A recurring human foible I see is making an assumption that the immediate past trends will continue in a straight line forever.
In the context of crude oil in general and western North Dakota in particular, the question is whether the slump of the last year will continue for an indefinite period of time (measured in years or even decades) or will there be surges in production at various points?
City officials in Williston give every indication of thinking that the boom is over and will never return. Seems like they are preparing for life in the city and surrounding area to have current level of employment plus only slow growth for decades.
I think that reasoning is why there is opposition from public officials to expanding the airport. Why spend any money on a new airport when you don’t need the extra capacity this afternoon and for the rest of the week? There is no reason to go through all the effort of tearing up farmland when the current airport is sufficient for traffic this month. There are open seats on flight to Minneapolis. Why, I’ll bet the airlines could even add a flight or two if they actually get more customers.
Why not chase all the crew camp facilities out of town? They are not needed. There is enough capacity in apartments and hotels to absorb the number of people who are in crew camps this month, so what purpose is there for ever again having any crew camp capacity in the city? Just force the temporary workers who don’t know how long they will be in the area to sign a one-year lease and everything will be fine. In the alternative, they can just stay in hotel that will only cost $3,000 or $3,500 or more per month. Problem solved.
If you assume that oil prices will stay where they are today for the next several decades and if you assume the number of rigs in North Dakota will stay in the range of 20 or 30 or 40 for a decade or two then you should plan for a city with population at about the current level.
If you assume the trends of the last 12 months will continue for decades, then there is no need for new facilities.
What size is Williston going to be?
On the other hand….
Most speculation I have read back in the 2013 and 2014 timeframe suggested that Williston had a population somewhere in the range of 30,000 people . I will make a wild guess that it’s somewhere in the range of 20,000 or 25,000 today.
The Director of Mineral Resources, Lynn Helms, suggests there will be 40,000 permanent oil jobs by the year 2050 which indicates the population of Williston could be in the range of 80,000 people 30 years from now.
Check out Amy Dalrymple’s coverage as published in the Bismarck Tribune: Helms predicts oil will come back “with a rush”.
He believes recovery in oil prices is a matter of when and not if. At that point there will be a lot of drilling crews back in the Bakken region. He said
“This is going to come back pretty hard and pretty rapidly and we’ll be back running to stay ahead of it.”
He thinks the world-wide supply of oil will balance out by the end of 2016 or the first six months of 2017. That is consistent with most of the comments that I’ve read elsewhere.
When the supply and demand balances, he thinks crude oil prices could double in what would seem to be overnight timing.
If you agree with that even partially, western North Dakota will be back to the high level of drilling previously seen in the 2013/2014 timeframe as fast as drillers can spool up. That drilling will produce a surge in temporary jobs which will in turn produce a long-lasting increase in permanent jobs.
The challenge to the city from Mr. Helms is whether they want to get ready for that growth now.
Indications I can see declare the city does not wish to get ready.
One city commissioner says they are planning on a future population of 40,000 or 60,000. I suggest the current actions of getting rid of the crew camps and challenging whether new airport is needed reveal they are not thinking of growth beyond the current population. Their actions certainly don’t suggest they expect the city to grow from 20k/25k where it is now to 80k in a several decades.
Here are a few other articles I’ve been holding which reinforce the above question, primarily following up on the city running crew camps out of town.
3/4 – Million Dollar Way – Idle Chatter: Once the Price of Oil Start Moving, It Tends to Move Quickly – From a Reader – Pondering on multiple threads that tie together.
3/25 – Amy Dalrympe of Forum News Service at Bismarck Tribune (and Dickinson Press) – Apartment developers trying to ride out oil slump – With occupancy down, new construction will slow down a lot so construction companies are really hurting.
Article has best information I’ve seen in a long time on occupancy rates.
A property management company surveyed 20 developments in March. What they found:
- 75% average occupancy for apartments that have been open for a few years
- 50% average occupancy for complexes recently opened
- $1,200 – average rent for two bedroom apartment – that is half the going rate from four years ago
Those occupancy rates are dramatically higher than what has been mentioned in the recent debate over man camps.
I previously mentioned a lobbyist who said there is a 50% vacancy rate for apartments and hotels.
Article says two investors claimed a 29% occupancy rate when they testified to the commissioners.
4/12 – Amy Dalrymple of Forum News Service at Bismarck Tribune – Crew camp operators seek help from courts to remain open – Target Logistics and another crew camp operator have filed suit in state and federal court regarding the Williston city decision to force closure of all crew camps. The state action claims the city violated its own rules and asks for a two-year extension to operate their facilities.
The federal action requests the ordinance be overturned based on constitutional grounds. One of the reasons cited is the city commission had a goal of helping hotel, motel, and apartment owners.
The mayor denies that last assertion, claiming it is false. The mayor’s response in the article reminds me of someone defending themselves in an argument by saying they didn’t use the exact words they are accused of saying. I am sure his comment is true: I am very confident the exact, precise words used in the filing were never uttered in a public meeting. I am willing to guess those exact words were never uttered in private either.
Reading between the lines on media reports, I am guessing that is the most likely real reason for trying to close the camps. However, proving it in court will be extremely difficult.