Camp Oil Sands: Alberta’s new economic boom
nathan vanderklippe
CALGARY— From Friday's Globe and Mail
Feb. 09, 2012
The floor of the Atco Ltd. (ACO.X-T62.971.111.79%)manufacturing plant sprawls out across 250,000 square feet of concrete covered with stacks of drywall, boxes of spiced ash mouldings and bags of insulation batting. Next to them is the assembly line, where dozens of 18-metre-long mobile housing units are rapidly taking shape, with workers using overhead cranes to raise completed walls and roofs into place.
Construction tradesmen build portable housing for oil sands workers at the Atco Structures facility in Calgary. The manufacturing plant sprawls out across 250,000 square feet of concrete covered with stacks of drywall, boxes of spiced ash mouldings and bags of insulation batting.
The walls echo with the sound of pneumatic nail guns. It sounds like a war zone. But the only battle for those building the next generation of housing for workers in Canada’s oil sands is to make the units fast enough. The oil sands is preparing for a wave of new construction and what’s happening on assembly floors like this one in Calgary are a glimpse into what’s to come.
Amid growing concerns that a rising boom will bring cost problems and worker shortages, oil sands companies are preparing for a massive expansion of the camps used to house workers. Those who build those camps, like Atco and others, are staring at orders for nearly 25,000 new units over the next three to five years, roughly a 50 per cent increase from the number standing today. There is enough concern about worker demand that one oil sands company alone has started a tender process for 15,000 new beds over the next decade.
“There has been a dramatic increase in the number of camp beds in bid and in negotiation,” said Trevor Haynes, chief executive officer of Black Diamond Group Ltd. (BDI-T20.86-0.35-1.65%), which has the second-largest number of oil sands rooms. “We anticipate that we’re going to go into one of the strongest building phases around the camp industry that I’ve ever seen.”
Last year, the regional municipality of Wood Buffalo, which issues development permits for camps, received 74 applications for new project accommodations. Together, they represented a desire to set up 15,428 new beds.
And as go the camps, so go the oil sands. Demand for camps, like demand for the engineers who are in increasing short supply, are an early indicator of coming activity.
“It seems to be the canary for economic activity in Alberta, for sure,” said Craig Alloway, director of work force housing for Atco Structures & Logistics. Experience has shown him that a wave of camp-building tends to precede a time when “it gets really hot.” And, he added, “all systems point to having a very pleasant next few years, as far as suppliers go.”
The oil sands rush is accompanying a broader tide of Canadian resource development, which is seeing new oil projects in Atlantic Canada, new potash projects in Saskatchewan and new liquefied natural gas projects in British Columbia. Atco figures suggest 60,000 workers beds will be needed across the country over the next three years.
That broad demand complicates matters for Alberta, which has forecast substantial worker need. Before the 2009 crash, the Construction Owners Association of Alberta predicted large projects across the province would require a brief peak of just under 40,000 trades workers. Its most recent projection shows a sustained demand – from the end of 2012 through mid-2014 – of roughly 45,000.
Past experience has shown those numbers often prove optimistic, as do industry’s own predictions of new project construction, which are often tempered by cost and operational struggles. Camp growth is also a point of tension with local municipalities, who would prefer to see workers move to the oil sands, rather than fly in and fly out. That’s proving to be a difficult battle, however. If camp-builder forecasts are right, the next few years will see the oil sands bed count in north-eastern Alberta climb over 75,000 – equal to the current population of Fort McMurray.
Worker availability is becoming a key factor for new projects, especially since pinched labour has, in the past, lifted costs through increased wages and decreased productivity.
“Certainly, labour supply is a really important issue with respect to continued development of the oil sands,” said Mike Horner, president of the construction owners association.
The cost of camps is also rising, largely because they are becoming more elaborate. Square footage is up, as are amenities. Individual flat panel TVs are increasingly the standard. Thread and coil counts have become important considerations. Companies have requested camps equipped with a swimming pool, tennis courts, movie theatres and even a full golf course. Some of those plans – like the pool and golf course – foundered when the true cost was revealed.
What hasn’t stopped, however, is the strong demand for camps. Some companies are acting early, putting in orders now for accommodations not needed until 2015 – a measure of the importance of camps.
Last year, Atco’s Calgary manufacturing plant, its largest in Canada, built 662 units. Far more is coming. The company’s rule of thumb is that 1,000 to 2,000 beds are needed for every $1-billion in construction – and the next several years are expected to bring nearly $20-billion in annual capital spending.
“Demand looks very strong for the next three years,” Mr. Alloway said.
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THE ACCOMMODATIONS
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Alongside the race to build more camps is another race: to build nicer camps. In the past two decades, standards have substantially increased. Numerous workers are still in older facilities with far more spartan accommodations. But the generation of camps that will house the next decade of workers is kindler, gentler and bigger.
49-bed dorms: individual rooms, shared central bathrooms with “gang-style” open showers. Each room: 100 square feet. (Up to late 2000s)
44-bed dorms: so-called “jack-and-jill” dorms where two rooms share a toilet and shower. Each room has a private sink and faucet, offering about 120 square feet per person. (2007, 2008)
38-bed dorms: private bedrooms with individual showers and toilets, and some 144 square feet. (Bids out now)
30-bed executive dorms: larger rooms for managers, with private shower and toilet. Each room: 180 square feet. (Around for decades)
22-bed executive dorms: the plushest accommodations. Individual rooms with shower and toilet, with 240 square feet of space. (Mid-2000s)
Nathan VanderKlippe
