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To build housing, or not, for oil boom workers

Miles Bryan Jan 6, 2015
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When Richard Kail retired to the northwestern Wyoming town of Pinedale in the late 1990s, it was a sleepy place  mostly getting by on jobs in tourism and government. Kail bought some apartments and a hotel in Big Piney, a town about 30 miles south of Pinedale. He did steady business, but nothing special. Then in 2005, he started to get a lot more calls.

By the mid 2000s, a new technology called hydraulic fracturing had opened up thousands of natural gas wells around Pinedale. Hundreds of energy workers descended on the area, all looking for a place to stay.

“There were continually calls,” Kail says. “They were willing to pay just about anything you ask them. There was a real frenzy for finding places.”

The demand for housing was just too much for the area to handle, says Steve Smith, mayor of Pinedale from 2006 until last June. “At the end of the day we just couldn’t pull it together here,” he says.

Pinedale scrambled to react to the boom, but there was not enough housing, and too many energy workers searching for a place to stay. What got in the way? First, the free market.

“Everything was going up, up, very quickly in Pinedale,” Smith says. “Folks that had lived here for a long time that might have been valued for [$100.000] to $150,000 now selling for $300,000. In that market … it is very difficult to find land to put in attainable housing.”

Attainable housing means that is available, but isn’t necessarily cheap.

The second issue is the sewer lines and roads and stoplights, the infrastructure that a town must build along with the housing. 

The third major point, which was more of an issue for Pinedale, was a little more abstract: Do you make the energy workers a part of the town and the community? For Mayor Smith, the answer was yes.

“I wanted those people coming into our community to be part of our community,” Smith says. “To pay sales tax and property tax and enroll their kids in school. I thought that was important, and I still do.”

Locals welcomed the idea of their bars and diners filling up with energy workers, he says. But when it came to housing, he was overruled. A housing report commissioned by the town in 2008 recommended it limit new residential development to cushion the real estate values of long-term residents. Ultimately, not much housing was built to accommodate the workers.

Fast forward four years, and the same scenario is playing out, this time in the northeastern Wyoming town of Wright.  

Roger Jones has developed apartments and townhouses in energy towns in Wyoming and the Dakotas. Now he’s building some apartments in Wright, which is seeing a surge in oil development. These construction projects take an average of one to two years, so contractors often underbuild because they don’t know how long the boom will last.

“You always want to have a waiting list,” Jones says. A few months ago, he was still optimistic about the Wright project, but the recent sharp drop in the price of oil has him concerned, he says.

Unlike the boom in Pinedale, Wright has had plenty of lead time to track the growth of oil and gas work. Mayor Tim Albin says he wants to see the energy workers in the area living and shopping in Wright, but the town has to invest long-term first. That means using oil tax proceeds to build an almost $10 million recreation center, but taking it slow with housing.

“We want to build for the future and have our town be a permanent structure,” Albin said. “We are not trying to just build stuff to handle the overflow and then go ‘we don’t care what happens in two years whether it folds or not.’”

When small towns in energy states are hit with a boom, they know a bust is probably coming, too. Even with plenty of foresight, it’s hard to get around the fact that investment to meet the needs of energy workers might not be a good investment for the town.

“I mean this happens everyplace,” said Pinedale innkeeper Richard Kail. “Nobody is prepared. Those things just happen and we adjust.”

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