One particular hotspot has had me interested since August last year, with vast quantities of oil now able to be tapped with our advancing technologies. However, after visiting I have found that it's more than just a mining town.
Blogger: Jason Simpson, Cash Flow Gold
I have been interested in the potential of North Dakota and the Bakken Oil Formation since about August 2011. Vast qualities of oil were discovered in the 1940’s, but getting it out of the ground proved too costly at the time. In the 1980’s, another oil boom emerged, although short lived, again as it was too hard getting it out of the ground at the time.
Today’s advances in technologies such as fracking, has enabled North Dakota to access an estimated 24 billion barrels of oil in the Bakken Formation, which would keep this boom running 30 years. This is not to mention the potential for an additional 10+ years of reserves, to also be extracted in the future as technology advances.
The key aim of my recent trip to North Dakota was to establish the true potential the Bakken Formation had to offer.
It was very clear soon after landing in Williston, ND, that there was more than just an oil boom in town. As I looked around I could see five brand new large hotels and in the background another four just from the airport door.
I needed a place to stay and based on my research it was going to be tough. I jumped in my rental car switched my brain over to driving on the right side of the road and set off to find myself somewhere to stay for the night. After travelling 24 hours to get there I needed a break and was not keen on sleeping in my car on my first night!
I parked close to one motel and decided to walk around a bit and stretch my legs. I was keen to go into all five motels, find a room and get the latest on what’s going on from a local perspective.
After talking to the managers of all five motels, I was told they were booked solid. The motel capacity has a capacity for 75 rooms of which the oil companies bulk book 90% on a long term lease. The oil companies put the contracts in place two years in advance to secure accommodation for workers, whether they are filled or not. The hotel has approximately five to seven rooms, to use for day to day travellers like myself. By the time I arrived I had no chance of getting a room, as it was mid-afternoon and rooms are gone before 10am. I was also told I could not book for tomorrow, but could come back in person to secure a room.
I eventually found a room, but I am sure that that it did not meet basic living standards. This gave me an additional incentive to go back to the new hotels and try for a better option for the remaining three nights. In short, I got a room for the remaining three nights for the best part of $300 per night.
My first full day out and about really shook me up, I expected it to be busy but I have never seen anything like this! The queue for McDonalds goes down the highway for miles, workers there on $15hr which is unheard of in America. Another local American restaurant Appleby’s has brought in staff from Lithuania, with broken English, just to work on the fixed wages (franchise regulation I guess) as they can’t increase the wages like McDonalds can, so I was told. Everything in Williston is in need of some serious support!
There are trucks everywhere, not just a few but thousands of trucks and they all are moving non-stop across the state and Williston seems to be the junction of all this. There are men, tens of thousands of them supported by the oil boom but their living conditions are almost third world standard.
Walking through the streets and motel parking lots, you see people sleeping in their cars, everywhere. Recently there was quite a huff about moving all the squatters out of the Wal-Mart car park in Williston, which has resulted in 24/7 security moving them on.
In all these cities not just Williston, there are real concerns for the welfare of these people with temperatures falling well below zero in winter. Just to put this into perspective, some of these homeless, living in their cars are people earning up to $120 an hour in the oil fields. It’s not that they can’t afford a room, they just can’t get one and don’t want to stay in the “Man Camp” options.
As of 1st September 2012, there are new regulations, to run these people out of town. All RV’s and people sleeping in cars are being asked to leave which places these towns under more pressure. This is resulting in the oil companies having to establish man camps outside the city limits, just to try and address some of their accommodation needs and keep the oil pumping.
Man camps are a sad place to call home for any length of time, living in shared cramped quarters becomes very frustrating, almost like a prison camp. Combine this with mess halls and other restrictions, it becomes tough and lacks any family friendly options.
I had arranged a meeting with a local employment agency “Bakken Staffing” in Williston. They focus on jobs other than direct oil positions. I was told that there are 2.5 new jobs created for every new oil job. 90% of these successful applicants start the job knowing that they will be sleeping in their cars and sadly most continue to do so.
I met Isaiah, a young man from California, who is working two jobs, $27 per hour, 18 hours a day and chooses to sleep in his car. Like many others, Isaiah travelled a long way looking for a chance to build his future. This is a very common story in these parts.
On a motel building site in Williston ND, site foreman Joshua and his team are working from 6am to 9pm and are now placing on a night shift crew, to start fitting out the internal parts of the motel. These guys are sleeping in their cars or caravans in the development carpark whilst it is getting the 76 room motel built.
There is already a two year occupancy contract on this building with an oil company, and it is still 2 months from completion. Talking with Joshua the site foreman, there has just been an additional extension on the motel, with some 40 additional rooms being added on the back. Josh tells me that this sort of thing is happening everywhere, they just can’t build them fast enough!
Getting out of town with all these trucks on the roads I was nervous, not because I may start driving on the left but because of the state I imagined the roads would be in, I mean the traffic is just incredible!
Heading south towards Watford City the first thing I noticed was all the new roads and later learned about the substantial investment into infrastructure to support the oil boom. The roads were amazing, I don’t recall a single pot hole in my 600 miles and the overtaking lanes were everywhere, not that the trucks were slow at all.
Watford City is a smaller junction, development is feverish with construction everywhere, not surprising considering I had already seen 10+ man camps and at least 60 wells on the side of the road in my 60 minute drive.
Again in Alexander, Minot, Sidney MT, and Dickinson the same stories with the motels, man camps and demand on infrastructure. There is just so much potential at every turn, it was just like someone had turned the dial up off the charts and every industry is trying to keep up.
Getting over into Sidney, Montana where the oil trains run, it is starting to get very busy. I was amazed to see a relative small town with four brand new big motels and six sets of shiny new traffic lights down the main street but without the traffic as yet. This made me laugh, someone knows what’s coming! Again all motels were booked solid just as they were in Dickinson, Williston, Watford City, Alexander, Minot and most likely the rest of the state too.
Getting your head around the problem isn’t as easy as you may think. An engineer can earn four times the wages working on an oil rig than on a building site and a plumber demands a $300 per hour with a minimum of 8 hour’s work, that’s if you can find one for a start. Imagine trying to keep a bunch of trades together without anywhere but their caravan to sleep during construction. It all becomes too hard very quickly and I can tell you the oil companies aren’t in the motel business they are focused on oil, that’s all.
Outside of the accommodation crisis, there is lack of women and children in town. This is having an impact on the men having to live and work a great distance from their loved ones, not to mention the impact on overcrowded schools and no childcare facilities. Pressures are clear facilitates and infrastructure such as the new Williston hospital that is already trying to keep up, and the water and sewerage systems along with electricity are all undergoing significant upgrades.
Instant housing and a substantial amount of it quickly, would go a long way to solving a big part of the issues in the Bakken Basin today. I know this because over four days from 6am to 11pm I lived it, personally sitting down with the recruitment agencies, oil companies, developers, workers on and off the oil fields and building sites. I used the restaurants, motels, have seen the cities and tapped into the local’s needs, from the overwhelmed postal worker I spoke with, to trying to fly out of dysfunctional airport and speaking with Isaiah, a man looking for a future along with many more.
As the owner of Cash Flow Gold it is important to be personally ensuring accountability, whilst providing a solution to address these housing needs. We are local and on the ground where it matters.
Did I forget to mention the billion dollar gas reserves? Well they are there too!
Australia is going through its own resources boom, but look the other way and you’ll see the US provides even bigger opportunities for investors.
About Jason Simpson
I started my back journey back in 2007 when I became very clear for me that there had to be more to life than going around in circles not getting anywhere. Regardless of what I earned form the 9 to 5 I always seem to spend it just as fast as it came in! I started reading a few books to get the knowledge I needed to break this cycle and purchased my first two homes in the USA for cash flow.
It was a disaster I quickly learned the term flipping and how rife it was through Australian resellers, I guess I was lucky I only lost 60k (donated the homes to charity) but more importantly after that experience and a lot more investigating I saw that there was a spot in the US property market to assist investors the right way and help them avoid the scams and flipped properties by buying direct from the Banks.
I stared Cash Flow Gold which has taken me into full time employment assisting investors from around the world to gain the maximum from their purchase. I now directly employ 6 staff here in Australia primarily in customer support and indirectly 40 personal across seven states in America.