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June 5, 2012
PETROLEUM INDUSTRY KEEPS PROVINCIAL ECONOMY FLYING HIGH
St. John’s, Newfoundland and Labrador, June 5, 2012 – A new study about the socio-economic impact of the offshore petroleum industry in Newfoundland and Labrador was released today by Stantec Consulting. The study, which details the scale and range of benefits accruing to the province between 2008 and 2010, was funded by Petroleum Research Newfoundland and Labrador. The full study is available at http://www.petroleumresearch.ca/index.php?id=154.
The study builds on previous reports that were conducted in 2003, 2005 and 2007 that track the ongoing effect of the petroleum industry on the province. In addition to expenditures in Newfoundland and Labrador, the study provides information and analysis on direct and indirect economic benefits to the province. Other benefits include investments made in infrastructure, education and training, and research and development (R&D). The study focuses on upstream activity only and does not document the substantial taxes and royalties paid to the Provincial Government by the operators.
During the 2008-2010 period, the study indicated that Newfoundland and Labrador’s offshore petroleum industry saw further expansion with increased expenditures across exploration, development and production. While total oil production from the main fields decreased, additional investments in satellite fields offset these declines by the end of the study period. The previous study period (2005-2007) was characterized by a decline in development expenditure due to the transition of White Rose from development to production. The current period saw the end of this lull due to the satellite developments and work that started on the Hebron project.
Highlights from the study include:
by 2010, the petroleum industry was responsible for approximately 33% of provincial Real GDP;
average personal income increased 6.5%;
the unemployment rate decreased 1.8%;
the provincial population increased by 16,400 people by 2010;
wages, salaries and benefits associated with production activity increased from $207 million in 2007 to $291 million in 2010; and
consumer spending increased by approximately 22% from $715 million in 2005-2007, to $871 million from 2008-2010.
“The offshore petroleum industry is continuing to make a major contribution to Newfoundland and Labrador’s economic diversification and sustainability,” said Mark Shrimpton, Senior Associate of Socio-Economic Services with Stantec and author of the study. “The interviews that we conducted with local companies show the opportunities and market growth that they have experienced as a direct result of the offshore petroleum industry,” Shrimpton added.
The report provides case studies of local companies, including the Cahill Group, Greg Locke Photography, Dynamic Air Shelters, C-CORE and Provincial Aerospace. The case studies demonstrate ways in which local companies have become successful in the oil industry in Newfoundland and Labrador and in other parts of the world, and the ways in which they have been able to apply expertise developed in the oil industry across other sectors.
The study also references some of the substantial financial contributions that the oil industry has made to local charities and community groups. The beneficiaries represent a diverse group that spans a cross section of arts, health, education and cultural organizations including Junior Achievement, Habitat for Humanity, the Bliss Murphy Cancer Centre, The Rooms, the Newfoundland Symphony Orchestra, Stella Burry Community Services and the Rock Rugby Club.
The study shows that, between 2008-2010, research and development, education and training and infrastructure investment were all areas of high activity in the provincial offshore petroleum industry. Infrastructure development was documented in previous reports as a priority in order to facilitate continued R&D in the province. The study period saw continued development and growth in supporting infrastructure for the offshore petroleum industry. This has enabled many Newfoundland and Labrador companies to leverage harsh environment engineering expertise developed in provincial facilities, to gain extra experience in Arctic environments.
About Petroleum Research
Petroleum Research is a federally-incorporated, not-for-profit organization that funds and facilitates collaborative research and development (R&D) on behalf of the offshore oil and gas industry in Newfoundland and Labrador. For more information about Petroleum Research, please visit their website at www.petroleumresearch.ca.
Note: Mark Shrimpton, author of the report, is available for media interviews.