Oil boom creates new opportunities for Saskatchewan’s construction industry

By Lisa Fattori

Oil boom creates new opportunities for Saskatchewan’s construction industry.

Oil boom creates new opportunities for Saskatchewan’s construction industry.

The oil boom in Saskatchewan fosters spin-off benefits for a variety of sectors, including the construction industry. Oil production requires the construction of on-site infrastructure in the oilpatch, but it also necessitates new development to support the influx of oilfield suppliers and related businesses, as well as workers and their families. New retail stores, restaurants, recreation centres and housing are a sample of the amenities needed to support a growing population, and are indicative of thriving communities experiencing economic prosperity.

“The Estevan and Weyburn region is the area where we’re seeing the most activity in new construction,” says Doug Folk, acting president for the Saskatchewan Construction Association. “Lloydminster is also having an impact and there are construction projects with the new oil development in the Swift Current area. We’re seeing the construction of hotels, restaurants, coffee shops and work camps; and in the oilpatch, the construction of pre-engineered buildings, which can be completed quickly.  Along with the oil and gas industry, we also have the mining sector that is absolutely booming, so there’s lots of work for anyone in construction.”

According to Statistics Canada, in 2012, capital investment in Saskatchewan increased by 6.5 per cent to $20.9 billion, compared to 2011. Spending by the private sector accounted for 83.2 per cent, while the public sector contributed 16.8 per cent. 2013 is expected to be the sixth consecutive year in which new capital spending in Saskatchewan exceeds $14 billion. In March, Statistics Canada reported a 66.7 per cent increase in building permits in January 2013, over December 2012, with residential construction up by 50.2 per cent and non-residential construction up by 115.7 per cent. Saskatchewan enjoyed the second-highest percentage increase among Canadian provinces and is ahead by leaps and bounds of the national average of an increase of only 1.7 per cent in building permits for January.

The expertise of heavy construction workers in earth work, grading and road-building is in high demand by both the oil and gas, and the potash industries, which increases competition and secures top wages for employees. “Approximately 60 to 70 per cent of heavy construction work used to come from government for contracts to construct highways,” says Shantel Lipp, president of the Saskatchewan Heavy Construction Association. “Now we’re seeing a lot more demand coming from the resource sector. Contractors have more choice in the projects that they take on and employees also have more options. They have the opportunity to make more money, because contractors have to pay more to retain their workers.”

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The oil boom has increased construction demand for new shops and offices, as well as the renovation and expansion of pre-existing properties. Estevan-based Wilhelm Construction Services Inc. saw both its on-site and office teams triple in size between 2008 and 2011. The company is currently working on four construction projects for clients from the oil industry, including a 16-building rural development project that replaces multiple facilities in several locations throughout the city with one complex on an 80-acre parcel of land. Wilhelm Construction Services is providing design-build services for the construction of various buildings that include specialized spaces for heavy-equipment maintenance, wash bays, pipe yards, office buildings and supply stock.

“The demands occurring in the oil industry have put a strain on the size and functionality of many companies’ existing facilities,” says Nathan Wilhelm, owner and operator of Wilhelm Construction Services Inc. “Established oilfield companies have been willing to take a chance with us, even in our infancy of five years of business. We have gained valuable building experience and have increased the size and number of types of projects that we are able to handle, because of the willingness of oil companies to try out a local contractor who answers their calls quickly.”

Estevan and the surrounding RM have a population of 12,093, which is an increase of over nine per cent, compared to population figures in 2006. With transient workers living in the area, the population is higher, but is difficult to pinpoint.

Within Estevan, new developments include Spectra Place, a multi-purpose entertainment and sports facility that opened in April 2011. The state-of-the-art Saskatchewan Energy Training Institute is a new 44,000-square-foot facility that is part of Southeast Regional College. The $14.2-million building opened in May 2012 after three years of construction. On the east end of Estevan, a new strip mall is under construction.  The city has also seen the opening of additional fast-food restaurants and has a residential housing project currently under construction.

“With the booming economy in southeast Saskatchewan, there is a need for more housing,” says Manpreet Sangha, economic development officer for Estevan. “People are waiting over a year for an apartment, so there’s a lot of demand for rentals as well. Right now, we have a lot of workers staying in hotels and motels.  A housing report is coming out in June and, after its release, we’ll have a better idea of the types of housing development that we need for Estevan.”

According to Statistics Canada, in 2012, urban housing starts in Saskatchewan increased by almost 40 per cent, whereas the national average was up by only 11 per cent. In Weyburn and Estevan, new housing developments are helping to alleviate the shortage of accommodations in this oil-active region of the province. Home-building company Trimount Developments currently has a 39-unit condominium under construction in Weyburn, with townhomes and condominiums planned for subsequent phases, for a total of 108 homes. In Estevan, Dominion Heights is a master-planned community that is situated at the north end of the city. Trimount will be constructing single-family homes in the first two phases of the project, to offer 267 new homes to the Estevan market.

“There is enough land for over 700 homes, a project that would take about five years to develop,” says Mike Reinheller, VP of operations for Trimount Developments. “This is a community that has a mix of single-family and multi-family homes, set on 86 acres.”

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Since the spring of 2011, Trimount has constructed 117 condos and seven single-family homes in the Estevan/Weyburn area. Although prices have risen significantly in the last 18 months, the company is committed to keeping its home prices at an affordable level.

“The oil boom is a big driver of the demand for housing, but coal and agriculture are also strong industries in the area,” Reinheller says. “We feel that Estevan is very sustainable and a good market to be in. Fort McMurray had a big boom five years ago that saw prices go through the roof, which created a bubble that wasn’t sustainable. We don’t want to see the same thing happen here. We want to be good corporate citizens and keep our pricing at a reasonable, affordable level.”

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