Investors’ interest in central Alberta appears to be rising along with oil prices.
“Things are getting crazy busy again,” said Dale Freitag, Lacombe County manager of planning services. “Things that have sat dormant for years are all of a sudden back on the books.”
From January to August, the county processed 160 development permit applications representing about $83.3 million, compared with 108 permits and $13.3 million over the same eight months in 2020. Subdivision applications have more than doubled to 37 from 17.
While a proposed $52-million solar power facility near Joffre had a big impact on permit values, the volume of permit applications has kept Freitag’s department extremely busy.
“There is some residential and commercial, but residential is nuts. People are building homes like crazy, even with high lumber prices.”
Freitag said in speaking with developers he anticipates the momentum will continue through next year.
“I think we’re going to have projects hit the ground running next year and into 2023.”
The key driver behind the activity, he believes, is the resurgence of world oil prices and the growing sense of optimism that has followed in its wake.
While the bust part of the boom-bust cycle has lasted longer than usual, Freitag is confident things are on their way up again.
“I think we’re about to hit another one of those cycles. History continues to repeat itself. Everyone says it won’t, but it does.”
Clearwater County is also seeing the benefits of growing economic optimism.
Planning and development director Jose Reyes said there has been unprecedented demand for lots in the Nordegg area. All of the leisure and recreation subdivision lots on the north side of the hamlet have been sold and buyers are now scooping up mixed residential/commercial lots in the town site itself where 10 lots have been sold.
“It’s awesome. We were sitting on those lots for eight years and we hadn’t seen any activity until now,” he said.
More people in the town site creates the critical mass needed to give commercial and retail investment a boost, he added.
Besides that activity, half the homes in the first 30-lot phase of a manufactured housing subdivision sold in a year.
“That’s something we never anticipated in the past. That is really quick.”
Buyers are coming from all over, Edmonton, Calgary and Red Deer. They are drawn by the recreational opportunities of the West Country and the chance to own property in an affordable mountain community and an alternative to Banff, Canmore or Jasper, where lots are in short supply and pricey.
Reyes believes COVID-19 may have convinced some to continue to look for getaways closer to home.
The changing fortunes of the energy industry undoubtedly played a role as well. “I think it’s totally linked with the oil money, it’s got to be,” he said, adding banks are likely been more willing to lend money now.
Canadian Association of Energy Contractors president Mark Scholz said energy industry prospects are clearly brightening.
“There definitely has been an uptake,” said Scholz, whose organization represents energy contractors close to the wellhead. “We are now trending higher than pre-pandemic numbers.
“We’re starting to see the demand side of the equation for energy in general around the world has improved significantly.
During the lengthy downturn, there was under-investment in the energy industry and now companies are looking to catch up. We’re in growth territory and supply hasn’t been able to keep up.
“We’re starting to see the implications of that within the pricing side.”
The oilfield services sector, which has a large footprint in central Alberta, is also expected to see better days ahead as the fortunes improve for large energy producers, who hire the service companies.
“I think you’re going to see margins improve in the service sector,” he said.
“2020 hurt a lot of companies so it is going to take some time to get some strength in the sector. But everything is pointing to some really positive signs.”
Among the challenges the energy sector will face is a shortage of labour and supply chain issues for everything from steel to machinery parts.
But compared with the challenges faced when oil prices collapsed, oilpatch companies will take a few workforce and supply headaches.
“I think the industry would much rather deal with challenges in a growing market have a lot more prospects for greater levels of activity than the challenges we dealt with for the last seven years.”
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