Lloydminster – The boom and bust of heavy oil prices is old hat to the city of Lloydminster that continues to plan ahead based on an average population growth rate of 2.5 per cent.
The city’s new 2015 capital budget of $52.7 million targets that long-term steady growth rate with $21 million in spending for new water and sewer lines and $5.4 million to improve transportation.
“Our thrust is to get ourselves in a really good position with very strong infrastructure for the long term future of our city,” said Mayor Rob Saunders in advance of a detailed rollout of the city’s strategic plan and vision for 2015-17.
The plan’s four keys priorities are defined as strong relationships, vibrant city, sustainable infrastructure and a healthy financial position.
Building Canada fund applications are in the works to construct the next phase of the Highway 17 couplet that will ease north south oilfield traffic on the Alberta and Saskatchewan sides of the city.
Lloydminster is also forging ahead with plans to annex 1,793 hectares of land to support the city’s growth needs for the next 30 years led by the oil and gas the oil and gas industry.
“The oil and gas sector is a huge piece of the economy and the future growth of the city of Lloydminster,” said Saunders.
“We have seen substantial investment of corporate capital dollars spent in Lloydminster. We anticipate we’ll continue to see that.”
Lloydminster should also benefit from diversification into other anchor industries like agriculture during the current downturn in the heavy oil sector.
“There’s some pretty strong commodity pricing for a change that’s been consistent for the last couple of years,” said Saunders about agriculture.
“We hear the projections from the agricultural economists that 2015 will be a strong year which bodes well for the city of Lloydminster.”
Saunders said some energy companies will see lower oil prices as an opportunity to expand their shops or purchase new equipment with reduced operating costs and expenses.
“They could probably get the job done cheaper than at the peak of the activity,” he said. “Usually, the service side of the oil industry is populated by a lot of younger people.
“We’ve created a climate for young families and business to invest in Lloydminster. Our growth has doubled in the last 30 years. “We’ve had some low oil price years but we’ve managed to work through them,” said Saunders.
His advice to anyone who has been following the downward price of heavy oil is to stay calm and be optimistic.
“I think everyone’s watching and listening and wanting to understand more about what’s gone on with the pricing and why it’s happening, and who’s making it happen, and what are the controlling factors,” he said. “You always have to remain optimistic and I think those of us who have worked in the industry for a long time have seen this a few times and worked through it.”
Saunders has a long work history in the regional heavy oil industry and he can relate a sustained retraction in oil prices to a need for long term thinking.
“I guess with our anchor producers here that have weathered the storm, so to speak with fluctuations in pricing, they are inherently committed for the long haul,” he said.
“They usually make the necessary adjustments to compensate for lower pricing.
“They are fairly adept at pulling those levers to do those things. I am anticipating we’ll see some changes. It’s hard to predict because we don’t know.”
Saunders anticipates there will be challenges and opportunities ahead for many companiesdoing business in the market downturn in 2015.
“Well I think it’s a double edge sword for people that maybe new into it, both from the production side and the service sector,” said Saunders. “They could have been leveraged to a point where this could be detrimental with sustained low pricing over time.
“On the other side, those that budget long term and plan long term, sometimes it creates opportunities for acquisitions and such.
“I think we’ve seen some of those start to happen even in this region.”
As for the effect of lower oil prices on city revenue Saunders said,
“If the robust economy we’ve seen in the past tapers down somewhat, there could be possible lower investments in properties – in land and things like that.
“But once again, what we’re seeing with the establishment of regional service centres, is that we do have a lot of the largest players in the world investing in Lloydminster.
“They realize the long term of our resource here will bode well for their master plans.”
The city is expecting a final building permit tally of about $180 million for 2014 with some construction momentum carrying over into 2015.
“There’s been substantial investment in building right across the board,” said Saunders on both sides of the border city.
“It’s a good news story because of the fact that over the past years, Alberta has been very strong with our growth especially our housing.
“But we’ve also had substantial growth on the Saskatchewan side for residential, commercial and industrial.
“There’s been hotels built on the Saskatchewan side, restaurants – huge investments by local corporations.”
The Lloydminster and District Co-op celebrated their 100th year of business in 2014 with the expansion of Lloydminster Co-op Marketplace and Pharmacy.
Several new oilfield buildings are currently under construction in the Hill Industrial Park in pace with new commercial and retail developments.
Construction is proceeding on Phase 2 of the Lloydminster Power Centre on a 140-acre parcel of land fronting Highway 16 at the west side of the city.
The site drawings by Brentwood Developments show space for retailers such as Mark’s, Dollar Tree, PetSmart, Michaels, and bulk barn among others.
The new 122 room Hampton Inn By Hilton just opened on the northwest side of Hwy 16 where a second hotel called the Meridian Inn & Suites is set to open any day.
Those projects will also support a Browns Socialhouse and a Rock Creek restaurant and a Co-op gas bar that are both under construction in the Hampton Square.
“We actually opened over 300 doors of hotels and apartments this past year,” said Saunders.
“I did a tally and we had over 600 doors open in this past year which is fairly substantial. That includes condos, houses, townhouses and apartments.
“The goes to help our hosting and conference capabilities and goes to support the industry and the economy and people that area moving to Lloydminster.”
Lloydminster plans host to a Society of Petroleum Engineers Canada workshop sometime this year on the future challenges of heavy oil.
“It just goes to show Lloydminster is a great drawing point and a hosting facility,” said Saunders.
The plus side to that as well is we have Lakeland College with their new Petroleum centre being ready this year as well.”
The grand opening of the $23 million Energy Centre as the facility is officially called is expected to be announced soon.
“There’s a lot of expertise here and a lot of people like to share their expertise here because they all fuel of each other and generate new innovative ideas,” said Saunders.
“We tend to think that we’re helping to lead the leading edge in new technology around heavy oil development.”