Workforce housing now consists of more than just a Home on the Range.
Throughout history, mineral plays have brought floods of people to remote areas that lacked sufficient resources and infrastructure to house, clothe, and feed such hordes. We’re not told how King Solomon housed the workers at his mines at Ophir, but we know that from the 1849 California gold rush to Spindletop in 1901 or Santa Rita #1 in the 1920s, there have been great challenges—and today’s boom falls right in line.
Those earlier situations brought tinder-box shanties, tents, and sleeping-bag-on-the-ground accommodations. Unfortunately, they also saw crime, violence, unsanitary conditions, and other quality-of-life issues that, in many cases, only ended when the minerals played out. A few lasted long enough for mule-mounted missionaries to arrive with their Golden Rules and their thou-shalt-not-kill-s.
Knowing mankind’s tendency to behave badly when idle in the middle of nowhere, today’s workforce camps are gun-and-alcohol-free environments that are sanitary, supplied with good food, and wired for internet and other amenities. These developments often have basketball goals, a swimming pool, a gym, and/or other options for physical activity as well.
Grand Junction, Colorado-based Goliath Industries, with housing facilities near Odessa, Pecos, and other communities, is an industry leader. CEO Todd Harris reported that his company is redoing its Odessa location and is adding on to its Pecos camp. Odessa was originally put together in a hurry when a client needed worker housing right away, causing Goliath to rent buildings at that time. That contract is now up, so they have removed the rentals and are replacing them with more permanent facilities in anticipation of the next tenant. That camp will house approximately 100 workers. Harris said they have acquired land next to the current location in anticipation of further growth. It could be up and running by the end of July or early August.
In Pecos, Goliath just completed a new $6 million, 250-bed first phase, with phase II ready to be started. When it and phase III are finished, the location will have 500 beds.
Another industry leader, Target Logistics—recently acquired by international housing giant Algeco Scotsman—has also entered the Pecos market, with a 200-bed facility and a permit to go to 450 beds. Senior Vice President Troy Schrenk noted that phase II for them will involve 45 single occupancy rooms with private baths for VIPs. “Historically,” Schrenk said, “only VIPs and professionals have had rooms with a private bed and bath. But these days, we’re rapidly moving toward VIP-class housing for all classes.”
The company abandoned plans for an Odessa facility, saying that, upon further review, they felt that Odessa did not fit their business model. Target seeks more remote locations, where they are not in competition with apartments or hotels. “We look for opportunities that are geographically remote,” Schrenk explained. “The Permian Basin is a hub-and-spoke area, with Midland/Odessa as the hub, and areas along the spokes are where work is performed. Drilling, well servicing, field work, those workers typically drive back to the hub.”
Locations that are at least 40 miles or a 60-minute drive from the hub—such as Pecos—fit into Target’s criteria. “For now, the majority of labor (in Midland and Odessa) is locally sourced. That labor supply lives in homes, apartments, and hotels. The climate is not harsh, like it is in, say, the Bakken Shale, so RVs and campers are also an option there. For now, we feel Midland/Odessa is not a marketplace large enough to support our operations.”
Even so, Target considers the entire Permian Basin as one of the most active basins in the United States and is committed to being in the region for the long haul. Indeed, some industry figures show the Basin accounts for 17 percent of all U.S. production.
Target usually operates on exclusive contracts. Typically, one of the top four service companies will rent an entire facility for a period of time. That keeps employees from fraternizing with—and possibly being recruited by—workers from another company.
Goliath also contracts with employers, and, in both cases, the employers pay for the housing. This arrangement is what provides for strict controls on behavior. When Goliath officials find a resident to be in violation of the rules, the incident is reported to the employer, who then decides what steps, if any, to take.
For Target, controls are even tighter. Their agreement with employers provides for the guilty party to be expulsed from the facility and their job to be terminated, in most cases. It is not surprising that there are few incidents reported with these rules in place. “Companies look to Target Logistics as a company advocate,” Schrenk explained, protecting their interests.
That protection does not just involve enforcing rules. It also means providing good food and a restful environment so employees arrive at work well fed and well rested. Rested workers not only get more accomplished, they have fewer accidents and fewer injuries.
Although there may be competition from apartments and hotels, most workforce facilities provide several things neither competitor offers. First would be the aforementioned security. Second would be a rotation of chef-designed menus appropriate for workers expending great amounts of energy in the field. Most also offer a sack lunch for those who work a long way from even these remote facilities.
With a new boom looming in the Cline Shale, and one progressing in the Eagle Ford Shale, further opportunities continue to present themselves, so the immediate future appears fertile for more growth.
All this is well and good during boom times. But what happens when (a) the local housing catches up with the demand or, (b) a bust happens? Both Schrenk and Harris are confident that this will not be a problem for a while.
Harris sees a positive political and marketplace environment for all major plays, including the Bakken and the Eagle Ford, as well as those in Oklahoma and, of course, the Permian Basin. “That particular play, in that basin, is about as solid as they come. It’s right on the front end out there in Pecos, which is exciting to us,” he said.
Further, discussions with field management personnel employed by Goliath’s clients indicate “there are some long-term plans there, and that, to me, is worth more than anything I read on the Internet, frankly,” he said.
Target’s Schrenk said his company begins by doing a risk assessment in a new market for at least six months before going in. They look for a play with a 2-10 year lifespan. Schrenk noted that the buildings are built to last more like 30 years, so they can be moved—but a move is very expensive, and anything short of two years in one place is not going to be profitable.
Almost by accident, Goliath has been presented with a possible alternative—expanding its customer base beyond the oil and gas industry. With many camps running across the gamut of oil fields, Harris said that, for the first time, a Goliath camp is being considered by a local government entity for housing its employees. “We’ve been interviewing and having meetings over the last two months… with the prison, right across the road from us in Pecos. We’ve got 400 guards we’re talking about, and 100 medical staff, that all need housing desperately.” He noted that locating across from the prison was an accident—the location was chosen because of access to utilities.
Overall, most hand-wringing by leadership comes in regard to housing oilfield workers—but the truth is, a boom brings workers of every sort, and not all fields see salaries increase enough to pay the higher rents and house payments that come with a typical boom’s housing crunch.
“In Midland/Odessa, we’re not truly remote like we are in so many of our other facilities,” he continued. “Typically what happens is we come in and put in a facility and then the oil field begins to pull their people, and that frees up apartments, it frees up housing for the community. In the case of Pecos, we’re far enough away that we are remote.” So the workforce housing not only relieves oilfield workers of long drives, it could meet a need for other, locally-based workers.
Another possible venue is cropping up in Andrews, as that county enters into a three-year hospital addition. “This hospital expansion they’re getting ready to kick off with McCarthy Construction is going to bring in a bunch of workers and they have nowhere to put them.”
Harris listed oil and gas, mining, construction, and timber as their areas of focus.
Through the years, oilfield housing has evolved greatly, in almost every case for the better. Some camps in the older days did allow for families to live on-site, which is a rarity in today’s market. But some would point out that travel and communication are easier now, and workers get to be with families when they rotate off, and, with Wi-Fi supplied in most camps, they can use Skype, FaceTime, or other video conferencing software to communicate.
Oil companies themselves drive these changes. Schrenk recalled attending a recent completion conference attended by 400 engineers. They listed housing as a top priority, which surprised Schrenk because engineers are not usually housed in workforce facilities.
Oilfield housing development must parallel the advances in oilfield technology, he feels. Schrenk sees Target, along with a couple of other companies, as being on the cutting edge of this advancement, as they seek to offer the services needed by a changing workforce.
One certain thing is that things will continue to change as opportunities develop and needs are addressed. With today’s oil prices and production technologies, it is an exciting time to be in the oilfield housing business.