Black Diamond Group bunkers down in the oil sands
Majority of $125 million 2012 capital budget earmarked for camp expansions
It’s not just the big exploration and production companies that see opportunities in Alberta’s bounty of bitumen. Energy service companies providing industrial camp accommodations believe the oil sands will bolster their bottom lines for years to come as well.
Calgary-based Black Diamond Group Ltd.’s Sunday Creek Lodge is a prime example. The company acquired the lease to the site in 2009 and began transforming it to meet the needs of the 21st century oil sands worker. The latest round of improvements to the worker camp in the oil sands region of northeast Alberta will cost approximately $20 million. The renovations will bring the camp’s capacity to 1,160 beds. “What’s driving that opportunity in the oil sands is those massive projects require a large workforce,” says Mike Klukus, vice-president of Black Diamond’s camp division. “Every one of those guys needs a bed to sleep in.”
To help fund the complex’s expansion, and the company’s growing camp division, Black Diamond raised $55 million in July to boost the capital spending budget for 2012 to $125 million. The lion’s share of the capital, says Klukus, will be allocated to camps – one of four company divisions – since 59 per cent of the company’s revenue came from the camp division in 2011. The public company earned $241 million in revenue that year, an increase of 226 per cent since 2009. Through the first quarter of 2012, the company earned $59 million in revenue, a five per cent increase from the first quarter of 2011.
Across Canada, Black Diamond has a fleet of 11,000 beds. While roughly 80 per cent of the capacity is split evenly between oil development in northeastern Alberta and gas development in northeastern British Columbia., other resource developments are providing opportunities. “Not only are some of the current projects we’re doing mining-based, whether it’s potash in Saskatchewan or metals in B.C., a lot of stuff is in the hopper for coal and metal work as well,” Klukus says. “Mining has a lot of momentum right now.”
To get into new markets, Black Diamond doesn’t always look to acquire land and build a camp. Sunday Creek is the only lodge in Alberta where Black Diamond owns and operates the lease. The company also builds and services lodging on a producer’s site or supplies “turnkey” accommodations that clients can set up on a lease and service with in-house staff. “The full turnkey solutions will become a bigger part of our business,” Klukus says.
A home away from home
Private washrooms. Satellite television in every room. Restaurant-quality food. This ain’t your grandpa’s oilfield camp
Renovations at Sunday Creek Lodge will increase the bed count by 116, but increasing capacity has been secondary to improving amenities for oilfield workers. The camp was first built southwest of Christina Lake in the 1960s to accommodate workers in the remote areas surrounding Fort McMurray. Black Diamond has been renovating the facilities on the 40-acre site ever since acquiring it in 2009.
“It comes down to not only an evolution of the product, but demand for workforce,” Klukus says. “If you’re in competition with the guy down the street who’s also building a facility, the worker has the choice of where they want to go, and so you want to be able to provide a nice home away from home.”
In the last 10 years, oilfield worker camps have undergone a massive facelift. Trevor Haynes, president and CEO of Black Diamond, estimates the square footage of a standard room has increased by 25 to 50 per cent. While all the improvements are important, the real key to happy camp life is through a worker’s stomach. “The food has to be good; that’s the first thing that sets the mood at camp,” Klukus says. “You can have the nicest facility, but if the food is crap the guys won’t stay.”
Black Diamond is just one of a few companies building a big presence in oil sands country
PTI Group Inc. (Subsidiary of Oil States International Inc.)
2011 Revenue of Accommodations Division: $864.7 million
Beds in Oil Sands Region: 10,547
Canadian Oil Sands Lodges Facts (2011):
6 million pounds of laundry washed
8.75 million meals served
5.5 million coffees served
20,000 pillows purchased
Horizon North Logistics Inc.
2011 Revenue of Accommodations Division: $340 million
Total Beds: 6,200
Growth Plans in 2012:
$100 million in capital spending
Addition of 1,500 beds in the oil sands region