Alberta's Number 2 oilsands community is expecting a busier 2012 - especially for landlords.
That's because Imperial Oil has finally given the go-ahead to its long-awaited Nabiye oilsands expansion project northwest of Cold Lake, which is situated roughly 300 kilometres northeast of Edmonton.
Nabiye will access 280 million barrels of reserves, and boost daily production at Imperial's Cold Lake operation by about 40,000 barrels per day (about 2.5 per cent of the province's total oilsands output) by the end of 2014. Imperial's existing project is the largest non-mining oilsands extraction facility in the province.
While oilsands expansion projects affect nearby communities to differing degrees, Nabiye stands to influence Cold Lake even more than most projects would because it will be built without the use of on-site accommodation. That means hotels will be full, restaurants will be busier and rental accommodation will be more scarce come the fall.
Cold Lake Mayor Craig Copeland says his community is more prepared for this expansion than it was for previous Imperial projects, but that accommodation will be stretched.
"It's the rental market in Cold Lake that will get really tight," said Copeland, noting that this will pose significant challenges for lower-paid workers in some other industries and for renters on the bottom end of the Department of National Defence pay scales at CFB Cold Lake.
Copeland says some significant hotel expansions and upgrades will help when work kicks off in September, but he doesn't expect there will be any significant multi-family housing projects completed in the community before work on Nabiye starts.
That means investors with rental capacity in the city of 14,000 are now sitting in a good position to cash in on the next boom. Housing prices have increased from about $305,000 to $325,000 for a single-family home in the past year.
Meanwhile, reworking of Highway 28 to improve traffic capacity between the north and south ends of the amalgamated community should be complete this summer. A new deal approved last year will also give the oilsands community about $11 million more in provincial tax revenue in 2012 to deal with what had been a ballooning infrastructure deficit - one that had caused Cold Lake to muse about shutting down new development because of lack of resources to deal with it.
"The province was aware we just couldn't do it any more," Copeland said, reflecting on Ed Stelmach government's decision last year to divert tax revenue from the Cold Lake Air Weapons Range to help the city.
from Western Investor March 2012
