Kindersley – The Kindersley area can look to high-netback Viking light oil produced in the region to help sustain economic growth during the current low oil price reality.
“It is a quick return for the amount of money spent for the infrastructure, the drilling part, the return and to pay it off,” said Councillor Vaughn Biberdorf, who works as a battery operator for Penn West Exploration at Avon Hill north of town.
Compared to other unconventional plays, he said, the Viking is shallower at only 700-750 metres in depth resulting in lower costs for drilling and completing a well.
“In Alberta, it’s double the size of drilling and it’s more expensive,” said Biberdorf, who noted multistage fracking and horizontal wells half a mile long are proving to be the productive secret sauce.
“There’s less drilling time and less payout for the rig costs and that, and yes, the return is there,” he said.
Penn West was one of several companies active in the area in late February, but Biberdorf is well aware that the overall pace of the industry is slowing down.
“We’re still drilling as are other companies, I am sure until breakup – then re-evaluation after the end of the first quarter at the end of March,” he said.
“We’ve got a big waterflood moving on – just starting and we’re trying to get that going. Things are going good yet.”
He’s heard talk from maintenance companies in the area about being asked to cut rates, but he said that’s common practice.
More worrisome to some are competitors from Lloydminster, north of Lloydminster and Calgary cutting costs to grab a piece of the action in the Viking.
“We hope our guys can sharpen their pencils, but we want them to be sustainable as well,” said Kindersley Mayor John Enns-Wind as the impact of the downturn unfolds.
“There’s been a number of contracts for individuals that haven’t been renewed. There’s been some layoffs,” he said.
“For some of our seasoned guys, it’s the fourth or fifth time that they’re doing it. Experience has taught them how to manage their finances and what to expect with work.
“For the guys who are going through the first or second time, it’s a different experience for them.
“Some of them are a little bit nervous. They’re not sure how it’s going to pick up again whereas the senior guys – ‘ya it will go.’”
Despite the overall gloomy mood in the oil industry in the province, Enns-Wind said there’s a lot of confidence in the local economy.
“Last time I checked there were about 250 positions advertised in the area,” he said noting the restaurant and hospitality association is still recruiting new workers.
“We’re doing better – talking with my mayoral colleagues in Estevan and Lloyd, it seems we’re doing better,” he said.
“It seems like we haven’t been hit as hard. It doesn’t mean we haven’t been affected. There’s still confidence in the area. “People are confident and they’re making cautious but optimistic decisions. We have to grow.
“We’re too small for our shoes and so our commercial sector is growing, our retail sector is growing and oil will come back. “We just have to wait and be prepared and that’s what I see a lot of people doing.
“There’s a lot of volatility in the oil market and for it to stay depressed for a long time – it’s difficult to imagine that.”
Kindersley reported a record-setting building permit total of $28.9 million in 2014.
“It’s a combination of commercial development residential development, industrial and retail development that’s driving some of these things,” said Enns-Wind.
“We’ve been doing a lot of infrastructure work and planning is starting to pay off. I still think our record breaking years are ahead of us instead of behind us.”
A ground breaking ceremony was held on March 6 for a new Boston Pizza at the 84-room Canalta Hotels construction site in the Holland Industrial Park on the north side of Highway 7 West.
Canalta is also paying a significant amount for the cost of a new lift station for sewage with project tenders issued. The second expansion of the Kindersley Inn fronting Highway 7 East is also expected to open by April with a total of 218 rooms available.
The new 43 room Snow White Hotel is also expected to be open by April on Highway 7 just east of the Hwy 21 junction.
Construction is also underway on a 109 room Best Western Hotel on 14th Avenue.
A development permit has been issued for a new Microtel Inn & Suites by Wyndham east of the new East Crossing strip mall at the east end of town. The new expanded home of Energy Dodge is currently being constructed at that location.
“There’s still room to grow here,” said Enns-Wind about the outlook for building in 2015. “People are looking more long term and they need to get stuff started now, so when things do start up next year because prices have rebounded, they want to be ready for it.”
Enns-Wind said he’s not surprised by the pace of growth in the early going of 2015 despite the slowdown in the oilpatch.
“We’ve been living with shoes that were too tight. We had to expand,” he said.
“What I’ve been pleasantly surprised with is that this is still going on with the downturn in the oil prices and that there is still confidence in the area.
“We still need a lot of employees for different businesses so there’s a transition out of the oilpatch into other areas. “We have some of our ag dealers and service companies looking at expanding. We’ve got the terminals that are expanding as well here and around town. “That all contributes. They employ a lot of people as well. There are a lot of different reasons to be upbeat.”
Priority one for the town is housing focused on the Brookhollow Estates subdivision by Marathon Properties.
The first two six-unit condo structures are completed and for sale and four new houses are under construction with eight lots sold in the first phase development.
The town is also talking with another developer about building several apartments at different locations for those who can’t afford homes. “It seems to be that we primarily need apartments, but there’s nothing firm to announce,” said Enns-Wind.
“We kind of have a perfect wave – where all these circumstances come together but we need more housing for economic development."
“People are attracted by quality of life and they want positions to go to. Currently, we still have positions for people to come to. We have a housing problem and our quality of life – we’re trying to address through a multi-use facility for arts and for recreation.We’re doing all these things concurrently, so we’re just plugging away at it.”
Kindersley plans to spend about $1.3 million this year on its water main replacement program with Build Canada funding. Other quality of life projects like a new swimming pool could hinge on the impact of the provincial budget on March 18.
“That’s the $64,000 question. Currently, we (municipalities) have a revenue sharing with the province where we receive 20 per cent of the revenue from the five per cent sales tax revenues. The premier said that’s on the table,” said Enns-Wind.
“The premier is looking at changing that so SUMA (Saskatchewan Urban Municipalities Association) has been lobbying hard that that shouldn’t be that case.
“Our local organization with the West Central Municipal Government Committee –we’ve been talking very much and talking with the province as well – ‘no you can’t be doing this.’”
In the end, the province did not reduce its revenue sharing commitments in the 2016 budget.
