Dropping oil prices slow down North Dakota economy from previous breakneck speed
Rapid drop in drilling activity is backing off the economy in the Bakken oil patch from crazy out of control growth to merely the level of economic boom most places in the country would love to have seen anytime in the last 5 years.
4/18 – Star Tribune – In wake of oil slump, watchful North Dakotans adjust expectations – Title could have been Williston backs down from crazy out of control growth to merely as wild as four years ago.
The state jobs service in Williston has twice as many openings as applicants. They added 70 new job listings on a Friday and 60 the following Monday. I seriously doubt there are that many new jobs a week in the Inland Empire area of California, and our population is a huge multiple of Williston. (I’ll guess there are between 50 and 100 times more people in the IE than Williston. I’ll further guess that there are radically more jobs there with living wages than here.)
The joke in Williston used to be the oil companies would hire anyone with a pulse. (I think you had to be standing on your own power, but that makes for too long of a joke.) Today the article says companies want people with skills, experience, and a good work ethic. That is in the midst of a slowdown.
The City of Williston has a billion dollars of infrastructure work to do in the next five years. $200M a year.
Two of my observations.
Drilling rig count is 93 this week. That puts the state at the level of rigs in place equal to back in the first quarter of 2010, when the boom was already going. Keep in mind rigs are far more productive today than then.
Also remember, each completed well creates the need for about 1 FTE position. That means the jump in producing wells from 4,394 in January 2010 to 11,794 in February 2015 means that today there are 7,400 more full-time permanent positions than five years ago with the same number of rigs in the field as then.
If this is a bust, I really do wish that the Los Angeles metropolitan area was currently in the midst of such a terrible time.
Actually, I would wish that on every state in the country.
Here are two articles suggesting the economy is dropping down out of the stratosphere to someplace high above the clouds where there is finally enough oxygen to breath.
4/13 – Dickinson Press – Apartment vacancies an indication of the oil slowdown – There are actually ‘for rent’ signs appearing at apartment complexes in Dickinson. One property owner has 16 vacancies out of 251 units. A tenant elsewhere paid $1,750 a year ago for a two-bedroom one-bath place and just renewed for $1,450.
Another property owner has 400 units in multiple projects. A year ago they had 97% occupancy and now are at 90%.
Based on the tiny amount of apartment construction in the IE for several years, I’ll make a wild guess that property owners here fantasize about one day rising to a 90% occupancy.
4/15 – Bloomberg Business – The Oil Industry’s “Man Camps” Are Dying – The huge surge in workers flooding into Bakken created a crunch for housing. Man camps popped up everywhere to meet the need. Picture college dorms for roughnecks.
The entire concept was the barebones housing could be installed quickly when needed and pulled out when the need past. That is what’s happening now. With the dramatic drop in oil prices, the amount of drilling has fallen. Thus the need for temporary housing has collapsed. Man camps are seeing low occupancy and many are closing.
The part not realized is that the permanent housing infrastructure has expanded over the last couple of years and can provide a lot more of the long-term housing needed for the next few decades.
Just like the rigs can be stacked quickly and put back in place quickly, so too with man camps. They can be installed and disassembled equally fast.