Offshore development benefits.

Transcription

1 8 C H A P T E R E i g h t: Offshore development benefits

2 Barrow, Alaska The Ripples of Offshore Development Benefits Energy production has done much for Alaskans previously, and by working with residents today, Shell hopes to build on that history. Alaska s waters hold some of the world s most significant untapped oil and gas reserves, and when we returned to the state in 2005 for an offshore program, we did so with clear business objectives. Achieving those goals, however, means succeeding in two others: conducting our operations in an environmentally responsible manner, and having a positive presence in the community. Our ability to succeed in Alaska offshore development requires working in tandem with key stakeholders including local communities for our mutual benefit. Shell is committed to doing its part. Alaska s Gains Financial and Beyond The development of new offshore oil and gas fields could create significant tangible economic benefits for Alaska: Billions of dollars in taxes to state and local governments, new jobs for local workers, contracts for suppliers and more business for local enterprises. Shell also brings its social investment projects for health, research and education programs. But a host of other, less visible gains often accompany our operations as well. New jobs, education and business opportunities can improve certain social conditions. Extensive scientific and socioeconomic research, a major element of all Shell operations, complements local knowledge in the regions where we work. They can offer solutions for potential environmental problems and add to the stores of scientific data. Shell s safety equipment and other resources can assist communities struck by natural disasters and human accidents particularly in the offshore areas. Calculating Gains Projecting the scope of the benefits is, of course, difficult during the exploration phase because we do not yet know the size of the reserves, whether they can be produced economically, or how revenues would be shared amongst federal, state and local governments. Onshore performance and gains already made by the North Slope, however, provide a good estimate of what might be expected. And we do know that extraordinarily high market prices for oil, such as $150 per barrel in 2008, are not necessary for benefits to be realized. Significant economic gains are achievable at crude market oil prices of $60 per barrel and market gas prices of $9 per thousand cubic feet. Revenues How the revenues from oil and gas production are shared among federal, state and local governments will be a key factor in achieving widespread economic benefits for the region. Alaska could see tens of billions of dollars in revenues from new offshore development, depending on the arrangement. Those revenues would include corporate income taxes paid by the oil and gas producers as well as property taxes I think one of the very important elements to a project like this and particularly to offshore production moving forward is achieving state and community revenue sharing. Shell will continue to advocate that revenues generated in the federal offshore waters through oil and gas production be shared with Alaskans, as they re currently shared in the Gulf Coast states. Marvin Odum, President of Shell Oil Company and Executive Vice President for the Americas for Shell Exploration & Production, speaking at a Texas Governors forum, April

3 Assessment of Technically Recoverable Oil and Gas from America s Outer Continental Shelf, 2006 on new infrastructure and facilities built to support energy commerce. Shell has taken a visible national position in advocating that Alaska be included in the offshore revenue sharing program that the U.S. Congress expanded to include the states bordering the Gulf of Mexico, and will continue to do so. Employment Growth An offshore development project can anticipate operations to extend over a period of 40 to 50 years as oil and gas are discovered, produced and transported to markets. An economic analysis conducted in 2009 by Northern Economics and the University of Alaska finds that oil and gas development in Alaska s Outer Continental Shelf (OCS) could generate an annual average rate of more than 35,000 jobs over the next half century. That employment is in both jobs directly related to oil and gas operations and those in other areas generated by the economic expansion offshore development would bring. The increase is 6 percent higher than what projected total statewide employment would be without offshore development. These new jobs potentially represent a total payroll of $72 billion dollars over that period. Oil and gas sector job opportunities would be created throughout Alaska in both high-paying, year-round jobs and in seasonal positions. Of the approximate 6,000 jobs directly related to the oil and gas sector, about 3,900 would be year-round jobs. Part-time and temporary positions may provide flexibility for those with other occupations, such as subsistence activities. Many of the full-time positions would provide work rotations that can also accommodate other employment. Hiring Locally Some of these jobs will attract new people to Alaska, while many are expected to be filled by current residents. Hiring local staff is a consistent practice in all Shell operations. Some countries set requirements for local hiring, but even when they do not, Shell makes a conscious effort to build skills and employ local people. We have been able to localize the majority of the workforce at many operations through early planning and training, even in places that initially lacked the technical and commercial skills. Workforce Development Employment directly involved in Shell s oil and gas activities in Alaska will include exploration for hydrocarbon deposits, construction of offshore and onshore production and transportation facilities, spill prevention and response, logistics, operations and maintenance activities. These new jobs, from initial construction to ongoing production, will require certain skills and knowledge levels. Building the skilled workforce for these jobs among North Slope residents is a priority for Shell, and we began our efforts with the Arctic Slope and NANA Regional Corporations for targeted recruitment efforts. Shell sponsored job fairs and organized outreach activities to encourage residents to apply for local hire opportunities. We have trained a number of local workers for planned operations, including oil spill prevention and response teams, marine mammal observers and communications center operators. Through collaborating with local school districts and providing training to new employees, Shell offers the tools necessary to bring new workers of all skill levels into the field. Indirectly, Shell s funding for education programs raises education levels among students generally, as well as among those interested in the energy field, ultimately improving their ability to obtain jobs in oil and gas operations. 4 5

4 Indirect Employment The Northern Economics and University of Alaska economic analysis conducted in 2009 show that for every new job in the oil and gas sector, between three and six more jobs are created in other enterprises needed to support the oil and gas work. Those indirect jobs invariably are stimulated by industry purchases from other businesses, government spending of revenues from oil and gas and household spending of wages and salaries among oil and gas workers. The broad economic expansion will maintain the growth in indirect jobs even after oil and gas production begins to decline. Buying Locally Buying from local suppliers is a particularly effective way to help development in the places where we operate. It directly contributes to the local economy, creates jobs and builds skills. Shell has contracted with Alaska Native corporations on a full range of jobs and services, from rig staffing, oil spill response and base operations to mitigation, communications services and Marine Mammal Observers. Research As with all our operations, Shell s engagement in the North Slope is accompanied by extensive research on areas ranging from geology, to marine life studies and traditional culture and land usage. These studies seek to help improve our understanding of the impact industrial activities have on the region. While these studies are related to our operations, much of the data collected also adds to the general public s store of vital information. Shell s stateof-the-art equipment, including a multi-milliondollar Marine Mammal Monitoring System, and the highly trained independent scientists we collaborate with are among our most important contributions to our Alaskan neighbors. Shell scientists collect baseline marine data in the Beaufort sea. Our baseline studies seek to further document marine mammal, biodiversity and environmental conditions to evaluate our impact on the region. Carried out in conjunction with independent scientists, these studies further define a baseline for these areas and will help Shell answer local concerns. It is important to Shell that the North Slope communities are fully informed about how industry activities affect marine mammals and other wildlife, how exploration and development can be carried out in deep, ice-covered waters and how companies can successfully clean up an oil spill in the unlikely event one occurs. Social Investment One way in which Shell delivers community benefits is through social investment, voluntary contributions to local social and environmental programs. We provide financial support to organizations for programs, procedures and activities that enhance the quality of life for the communities in which Shell operates. The projects represent Shell s commitment to the areas of education, health, training, environment and local community development. In 2007, we spent approximately $170 million on social investment activities worldwide. Categories for contributions include: Education Arts/Culture Health Workforce Development Environment Shell has contributed to several major education programs in areas ranging from teacher training to job skills development. A key focus has been on increasing math and science knowledge throughout the areas where our exploration activities take place. Since returning to Alaska, Shell has funded initiatives such as the Alaska Native Science & Engineering North Slope students bused to school Program through the University of Alaska and a Teacher Certification Program. Shell has also participated in a Teacher Externship initiative in which individuals are embedded in oil and gas operations to learn more about the industry. The teacher then returns to the classroom, bringing with them materials and knowledge to help educate and excite youth on career opportunities and what skills are needed to acquire positions. Enhancing Local Representation Shell provided initial startup funds for the North Slope Borough s Village Voice initiative. This program seeks to provide a platform for municipal and tribal governments and village corporations to represent the communities in public processes relating to industrial development. 6 7

5 Safety Shell s seasonal operations have brought enhanced support and security on the North Slope waters and in the wilderness with local vessels and aircraft. These resources and the highly trained crews have helped to provide search and rescue assistance as we do with all of our assets. Additionally, Shell operated several Communication Centers covering the Chukchi and Beaufort Seas to avoid potential conflicts between industry vessels and subsistence hunters. As part of the program, Shell provided whalers with VHF marine-band radios and satellite phones to immediately notify the Com Center in case emergency personnel needed to be mobilized. Communication Center Answers the Call Several rescues have been carried out with the use of Com Centers. At the request of the whaling captains, Shell opened the Chukchi Sea centers three months early for the spring whale hunt in In one incident, 20 Pt. Hope whalers were on an ice pack and beginning to harvest a Bowhead whale when the pack broke free and began floating out to sea. They used the Shell communication equipment to notify the Com Centers, which immediately deployed a Barrow Search and Rescue team backed by helicopter support. The emergency workers arrived in time to rescue all the crew members from the ice and transport them safely back to land. In addition, Shell s Arctic-based helicopters flew more than 20 hours in six search and rescue missions in 2008 at the request of the North Slope Borough Search and Rescue and the Royal Canadian Mounted Police. Minutes, if not seconds, can make the difference between life and death in arctic waters and Shell s Com Centers provided a vital part in rescue operations. Shell contributed in bringing a Water Survival and Helicopter Underwater Escape Training (HUET) facility to Alaska. As the only facility of its kind in the state, it is a welcomed addition to the training program industry workers currently go through. Training of this kind is found in only 20 countries worldwide. Community Relief Shell s resources from operations can also provide support to communities when disaster strikes. New Orleans and Louisiana s coastal communities faced massive challenges recovering from hurricanes in 2005 and 2006, which were the worst ever to hit the Gulf of Mexico. But the Shell staff s dedication restored activities quickly and helped local communities recover in the aftermath of Rita and Katrina. More than 5,000 staff, retirees and their families contributed more than 21,000 hours volunteering in relief efforts. More than 1,000 employees offered shelter to those left homeless by the disaster. When Shell learned that an ice shortage was threatening the regions key fishing industry, we helped build new ice making capacity on the coast. We also worked to bring New Orleans back to life with a public campaign for its recovery and by becoming a long-term sponsor of the city s world renown Jazz Fest. Aerial view of Barrow in winter Community Support Services Shell has activated a toll-free telephone number, , for people to call with comments, concerns or questions relating to our Alaska activities. Leave a message and Shell is committed to providing answers to questions in writing within five business days. It is part of our effort to communicate and listen to Alaskans and it is available 24 hours a day. A Web site also offers information about Shell s work in Alaska, including our efforts with communities, commitment to the environment, technology and other activities. Visit the site at 8 9

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7 Shell in Alaska To find and develop commercial hydrocarbon resources in the Chukchi and Beaufort Outer Continental Shelf. To support communities where we operate in benefiting from any potential offshore activities economically and socially. To respect the way of life of the residents of Alaska.