On March 30, the town of Williston, N.D., officially debuted "Build Baby Build," a marketing program that encourages builders, developers, and investors to make a long-term commitment to this municipality, which the Census Bureau has just identified as being part of the fastest-growing micro area in the country.
Williston has gone from approving the construction of between five and 10 housing units per year in 2008, to issuing residential permits in 2011 for 2,131 single-family homes, rental apartments, manufactured homes, and hotel units. Town officials previewed their marketing campaign at a recent conference in Bloomington, Minn., attended by 500 Realtors, which focused on growth opportunities in North Dakota. "As we add home building capacity, we see our community transitioning from temporary housing to permanent housing and investments," stated Shawn Wenko, deputy director of Williston Economic Development.
For the past several years, Williston has boomed along with other towns in North Dakota, Montana, and western Canada that sit atop the massive Bakken oil field, which produced more than 128 million barrels last year and whose reserves are estimated to be at around 3.7 billion barrels. Bakken's oil is more accessible thanks to hydraulic fracking, the controversial drilling practice that applies extreme water pressure to extract oil from deeply embedded shale.
As of early April there were 209 rigs permitted in North Dakota, 90% of them within 70 miles of Williston, according to Ann Kvandi, assistant to the city's executive director Tom Rolfstad. Needless to say, Williston—whose population has ballooned to 24,374, from 12,500 in 2008—has nowhere near the permanent housing or residential infrastructure to accommodate so many people flooding in to work in the oil fields. Some rents have zoomed to $2,500 per month "and there's zero vacancies," says Kvandi. RV parking spaces go for between $700 and $1,000 per month. "People are renting basements in their houses for $400-$500 per month," says Ray Blesener, a Duluth, Minn.-based architect who with a general contractor has been building in North Dakota for four years.
Remote housing for oil workers
"We need more housing," asserted North Dakota Senator John Hoeven, who last Monday toured a "man camp" in Dickinson, N.D., with U.S. Secretary of the Interior Ken Salazar.
Such camps have historically sprung up whenever oil drilling has spiked in Texas, Louisiana, Colorado, and other oil-rich states. In the past, migrating workers would sleep in their cars and pitch tents for temporary shelter. Some still do, but workers flocking to North Dakota now are more likely to be living in their own RVs or staying in large dormitory communities whose room and board costs are often subsidized by oil companies that commission this housing.
A recent article in TheNew York Times about man camps described Spartan living quarters: 7- by 11-foot cubicles separated by thin walls, with twin beds, a cabinet, TV, DVD player, chair, and single window. Companies that build and manage this remote workforce housing, on the other hand, paint a very different picture of living environments that include such amenities as kitchen and dining facilities, Internet access, exercise and conference rooms, and even laundry services.
Regardless of which portrayal is more accurate, turnkey workforce camps are becoming more prevalent in towns with oil-dependent economies. Prior to a moratorium on new man-camps it imposed last September 12, Williston had issued permits for more than 9,200 temporary housing units, and most of them are likely to get built. This kind of temporary workforce housing is expanding as well along the 400-mile stretch in southern Texas where the Eagle Ford Shale yielded 30.4 million barrels last year and is estimated to contain reserves of at least 3 billion barrels.
On March 22, Boston-based Target Logistics, the largest turnkey provider of remote workforce housing in the U.S., held a grand opening for its first "lodge" in Texas, a 300-room complex in Corrizo Springs. Since 2010, Target has opened eight lodges with more than 3,700 beds in Texas and North Dakota, including the facility that Salazar and his entourage visited. The company has several more lodges scheduled to open in these states this year, and is keeping its eyes open for opportunities near Pennsylvania's Marcellus Shale.
Stan Katz, Target's vice president of construction, points out that Target controls all aspects of these facilities: it purchases the land, builds and owns the camps, and turns over their management to its operations division. Supplying modules for Target's camps in North Dakota is Guerdon Enterprises, the Boise, Idaho-based modular-home manufacturer. Guerdon's business development manager, Troy Schrenk, sees Target and other remote housing providers as being in the "hospitality services" business, offering living experiences that "are more like hotels than camps," complete with front-entrance lobbies.
That might be an exaggeration, but living in these camps is hardly roughing it, either. Both Schrenk and Katz single out the heated "arctic corridors" at Target's camps in the north, which allow workers access to living quarters, dining, and all other rooms without having to go outside. And the advantages of these camps for oil companies that support them, Schrenk suggests, are more productive and better-rested workers who don't have to worry about preparing their own food and have recreational activities to fill their free time.
Schrenk places remote workforce housing within a larger "continuum" that encompasses semi-permanent and permanent housing, all of which his company makes product for. He expects demand for permanent housing in North Dakota towns such as Williston to increase over the next 24 to 36 months. Guerdon, with 320 production employees, is currently supplying modules for a three-story, 206-unit hotel and a four-story, 400-unit apartment building in that state. It also has several large multifamily, multi-use projects at different stages of development that will include townhouses, condos, single-family homes, and garden apartments.
Another modular-home producer that is dipping deeper into remote workforce housing is North Carolina-based Champion Enterprises, which operates five of its factories in the northwestern "energy belt"; has supplied modules for remote housing camps in Canada; and has contracts for other camps in North Dakota, says Kevin Flaherty, Champion's vice president of marketing.
He's hoping, too, that oil drilling will eventually elevate demand for permanent housing, as Champion is contracted to supply a 160-unit apartment complex that's scheduled to break ground in Minot, N.D., this fall, and another apartment building that will break ground in Williston this spring.
However, Flaherty was in Colorado in the 1980s when demand for shale oil tanked and local markets went bust. So he's cautious about predicting long-term housing trends in these areas. Katz of Target Logistics adds that towns that have been through oil booms and busts are sometimes reluctant to approve new permanent housing. In Texas, for example, man camps are being built on land where "dilapidated buildings" from the last oil boom were torn down, he says.
Expandable, if needed
"What nobody has a clear picture of yet is what's the curve" for drilling in these oil-rich markets, Katz says. "Is it three years, five, ten?" Target, he says, thinks this boom could last more than a decade, and his company is striving to get its camps up as quickly as possible.
And sometimes faster than it planned. Target got the order for its camp in Dickinson, N.D., late during last year's building season, which normally runs from April through November so weather doesn't become a problem. The town wouldn't approve the land Target wanted to build on, so Target had to find another 25-acre parcel. It broke ground on October 27 and opened the camp 78 days later on January 1, 2012.
Katz notes that Target purchased enough land in Dickinson to expand that camp if demand warranted. Last December, it expanded its Bear Paw Lodge in Williston to 518 beds from 350 when it opened on September 1. He also points out that remote housing can be disassembled and moved to other locations when demand for temporary shelter recedes in a given market.
Another provider of turnkey workforce housing is Calgary, Alberta-based ATCO Structures and Logistics (part of the energy conglomerate ATCO Group), which operates a 200-person lodge in Williston and has two manufacturing facilities in Texas. Craig Alloway, ATCO's director of workforce housing, says that a camp the size of the Williston lodge could be put up in about 3½ weeks (assuming the equipment is onsite and the land is prepped) at a cost of around $750,000 plus another 20% for kitchen and dining facilities. ATCO's camps, like Target's, are self-sustaining, with their own water supply, sewer, water-treatment plants, and back-up power.
Out-of-state contractors step in
Alloway is skeptical about oil drilling spurring permanent new-home construction and demand in Texas or North Dakota. Other sources are more hopeful. But who will build permanent housing in these markets?
Many out-of-work construction trades in North Dakota and Texas have already taken jobs in the oil fields. Flaherty of Champion Enterprises recently visited a subdivision in North Dakota, "where every builder there was from Minnesota." Among the builders that have pulled permits in Williston this year are Cheyenne, Wyo.-based Stone Crest Construction and Waverly, Minn.-based Cebulla Construction Services. (Neither company returned calls from Builder requesting comment.)
A major player that has emerged in Williston is Casper, Wyo.-based Granite Peak Development, which is currently working on a 720-acre industrial park and a 280-acre residential subdivision called Harvest Hills, where Granite Peak will build 2,300 housing units for an estimated 5,000 residents. "I suspect that Williston will see construction like they haven't seen since the levees were built in the 1950s," proclaimed Terry Metzler, Granite Peak's operations manager in North Dakota, when his company broke ground on this project last June.
And if that activity weren't proof enough that Williston has arrived, Menards, the country's third-largest home-improvement retailer, will anchor a 200-acre real estate development with a 200,000-square-foot store that is scheduled to start construction this summer.
The possibility that towns like Williston might stay hot for years has some builders, developers, and architects taking a second look at these markets. Michael Griffith, an architect based in Bluffton, S.C., thinks house designs he sketched for a proposed master-planned community in North Dakota a few years ago (which never got built) might attract interest from some builders or developers today. Those plans are for 800- to 1,450-square-foot single-family homes whose distinguishing feature is what Griffith calls a "de-clothing room," where workers returning from fields can deposit their grimy workclothes and shower.
Blesener, the Minnesota architect, until recently had been building hotels in North Dakota. "Now, we are working on more family-oriented housing so the trades can get their families out there." He and his general contractor partner are working on an 800-unit apartment complex on 40 acres. The homes would be about 1,200 square feet each, with one to three bedrooms. Blesener tells Builder that panelization has become more important to build anything in North Dakota because skilled framers are in short supply.
Growth pressures small towns
Other sources suggest that permanent housing could get a boost from restrictions that municipalities are imposing—in some instances preemptively—on man camps. Last month, Williston extended its moratorium on new camps for another six months, but will allow existing camps to expand. The Bismarck Tribune reports that Morton County in North Dakota has drafted new codes to its special-use permits that would make it tougher for man camps to get approvals. And The Denver Post reports that Weld County in Colorado has all but banned man camps on health and safety grounds.
However, there are disincentives to building permanent new homes in these small and remote markets, starting with their tiny populations, unpaved roads, and overwhelmed planning and zoning departments. Flaherty notes that the limiting factor to any housing demand will be how long oil fields can offer well-paying employment to workers, because "there's not much to hold people [in North Dakota] aside from the job."
Nevertheless, Champion continues to pursue supply opportunities for temporary and permanent housing in North Dakota, Montana, and Canada. This oil boom, says Flaherty, "is a relatively safe bet."