1. ECONOMIC DEVELOPMENT BENEFITS OF THE OIL AND GAS INDUSTRY IN NEWFOUNDLAND AND LABRADOR CONFERENCE ST JOHN’S NEWFOUNDLAND 16 MAY 2007

2. LOCAL ECONOMIC BENEFITS OF THE OFFSHORE OIL AND GAS INDUSTRY IN SCOTLAND AND NORWAY by TONY MACKAY

3. ANNUAL OIL PRODUCTION (million tonnes)

4. ANNUAL GAS PRODUCTION (billion cubic metres)

5. OFFSHORE EXPENDITURE IN 2005 (C$ million) Newfoundland 1,345 Norway24,600 UK20,785

6. INDUSTRY COMPARISONS Norwegian oil and gas production 15 x Newfoundland UK oil and gas production 12 x Newfoundland 300 producing fields offshore UK 54 producing fields offshore Norway 3 producing fields offshore Newfoundland Norwegian offshore expenditure 18 x Newfoundland UK offshore expenditure 15 x Newfoundland

7. UKCS EXPENDITURE SURVEY

8. NORWAY EXPENDITURE SURVEY

9. MAP OF SCOTLAND

10. KEY FEATURES IN SCOTLAND 35 years of activity, with fluctuations 1100+ companies involved as main activity, plus many otheres Currently 75,000 oil and gas jobs in Scotland, including 30,000 offshore Gas industry becoming more important Tax revenues go to UK rather than Scotland

11. GEOGRAPHICAL DISTRIBUTION OF BENEFITS IN SCOTLAND Most activity and employment concentrated in the Aberdeen area Increasing concentration in Aberdeen following closure of platform fabrication yards Increasing concentration following oil price collapse in 1990s….economies of scale and proximity Other significant areas include –Shetland … Sullom Voe oil terminal and Lerwick supply base –Orkney … Flotta oil terminal –Cromarty Firth … Rig IRM base and Nigg oil terminal –Fife … Mossmorran NGL plant

12. COPING WITH DECLINE Diversification into other offshore markets, eg –Norway- Gulf of Mexico –West Africa- Caspian Sea Diversification into other energy markets, eg –wind farms, onshore and offshore –marine/wave/tidal energy Supply of labour to other offshore markets Offshore decommissioning market Average company turnover now 68% UK and 32% international, with latter increasing

13. THE SHETLAND EXAMPLE Close-knit community, comparable with Newfoundland and Labrador Very active local authority.. Shetland Islands Council Support from Shetland Enterprise, part of the Highlands and Islands Enterprise network Oil revenues/taxes from throughput at Sullom Voe terminal Re-investment in other local industries –salmon farming- information technology –fish processing- tourism Investment in infrastructure –airports- ferry terminals –higher education facilities

14. MAP OF NORWAY

15. KEY FEATURES IN NORWAY History and scale similar with UK/Scotland but more stable and with smaller fluctuations because of gov policies More protectionist policies than in UK have increased national and local benefits State companies Statoil and Norsk Hydro dominate production and expenditure Benefits spread more widely because of country’s geography

16. GEOGRAPHICAL DISTRIBUTION OF BENEFITS IN NORWAY Three distinct areas - North Sea in the south - Norwegian Sea in the middle - Barents Sea in far north North Sea - Stavanger main oil centre in country - Karsto, Mongstad, Kollnes terminals - Various fabrication yards in region

17. NORWAY BENEFITS (2) Norwegian Sea - Kristiansund main base - Nyhamna and Tjeldbergodden terminals - Best examples for Newfoundland Barents Sea - Hammerfest main base - Snohvit LNG development - Best examples for Labrador, partic gas