Economic Development Benefits of the Oil & Gas Industry in Newfoundland & Labrador

1. Economic Development Benefits of the Oil & Gas Industry in Newfoundland & Labrador Comments by: John J Henley VP Offshore Services & Development G.J. Cahill & Company

2. Technical Benefits: • Safe Work Practices including Permit to Work systems based on international experience: The Oil & Gas industry has a very high safety standard and local contractors must have them in place to do contract work and have adopted these requirements in their other activities. • Environmental Awareness and Monitoring of activities: The programs and procedures required to provide services to the Oil & Gas companies are demanding and thorough. Contractors are using this knowledge on other work. • Quality Assurance and Quality Control: Contractors are required to be ISO 9001:2000 compliant. This requires documented corporate procedures to be in place along with a continuous improvement program. The QA/QC program properly implemented improves a company in many ways that are not easily qunatified.

3. Technical Benefits cont’d: • Experience with Equipment: The offshore platforms consist of complex process equipment including equipment not previously used in the province i.e. 22 MW jet engines, axial flow gas compressors, high pressure pumps, high volume pumps etc. The technical and maintenance community now have experience on machines and equipment that can be exported to other producing areas. • Design Experience: A large portion of the engineering technical work force in the province have gained experience with state of the art design systems including 3-D modeling, process simulation, international design codes, sophisticated project management, shutdown planning etc. These skills are needed for complex industrial projects but not for more conventional commercial projects.

4. Socio-Economic Benefits: • ~20% of NL Government revenue due to Oil & Gas royalty and corporate income tax. • Large pool of educated skilled personnel living in the province to support the facilities. These people pay taxes and are active in the community. • Oil & Gas Industry is a significant contributor to social and educational initiatives not funded by government. i.e. health care equipment, scholarships, research etc. • Oil & Gas Industry provides industrial experience for work term students and interns that was not previously available. • The industry provides role models and incentive for NL residents to get the education and experience to participate in the industry. The NL participants quickly learn they are as well trained and as capable as anyone else. • The industry is funded by private equity and is driven by solid business fundamentals. There is much we can learn from the oil and gas companies on how to invest capital wisely in long term projects.