External/Industry Analysis: Workforce Housing

The industry we are analyzing for this purpose is the workforce housing sector of the oil and gas industry. There has been an oil boom in the United States’ lower 48. New drilling techniques, namely horizontal drilling, have paved the way for domestic oil companies to exploit hard to reach homeland oil reserves. Due to a controversial technology known as “franking,” oil and gas drilling has seen an explosion in production, and with higher production comes a need for labor. These laborers need a place to live and currently, housing is in high demand.

A major concern that most ties and counties have is how much to build up for a permanent and temporary workforce. This analysis will address the housing needs of the new labor force and identify opportunities and threats within the market. Competitive Advantage Rhino Supply (Rhino) is a Service Disable Veteran Owned Small Business (KIDDOS) focusing on providing supplies to many different industries. Being an KIDDOS is one competitive advantage of Rhino. Currently, the United States Federal Government has a Presidential mandate to award 3% of the Federal Budget to Godsons.

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Rhino is poised to take advantage of the socio economic oils of the Federal Government by teaming with wholesale INDUSTRY ANALYSIS companies looking to increase their product sales to the government. As an KIDDOS, Rhino 3 External/laundry Analysis: Workforce Housing in the Oil and Gas Industry By Stevenson looking to provide mobile housing to the government and also to the oil and gas industry. This analysis only focuses on the oil and gas workforce industry. SLEPT Analysis The SLEPT (Social, Legal, Economic, Political, and Technological) analysis is used to identify significant outside issues that organizations must address.

When applying this process to an entire industry it can be confusing. There are many issues that are specific to a certain company without impacting the rest of the industry.. Opportunities Social Transient population provides a major opportunity in this market. When an oil boom strikes an area there is an influx of workers looking for Jobs. There will be an immediate need to house these workers. But after production begins to decline, “Local populations will likely also decline as production decreases, as workers in the oil and gas industries are gradually displaced and move on to other opportunities” (Shafer, 2012).

Cities and counties do not want to invest in a permanent workforce knowing they will be leaving when production slows. They will look to support clean, aesthetically pleasing, temporary housing in preparing for inevitable population reduction. Restrictive rules within man camps are another opportunity for non dormitory accommodations. The following example is of one resident residing in dorm like man camps. “The many restrictions grate on Randall Ervin, 38, of Beaverton, Oregon. “Here I am 40 years 4 old and it’s like I got a mom, you know what I mean? ” said Mr.. Ervin, who works as an IL field pump operator” (Cairns, 2012, p. 14).

Grown men may not enjoy living in dormitory style quarters with restrictive rules like boot removal policies and visitation hours. Legal Having man camps in and around the city has recently become a drain on the local population and services. Within the last year, three of the most oil producing counties in North Dakota have placed moratoriums on issuing any new man camp permits. “In recent weeks, Williams County, where thousands of previously approved camp beds have yet to be built, and Mountain County, where one-third of he population is living in temporary housing, imposed moratoriums on man camp development” (Sulzberger, 2011, p. 2). Local city and county officials are looking for alternative solutions to help ease the burden on the locals. There is a lot of work to do in the boom towns and because drilling permits are increasingly being approved, the workload will continue to increase. In a recent report “which was prepared by the Center for Community and Business Research at DUST, noted that the first well targeting the Eagle Ford was drilled in 2009 when only 13 drilling permits were issued (ENG Cot. 27’08). Since then, the number of permits has risen to 3,823 last year, up from 1,266 in 2010” (Shafer, 2012).

That is an increase of over 2,500 well permits. If one well requires over 100 workers, then over 25,000 workers will need temporary housing in West Texas where Eagle Ford oil is located. Economic The fact that demand is so high and supply is so low Justifies increasing rent prices. “In than $1,200 a month, says Mayor Gary SST. Once, a price that would have been unheard of even three years INDUSTRY ANALYSIS ago’ (Warning, 2012). The fact that wages in the industry are high means workers have the ability to pay higher rent prices.

Calibrating (2012) pointed out that “the oil fields offer generous pay, starting at around $15 an hour” (p. AAA). Providing rental property would be another opportunity in this environment. Technological Franking has become a valuable technology to the oil drilling industry. Due to horizontal drilling techniques and franking technology, rigs rarely, if ever, hit a dry well. A major concern with franking is the possibility that it can contaminate the ground water. There have been numerous studies and the general consensus is that there is no evidence of round water contamination. A study by the Energy Institute at the University of Texas at Austin released in February found no evidence that franking is polluting aquifers and noted that surface spills pose a greater threat to local water supplies than actual franking activities. The study analyzed data drawn from the Barnett, Huntsville and Marcella shale plays” (Shafer, 2012). Threats Social Statistics have shown that whenever there is an increase in population there will be a corresponding increase in crime. “Crime has exploded.

Some towns and cities in the area have reported double-digit growth in property crime and drug seizures in the last two years” (Warning, 2012). This makes it difficult for the locals to approve of more developments when there is a distrust of transient employees. “Criminal activity is on the rise with the population boom, and some Bismarck residents are distrustful of workers come to fill the roles of roughnecks, pipe fitters, fuel men and more”