and local oversight, tend to provide a supply to meet demand. Not that traditional construction has been forgotten, it just can't keep up with demand.

In another recent article, "a Salt Lake City real estate developer with 40 years of experience in the building industry believes the oil boom in western North Dakota presents the biggest opportunity for builders in decades." He notes that financing is sometimes an issue, since backers want to be sure that the boom in population will last long enough to make traditional development financially feasible. His comments reflect the fact that the downstream production of jobs goes far beyond work on drilling rigs or direct oil-field support service providers:

Builders and developers also spoke about the difficulties of finding enough licensed electricians, plumbers and other contractors in North Dakota, and the need to do a lot more planning to get materials.

The link above has the following bit from North Dakota: "Officials say about $3 billion in infrastructure improvements are planned in the state to process natural gas and move it to market." Much of that infrastructure is privately financed, and that is what happens when a state decides to respond to opportunities in a business-friendly way. As we have noted before, it is ironic that so many who wax eloquent about the need to spend taxpayers dollars on infrastructure often show a remarkable lack of interest in removing roadblocks that get in the way of infrastructure created by private development.

As Ed Kemmick showed in an article in the Sunday Gazette, the possibilities for participating in the Bakken boom include increased work for white-collar businesses ranging from law firms to engineering and design firms. The article shows that Billings is seeing a spillover of work from the Bakken, with some firms getting in on the action early and others coming to it later. It is sobering to note, however, that all of the business mentioned in Kemmick's article is taking place in North Dakota, and none of it in Montana. This is not to say that Billings firms are not doing projects in Montana, but it is reasonable to assume that any work being done in Montana is dwarfed by comparison to what is going on in North Dakota. Granted, the center of the Bakken formation is found in that state rather than ours, but the question remains: is Montana taking full advantage of the the significant resources that we do have?

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