WI Featured Real Estate
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Weyburn, SK, and Williston, ND, sit atop a massive oilfield, but their reaction is different
BY FRANK O'BRIEN
The Bakken oilfield that includes southern Saskatchewan and North Dakota contains an estimated 577 billion barrels of oil, and production is expected to top one million barrels a day by this summer in North Dakota. This ranks Bakken as one of the most prolific oilpatches in the world, second only to the Alberta oilpatch in North America and number 2 behind Texas in the United States.
Getting at the oil - with reserves equal to Saudi Arabia - is made possible with new horizontal drilling and high-pressure "fracking" that frees the oil from rock.
On the Saskatchewan side, oil production hit a record daily average of 473,600 barrels a day last year, and the trend is accelerating.
There are now 5,000 wells in the Bakken but industry estimates say the 15,000-acre core could support up to 52,000 wells at full-tilt production. And, underneath Bakken in the same area, is the Three Forks formation, which could contain an even greater 900 billion barrels, of which perhaps 32 billion barrels might be technically recoverable.
Analysts say the Bakken could help to make the U.S. an independent oil producer within 22 years.
This has totally transformed small Williston, North Dakota, into the biggest oil boom town in the U.S., but two hours north across the border in Saskatchewan, Weyburn appears to just be waking up to the potential and the challenges.
Williston, population 30,000, has seen a huge influx of oilfield workers from across the U.S., which has tripled both average rents and housing prices in the past two years.
"The oil industry is spending about $2 billion a month out here just drilling wells," said Williston economic development director Tom Rolfstad.
Unemployment is virtually non-existent, but the crime rate has shot up.
"Gun calls have gone up, stabbings, knives, all those kinds of calls have also been on the rise," said detective Amy Nickoloff with the Williston Police Department, where calls for service have increased 260 per cent in just two years, reports USA Today.
Weyburn - which saw its population spike 11.1 per cent from 2006 to 2011 to just under 11,000 - has also seen a crime increase, Canadian style.
"We have seen calls increase about 18 per cent from 2007; that is when the oil workers really started arriving," said chief Marlo Prichard of the Weyburn Police Service, who added that much of the calls relate to "too much money and too much alcohol" among transient oil workers," but is nothing his 19-member force can't handle.
Both Weyburn and Williston are also seeing a housing crunch, but the reaction is more muted on the Canadian side of the border.
In Williston, New York City-based KKR & Co. is moving forward on a $150 million, 164-acre housing development that will include homes for 3,000, one of the largest residential construction projects in the U.S. According to a study by North Dakota State University, the town needs at least 14,000 new homes to keep up with demand.
Last year, Williston posted $470 million in building-permit values and has added 12 new hotels in the past two years. This year, permits are still averaging nearly $40 million per month.
Last year, commercial permits alone hit a record of US$209 million.
Williston's median house price has more than doubled in the past three years to US$250,000; monthly rents for two-bedroom apartments are as high as US$4,000. Workers unable to find accommodation in "man camps" - prefabricated housing complexes - sleep in RVs or cars in parking lots. The city's Raymond Family Center has even limited shower times so that locals can use the facilities unencumbered by new arrivals.
In Weyburn, 100 new condominums are expected to start this year, along with about 300 new detached houses according to Martino Verhaeghe, the town's director of development and planning.
In the first three months of this year, building permits averaged $3 million per month, with 15 permits issued, including a new 82-suite hotel. Permit values are double what they were in the first quarter of 2012.
Weyburn officials expect to see residential development in two phases of The Creeks project, now owned by A3J Developments.
"This year we are setting the stage for an even larger year in 2014," Verhaeghe said.
The average house price in Weyburn has virtually doubled in the past five years, with the average detached house now selling for north of $240,000.
Weyburn should be adding 250 homes a year to keep up with population growth, according to local home builders.
The apartment rental vacancy rate is below 1 per cent, according to Canada Mortgage and Housing Corp., and the rent for a two-bedroom apartment is in the $1,100-per-month range.
Verhaeghe noted that Weyburn is moving out of the land-development business, handing it over to the efficiencies of the private sector. The city recently sold 16 raw acres for light industrial use on Ebel Road.
Noting that Weyburn celebrates its centennial this year, Mayor Debra Button said that, despite no increase in taxes for two years, the town is spending big on infrastructure.
As well as upgrading its water system, the town has built new sidewalks and improved storm and sanitary sewers.
"We are prospering, and will continue to provide more and better services," Button said.
One of those services could be a new clinic being built by the Sun County Health Region in a bid to attract new doctors to Weyburn.
There are now nine physicians, but at least 13 are required, according to Marga Cugnot, CEO of the Sun County Heralth Region, who added that the goal is to have the new clinic built and operational this year. The health region is in the process of putting in a request for funding.
Cugnot also said that the Sun County Health Region is continuing to work with the province and Weyburn on a hospital project.
"The health region supports that Weyburn needs a new hospital," she said, adding that they are waiting on the "go ahead" to begin.
While the oil boom is more apparent south of the border, Weyburn is picking up the pace, according to the city's head of planning.
"As much as people think we're growing fast, really we are just reaching launch speed now," Verhaeghe said.
– With files from the Webyurn Review
from Western Investor May 2013
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