EAGLE FORD:

'Man camps' go upscale in response to 'absolutely abhorrent' housing situation

CARRIZO SPRINGS, Texas -- The 480 beds made available last week at the newest oil field camp here are helping somewhat to alleviate a growing shortage of housing options in the boomtowns dotting south Texas' Eagle Ford Shale.

But the Studios at Carrizo Springs, built by Stratton Oilfield Systems, offers another service oil and gas companies are increasingly demanding these days: posh accommodations for their workers to help keep them on the payroll.

"We wanted a lot of green space and outdoor areas for people to come and relax after work, have a bite to eat," explained William King, Stratton's vice president for operations, during a recent tour of the new development. "Every room has its own kitchenette, full refrigerator; we have three different floor plans."

The Studios also features four outdoor gazebos, pits for playing horseshoes, and secure, fenced-in parking for employee and company vehicles. Servicing the 10 buildings put up so far is a massive cafeteria that can feed three meals a day to thousands of people at once with what Stratton employees believe is the largest kitchen in the region.

King said it's a far cry from the camper he first slept in when arriving here, or the notorious "man camps" built up to house the workforce in other parts of the Eagle Ford and Bakken shale oil fields. Though the units may look basic on the outside, inside the Studios at Carrizo Springs offers hotel-like amenities, including laundry services, recreation rooms, high-speed Internet and satellite television.

Industry insiders say it is a sign of the times in today's modern oil patch, where a rush to access new sources of crude oil and the constant activity that horizontal drilling and hydraulic fracturing entail are putting a squeeze on rural housing options and forcing companies to adapt.

First came sleeping in cars, then the tent cities, next evolving into RV camps and later into the famous man camps -- modular, temporary housing for oil field workers that can be picked up and moved along with the workforce if necessary.

But with jobs plentiful, workers are constantly jumping ship for other companies as they seek better pay, better benefits and lately better living standards. It's this rising demand for more posh settings where workers can relax after a shift that has led Stratton to invest in the Studios. And it has the option to expand -- starting at 480 beds, the company says it has enough land and material on hand to grow to a capacity of 2,000 within a matter of weeks.

"There's a company that didn't have the need in this area yesterday that today needs 100 beds," said Stratton Oilfield Systems' marketing vice president, Andrew Frye. "We can have this one doubled, believe it or not, in like 60 days, ready to roll. Sometimes faster."

Steep costs for some locals

Now in its second year, the Eagle Ford Shale drilling boom has brought with it both wealth and headaches to the communities affected, including Carrizo Springs, an isolated outpost in Dimmit County less than an hour from the border with Mexico.

At noon, the lunchtime rush buzzes the town with traffic. Lines of pickup trucks spill out from fast-food drive-thrus into the street, while large men in coveralls form equally long lines behind restaurant counters.

This previously economically depressed area now features brand-new sport utility vehicles recently bought by landowners lucky enough to own the minerals rights to the oil and gas that companies seek. Town coffers are filling with new revenues that officials hope to use to fix damaged roads.

But the biggest hit these communities are taking is to the costs of living, mainly in housing. Stories abound of renters being forced out of apartment blocks now advertised as "oil field housing" with rents climbing from $500 or less per month to, in some cases, $1,000 per week.

The situation here has already been seen in other areas of the country, where new methods for getting at crude oil from shale and other tight geologic formations have taken off.

"We've opened up three facilities in west Texas and New Mexico, and the housing issue is absolutely abhorrent," said Douglas Cain, president of Lake Truck Lines, during an industry talk hosted by Infocast last week in San Antonio, on the employment challenges facing companies active in the Eagle Ford Shale. "There are places to live, but it's so expensive it's ridiculous."

During another tour of a competing man camp on the opposite end of town, Tommy Ulrich, a facilities manager for Target Logistics, concurred. He said he spent a year in North Dakota helping to alleviate housing shortages in the Williston area. He said the numerous RV parks, "no vacancy" signs on hotels and the man camp complexes sprouting up alongside the highways in the Eagle Ford region are proof that what hit western North Dakota is now starting to hit south Texas.

It will only get worse as the activity spreads, provided crude oil prices stay strong, Ulrich warned.

"It's growing. It's not booming huge like it is up in Williston, N.D., yet," he said. "It's just at the beginning right now."

Target Logistics calls itself "the largest turnkey provider of remote workforce housing in the United States." The facility it just opened here back in March, Carrizo Springs Lodge, is big enough for 300 workers, but like Stratton's Studios it can also be expanded quickly and easily as the demand builds.

The buildings themselves are simple, modular units that can be picked up and relocated as needed. But Carrizo Springs Lodge's operations manager Raymond King said his company has also emphasized luxury and comfort in its offerings, mindful of where industry demand is headed.

"All the laundry is provided," he said. "Food is provided, and entertainment. Everyone gets Wi-Fi, cable TV, Blu-ray players in all the rooms, flat-screen TVs. We have microwaves, movie rentals, things of that nature."

During a tour for EnergyWire, Target Logistics was in the middle of upgrading the air conditioning systems for all the rooms to allow for more individualized climate control. It has also left enough open space to allow workers to stretch their legs, exercise or even toss a football around.

It's all part of an ongoing effort to demonstrate to companies that this newer breed of man camp isn't a basic, stripped-down outpost for roughnecks but a comfortable home away from home for all involved in the shale oil and gas business, including the growing number of women entering the workforce.

"The better experience they have here, the better work experience they'll have out there," Target's King said.

Advertisements for various man camp options or alternatives throughout the Eagle Ford Shale drilling zone show further evidence of the increased focus on improving creature comforts in oil field housing. Beds, hot showers, catering, and 24-hour gated access and equipment security are no longer enough, it seems, and it's not just free electronic entertainment and three hot meals a day that are winning clients over.

The Eagle Ford Cabins in Cotulla, for instance, boasts a 6,300-square-foot recreation center, free utilities and a "cookware and dining ware package," according to a flyer.

The Eagle's Den housing units in Cotulla, Three Rivers and Carrizo Springs also promise free utilities, along with kitchens, separate living and sleeping areas, and space for outdoor barbecues and picnics. The competing Star Energy Lodge also features outdoor grilling and promises weekly maid services, kitchens complete with pots and pans and dining ware, and even pet-friendly rooms.

Keeping workers separated -- and happy

Increasingly, drillers are also demanding that the facilities themselves be engineered in a way to keep different companies' workforces separate from others.

With turnover so high, firms are anxious to segregate their workers when shifts end, lest they hear from others about rival offerings or better opportunities that could entice an employee to change jobs "more frequently then they change their underwear," as Frye put it.

"What we try to do is space out the buildings so if a Halliburton, Schlumberger, Baker Hughes or some of these companies say they're going to bring in 100 men, we'll give them a building or two buildings," explained Stratton's King. The 2,000-seat cafeteria is broken up into four separated dining areas with the kitchen in the middle, so that one company can use one block all to itself while discouraging its workers from dining with rival companies' employees.

Cost comparisons between different options are sometimes difficult, as the workforce housing providers negotiate individual contracts with companies looking for space.

King said the cost for housing one worker at the Studios at Carrizo Springs was still a moving target as the demand/supply picture evolves. But he expects demand to quickly outstrip supply and is advising potential clients to act quickly if they don't want to feel the sting of a price spike later this year.

"We're trying to tell the different oil companies and service companies to lock in, because in six months, 12 months, if it happens like North Dakota with somebody trying to get a room up there for under several hundred dollars a night, it's impossible," King said.

Drilling and production activity in the Eagle Ford Shale has been hamstrung to some extent by the housing shortage, but also by a lack of infrastructure needed to move the hydrocarbons out to market. Companies say they are still heavily dependent on trucking and rail as they wait for various pipeline projects to be completed. Storage tanks are also quickly filled.

But lately companies are growing more worried about the workforce challenges they see coming, namely to recruit competent, qualified people from a relatively small pool of labor, and retaining them. A survey by Ernst & Young identified talent acquisition as one of the top five business challenges that oil and gas companies are facing, and a large majority of executives surveyed said they worried that it would affect profits in the near term.

At the industry talk in San Antonio, Brett Haugh, an executive with Employee Benefit Solutions, said he is advising one company he declined to name that is seeking to expand its shale oil workforce by about 50,000 people over the next five years. He suggested the company may be unable to meet that target.

Haugh said his advice to oil and gas companies active in the Eagle Ford Shale is to think more creatively when trying to find ways to keep employees happy and on the payroll, beyond just offering them more money.

Finding ways to make their lives a little more comfortable after a day spent working in the hot south Texas sun could be one approach, he said.

"We've got to make sure that we've got this systematic process of qualifying these people, compensating them correctly, providing the right benefits to people, and providing them with the training and development and education needed to supply the capacity," Haugh said. "The people issues here are very real, and they're very scary, and they require a lot of creative thinking."

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