A few weeks ago, I attended the Brandon Chamber of Commerce’s Manitoba to Montana: Business Opportunities in the Bakken conference.
There, former Montana governor Brian Schweitzer let the delegates in on one of the worst kept secrets.
"Yes, there is a lot of money to be made in the Bakken, but there’s even more money to be made servicing the Bakken oil play," and as one conference delegate so eloquently put it — "Brandon is just a short (beer) run away!"
North Dakota, thanks to the Bakken oil reserves, has a huge surplus, US$1.6 billion and counting. More than 75,000 jobs have been created, and they’re just getting started. The oil field drilling programs will last 25 years by some accounts.
Brandon is ideally suited to prosper from the oilfields, especially as the drilling moves east.
Every spring I drive through the Bakken-affected oil towns — Williston, N.D., and Billings and Sidney, Mont., to name a few — and I see the impact oil and gas has had in those communities.
Williston has grown from a sleepy little farm community of 16,000 people to a boom town with a projected population of 70,000 by 2017. Sidney’s McDonald’s restaurant makes all its revenue targets by being open only four hours a day and only the drive-thru window.
The Bakken oilfields cover 250,000 square miles (about the size of France and the U.K. combined) and have a conservative estimate of 40 billion recoverable barrels. The Bakken Formation is part of the Williston Basin. It spreads across southeast Saskatchewan, the western edge of Manitoba, covers most of North Dakota, and overlaps into Montana and South Dakota.
Brandon is on the edge of this opportunity, both geographically as well as economically. Currently, one of the major service centres for the Bakken is Billings, because of its proximity. However, Brandon is actually 52 kilometres closer than Billings. So where is Brandon in all this?
Manitoba’s Daly Sinclair fields had more than 2,000 producing wells in 2013. Waskada had just over 1,000, Pierson 500, Virden is just under 500 wells, and the new play in Manson/Birtle that is just opening up had just under 100 producing wells last year. These wells produced almost three million barrels last year.
Most folks think of royalty and production taxes when they think of oil. The province made $20 million in royalties and production taxes from privately owned (freehold) minerals in 2013. More importantly, private Manitoba citizens (most of whom live within an hour or two of Brandon) who hold mineral rights made slightly more than $200 million.
In addition, more than $11 million was paid to rural municipalities (alas, not Brandon) in property taxes. Much of that money winds up in the cash registers of local stores and boosts the Westman economy. The piece of the economic pie Brandon would like access to is the $1.3 billion last year alone in industry expenditures — those are from servicing the oilpatch opportunities referred to by Schweitzer.
Opportunities are many and varied. Some of the technical expertise that needs to be close to the oilfields (Manitoba’s as well as Saskatchewan’s and the North Dakota/Montana fields) includes seismic support, drilling, completion and production of wells, petroleum engineering, back office services such as purchasing and
payroll, manufacturing, communications, transportation and logistic services.
If you’ve driven through the Bakken, you’ll have seen the farmers’ fields full of parked RVs and trailers that are housing the tens of thousands of workers who can’t find anywhere else to live. The big breakthrough in housing for the Bakken was a design for prefab modular housing that could be constructed in a day. This gave the construction workers a place to live while they built more units.
This lack of adequate housing has had significant impacts. Hotel rooms have been almost impossible to get for the past four years, although new hotels are growing like mushrooms. A studio apartment in Williston rents for $2,000 a month and is shared by as many as four or five workers who balance their hitches (shifts) over a 24-hour period. Employees often commute up to two or three hours each way to work sites or sleep in their cars. Families can’t join them because of a lack of housing.
Brandon has already benefited by attracting those workers who don’t mind the commute. The lifestyle amenities that the workers are looking for include housing, laundry facilities, restaurants, recreation and entertainment options, as well as Wi-Fi to keep in touch with friends and family. Long-term skilled employees have said that they would seriously consider lower wages or salaries in exchange for high-quality living conditions.
Williston brags about a 45-day turnaround in its commercial and manufacturing parks. Brandon, I am sad to say, is nowhere near that. We have some appropriately zoned land in place, but very little of it is serviced. We need to be ready when another company like Trican comes knocking.
Brandon and Westman have potential employees with great work ethic, and post-secondary educational institutions eager to give them training and experience. The provincial government is currently considering several new, specialized petroleum programs, and Brandon needs them to say yes. Access to skilled labour markets is a very big carrot for those in the oil sector.
Manufacturing in the Bakken right now is choked because of a lack of infrastructure, and established manufacturers are looking for subcontractors. Brandon has machinists and millwrights who should take a piece of that business. To do that, they, too, need skilled trades workers — which circles back to Assiniboine Community College as well as overseas recruiting efforts. Bakken businesses of all types need more back office services, more tertiary services especially construction and skilled trades, and equipment repair.
When time is money — big money — you don’t want your equipment idle. There is a big demand for mobile refuelling services so that the equipment can be gassed up at night while the drivers are sleeping.
Anything to do with 24/7 repair and maintenance also carries a premium price. It takes approximately 2,000 incoming and outgoing truckloads per well. About 9,500 Bakken wells are already drilled and anywhere from 30,000 to 50,000 more wells needed to fully tap the formation means a lot of possibilities in terms of truck repair and maintenance. Trucking companies and their drivers frequently travel up to five hours to have their vehicles serviced because diesel mechanics are in such short supply in the Bakken.
Another urgent need is for in-demand equipment and services such as parkas, generators, all-weather remote communication equipment, and portable heating. Basically, almost anything you can think of is in short supply in the Bakken.
Brandon is well positioned with labour, servicing and manufacturing to meet these needs. The private sector needs to be front and centre to seize these opportunities, and the City of Brandon must be ready to provide an attractive framework that will be part of their success.
A growing city is more than just size, it’s also about prosperity. Carpe diem, Brandon!
» Shari Decter Hirst is Brandon’s mayor. Her column appears monthly.