Slowdown in oilpatch activity hurting work camp operators

CALGARY - A slowdown in oilpatch activity means fewer tradespeople on site, putting a squeeze on businesses that house and feed workers in remote locations.

See Full Article

Before the downturn, when the oil and gas sector was chugging along, it was a challenge to entice enough skilled labourers to work for weeks on end far from home. Fat paycheques were one draw, but quality lodging was also key.

Many camps more closely resemble hotels or resorts, complete with Wi-Fi, fitness centres, ice rinks and meals prepared by Red Seal chefs.

They're quieter places nowadays, with oil and natural gas prices too weak to justify most new projects.

Black Diamond Group CEO Trevor Haynes figures the company's lodges are at about half occupancy these days. A few years ago, when times were better, it was more like 80 per cent.

The workers who remain are settling in for longer stays, as frequent shift turnovers eat into productivity at the mine or drill site, Haynes said.

Black Diamond is responding by tackling costs. Administrative expenses were down by 23 per cent during the last three months of 2015 compared to the fourth quarter of 2014, while capital expenditures were 97 per cent lower.

One of the more "painful" measures has been to reduce the workforce last year by around 130 to 140.

"It's really hard to turn an organization around from being fast-growth to being very cost-conscious," he said. "It was a very difficult year in that respect."

It's a similar story for another big camp operator, Horizon North Logistics.

CEO Rod Graham told a recent conference call that he'd like to say the pain is over, "but I know that would be a falsehood."

"Horizon North's traditional energy markets in Western Canada are under extreme duress."

As of mid-February, Horizon North had a workforce of just under 1,200 - down 700 from the same time a year earlier, said Graham.

Jim Seethram, chief operating officer at Orissa Software, said the earliest signs of distress in the resource sector can be witnessed at work camps.

Orissa's system helps companies manage the comings and goings of their workers, processing more guest stays than some of the world's biggest hotel chains.

The decline has been most dramatic in open camps - ones that house workers for quick drilling jobs, as opposed to ones owned by oilsands operators, for instance.

Some regions have felt more pain than others. Shale oil rigs in North Dakota, for instance, "dried up in an instant" as it only takes a few days to wind down one of those operations, said Seethram.

But in the oilsands, the sunk costs are considerable and it takes years to build a project that will operate for decades. Operators are loath to stop construction partway through.

When activity does eventually pick up again, Seethram said he's not expecting to see camp operators pull back much on the bells and whistles for new projects.

"I don't think we can go backward from that," he said. "I think the camp operators have recognized that's what their guests are demanding and that's what draws them to the work site and that's just a necessary cost of business."



Advertisements

Latest Economic News

  • Asian stocks mixed as U.S. hikes interest rates

    Economic CTV News
    HONG KONG - Asian stocks were mixed on Thursday after the Fed raised rates again, meeting investor expectations but providing few surprises. KEEPING SCORE: Japan's benchmark Nikkei 225 index dipped 0.2 per cent to 22,721.21 while South Korea's Kospi climbed 0.8 per cent to 2,500.12. Source
  • Trump condo prices dropping in New York City: report

    Economic CTV News
    NEW YORK -- In Manhattan, where Donald Trump built his empire, prices for condos in buildings bearing his gilded name are falling in the first year of his presidency. The average price per square foot for condos sold in Trump-branded buildings in the borough fell 7 per cent in the 12 months through November compared to the year earlier, according to a report Wednesday by research firm CityRealty. Source
  • MLSE strikes deal to buy Toronto Argos

    Economic CBC News
    Maple Leaf Sports & Entertainment, which already owns the Maple Leafs, Raptors and Toronto FC, is adding the CFL's Argonauts to its portfolio. MLSE announced Wednesday it has an agreement to buy the Grey Cup champions. Source
  • Alberta chooses three companies to build four wind power projects in auction

    Economic CTV News
    CALGARY -- The Alberta government says it received such attractive bids in an auction to pick renewable energy projects that it exceeded its goal of 400 megawatts and will instead support 600 megawatts of new generation. Source
  • As Canadians turn to electric cars, charging stations will boom: AddEnergie CEO

    Economic CTV News
    MONTREAL -- Canadians will purchase a record number of electric vehicles this year as the growing sales of cars with longer ranges is prompting a push to increase the number of fast chargers, the head of the country's largest charging network says. Source
  • Fed rate increase is 3rd this year; foresees 3 more in 2018

    Economic CTV News
    WASHINGTON -- The Federal Reserve is raising its key interest rate for the third time this year and foresees three additional hikes in 2018, a vote of confidence that the U.S. economy remains on solid footing 8 1/2 years after the end of the Great Recession. Source
  • Federal Reserve rate increase is third this year; foresees 3 more in 2018

    Economic CTV News
    WASHINGTON -- The Federal Reserve is raising its key interest rate for the third time this year and foresees three additional hikes in 2018, a vote of confidence that the U.S. economy remains on solid footing 8 1/2 years after the end of the Great Recession. Source
  • Canadian wireless prices still high by most standards but ISED sees positives

    Economic CTV News
    TORONTO -- Prices for some types of Canadian wireless service plans have fallen but overall they remain high compared with other countries, according to a report commissioned by the federal government. It says the biggest declines are with low-use mobile plans, which the Department of Innovation, Science and Economic Development said in a statement were cheaper in Canada than in the United States for the first time since 2013. Source
  • Bitcoin and blockchain start-ups cashing in on cryptocurrency frenzy

    Economic CTV News
    CALGARY -- The investor frenzy driving bitcoin prices to precipitous heights is playing out on stock markets as well, as companies shift focus to cryptocurrencies to get in on the latest boom. "People are trying to surf off the wave of bitcoin by strategically changing their name," said Jean-Philippe Vergne, co-director of the Scotiabank Digital Banking Lab at Western University. Source
  • Bernie Sanders, others on political left push Trump to maintain NAFTA hard line

    Economic CTV News
    WASHINGTON - Donald Trump is being told to stay strong on trade by people who aren't normally his allies. Bernie Sanders and other members of the anti-NAFTA left are holding a news conference on Capitol Hill this morning. Source