Shale zone communities have discovered yet another benefit from their surging economic growth: more of everything. With $80 billion expected in annual investments over the next six years and rapid population expansion, local infrastructure construction and real estate development in shale formation areas like the Bakken in North Dakota and Eagle Ford in Texas are turning small outposts into genuine boom towns.
According to JLL’s new 2014 North American Energy Outlook, major metropolitan areas are benefitting too, with “surge cities” fuelled by oil and natural gas production — growing at more than twice the pace of their peers.
“The energy boom is having a dramatic effect on the infrastructure of these boom towns and on the economies of the hubs that support the oil and gas business,” said Bruce Rutherford, International Director and head of the oil & gas practice for JLL. “Sites like Williston and Midland, Texas, Hobbs, New Mexico in the Permian Basin are having a tremendous influx of workers, and those workers need to eat, they need places to shop and they need homes. All of this demands infrastructure that doesn’t exist, and it needs to be built.
“It also creates a business that has to be supported regionally which means jobs and a surge of economic activity in cities like Houston, Denver, Dallas and Pittsburgh. We are just scratching the surface of the benefit on our local economies.”
These developments have taken on new urgency as the U.S. prepares to join Canada as a net exporter of oil and gas as early as 2015 according to the International Energy Agency. JLL’s Energy Outlook quantifies this progress-which for some rapid-growth communities is already long-overdue.
“The U.S. Commerce Department recent announcement to open the door to more U.S. oil exports is an incredible economic opportunity,” Rutherford said. “Increase in crude production could lead to a nearly $73 billion rise in the U.S. GDP in 2016. That means more jobs and economic growth in these communities.”
By creating communities where shale workers want to live and bring their families, shale zones can attract the right talent to produce oil and gas in a timely manner from every land lease. So it’s no surprise that apartments, stores, roads and hotels are being built at a rapid pace, property values are rising and vacancy rates are plummeting.