Potential Financial and Employment Impact from the Development of Oil & Gas in the North Aleutian Basin Shell Offshore Inc. Anchorage, Alaska October,

Potential Financial and Employment Impact from the

Development of Oil & Gas in the North Aleutian Basin

Shell Offshore Inc.Anchorage, Alaska

October, 2006

The authors acknowledge the significant contribution of employment multiplier information from Professor Scott

Goldsmith of ISER, UAA.

Miles

0 50

What might the project contain?

Local Power

Local Power

Sand Point

Natural Gas Liquefaction Facility

Natural Gas Liquefaction FacilityLNG tanker to

US West Coast MarketLNG tanker to

US West Coast Market

Offshore Drilling and Production Platform(s)Offshore Drilling and

Production Platform(s)

Bristol Bay

Pacific Ocean

Bristol Bay Economic Benefits

Federal Income Tax~$12 Billion

Royalties~$7 Billion

State & Local Tax~$850 Million

6.8 TCF sales gas with February 2005 Forward Curve

Revenue Sharing?

Jobs: Offshore Operations & Onshore LNG Facility

0

1000

2000

3000

4000

5000

6000

Year 1 Year 2 Year 3 Year 4 Year 5

Construction Jobs(excludes indirect jobs)

(Pipeline + LNG Plant)Operating Jobs

(excludes indirect jobs)

(Platform + LNG Plant)

0

100

200

300

400

500

600

700

Year

1

Year

4

Year

7

Year

10

Year

13

Year

16

Year

19

Year

22

Year

25

Platform Maintenance

Platform Operations

Onshore Facilities

LNG Plant

2

Category Plan (two crews)Staff PositionsOffshore Installation Manager 2Process Team Leader 2Utilities Team Leader 2Process Staff Associate 2Resource Coordinator 2Marine Supervisor 2Craft PositionsInstrumentation Technician 4Electrician 4Electronic Technician 4Mechanic 6Production Operator 16Total 46

Comments: Typically 100% of staff positions areShell employees. Craft positions are resourced with Shell employees and up to 20% contract employees.

Typical Offshore Operations Staffing Profile

Two crews on board at all times (12 hour shifts). Four crews per platform.

Typical LNG Plant PersonnelOperators 32Operations Line Management 3Mechanical 15Civil 5Electrical 7Instruments 6Industrial Cleaning 5Work Preparation & Planning 1Field, Office & Advisory Eng. 7Inspection 2Materials & Transport 6Management 4Economics & Scheduling 2Technology 3Laboratory 2Finance 3Computing 3Personnel & Training 4Office Services 10Health, Safety, Environment 3Security 18Total 141

Shell US Operations Workforce Strategy

• Recruit Talent• Community & Technical Colleges and Universities

– Partner with scholarships and outreach programs– Participate in Industry Advisory Committees and Organizations (e.g.

Center for the Advancement of Process Technology (CAPT), Process Technology Degree Programs

– Operations leadership involved with schools

• Develop Local Source– Focus on schools in areas of operation (Gulf of Mexico, Rockies,

Texas, Alaska)– Invest in local schools and programs

• Seek Diversity – Actively promote our industry in high schools and colleges– Fund and participate in programs to attract local talent

Shell US Operations Workforce Strategy

• Retain and Develop Talent – Provide rewarding and challenging opportunities– Provide training and development assignments in every area of

operation

• Provide both Supervisory and Technical Career Paths– Technical Operations Professional Program (TOPP), Global

Program for Operations Staff Development– 20+ TOPP Candidates selected every year form US Ops

• Operations Training & Shell Robert Training and Conference Center– Industry’s premier training facility with extensive catalogue of

industry’s best and most current courses

• Offshore Installation Manager

• Process Team Leader

• Utilities Team Leader

• Process Staff Associate

• Resource Coordinator

• Marine Supervisor

• Associate to Bachelors Degree

• Significant offshore operations experience

• Continuing Education – In-House courses– Shell / Industry

approved CE courses– Shell Leadership

Training

• Pertinent License as required

Educational Expectations

Educational Expectations

• Automatic Control Repairman

• Electrician• Electronic Technician• Computer Assisted

Operations• Mechanic• Operator

• Associate to Bachelors Degree

• Continuing Education – In-House courses– Shell / Industry

approved CE courses

Support Positions

• Catering Crew• Helicopter Landing Officer• Medical Technician• Clerk / Office Administrator• Logistics Clerk

Comments: These positions are usually contract positions. Education varies for each job and may require special licenses.

The Job Pyramid*• For every Oil and Gas Industry worker there are about six

positions in the community

1

6

“oil patch”

“public revenue”

* Scott Goldsmith, (2006) Economic Multiplier for Oil and Gas Activities in Alaska Institute of Social and Economic Research, College of Business and Public Policy University of Alaska Anchorage 3211 Providence Drive • Anchorage, Alaska 99508-8180 UAA [email protected] 907-786-7720

Oil and Gas Contractors• Health, Safety, Environment

– Spill Response, Emergency Response

• Well Services– Drilling, Coring, Logging, Completion, Production, Re-

completion, Abandonment

• Platform Services– Equipment Start-up, Maintenance, Renewal, Removal

• Logistics handling– Helicopter, Crew Boats, Equipment Barges, etc.

• Pipe and Materials – Fabrication, Transport, Loading, Installation,

Maintenance, Removal

Community Employment• Services

– Hotels, Restaurants, Transportation– Emergency (Police, Fire Departments)– Infrastructure (Schools, Communications,

Power, Transportation, Water and Sewage, Waste Management)

– Governmental Agencies – Real Estate, Construction, etc.

• Goods– Food, Fuel, Homes, Vehicles– Clothing, Household items, Office Products

Employment and Compensation Impact

Category Ratio Total Count Average Salary per person per year

Total Compensation per Category per year

Operator & Contract Staff 1 650 85,000.00$ 55,250,000.00$ Community 6 3900 38,000.00$ 148,200,000.00$ Total 4550 123,000.00$ 203,450,000.00$

* Scott Goldsmith (ISER) – University of Alaska Anchorage** Based on Kenai Peninsula data, 2005 – 2006

*****