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Abstract Oil and gas activities raise important socio-economic questions for host governments, local communities and project proponents alike. If not identified and managed in a timely and effective manner, socio-economic issues - such as labour market effects, population influx, revenue management, social investment and socio-cultural change - can result in significant non-technical risk to projects including local opposition, permitting and project delays, inadequate delivery of benefits and reduced scope to prevent and/or mitigate negative impacts. These issues are particularly important where oil and gas projects take place in remote and environmentally and socially sensitive areas. Addressing socio-economic impacts early on can provide companies with timely identification of socio-economic, cultural and environmental issues at strategic and project level, as part of corporate planning, due diligence and risk management. Independent socio-economic impact studies can help resource companies (and host governments) plan projects more effectively, especially in relation to socio-economic impact management, social investment and overall stakeholder engagement. This paper explores the rationale, process and outcomes of an Independent SocioEconomic Impact Study of a proposed offshore oil development in the Falkland Islands. Arguing that the management of socio-economic issues is essential to any project’s approach to non-technical risk (NTR) management, the paper discusses the value of socio-economic impact studies as a means to manage socio-economic impacts. It also discusses key lessons of the Falkland Island study and its relevance to other projects around the world.
Hsu, Yu-Chen (National Sun Yat-sen University) | Liao, Yi-Chun (National Sun Yat-sen University) | Fu, Ke-Hsien (National Sun Yat-sen University) | Tseng, I-Fan (National Sun Yat-sen University) | Lee, Chung-Pan (National Sun Yat-sen University)
A complex hydrography and hydrodynamic system could be observed as the ACC passes through the South American Continent and Falkland Islands. Assuming the conditions of the air-sea interactions are similar on both sides of the South American Continent, and the characteristics of the southwest Atlantic Ocean is interfered by the El Niño. A 28-year (1981-2009) time series of the SST fields derived from NOAA polar orbiter AVHRR was reanalyzed in this study. Estimating the intensity of the ACC inflow, an uncomplicated analysis via SST variation has been used; the correlation coefficients between the ACC and ENSO period were calculated from the SST and the MEI. High correlation coefficients were obtained by adjusting the asynchronous data and using cross correlation analysis with 4 year time lags and re-sampling. South Georgia has a lag of approximately 6-12 month compared with the Falkland Islands. The result may suggest that there exists a mechanism to trigger both phenomena simultaneously. This will be further studied in the future.
The oil industry is seen as presenting a number of opportunities and threats to the residents of frontier regions when it first shows an interest in exploring off their shores. Based on experience dealing with the socio-economic effects of such activity in such temperate frontier regions as Atlantic Canada, British Columbia, the Faroe Islands, the Falkland Islands and Saint-Pierre et Miquelon, this paper discusses the nature and reasons for initial responses, the learning process, and means of facilitating it. In doing this, it reviews the expectations and responses of various coastal state stakeholders and means by which they learn about the industry, its effects and their management.
When the oil industry first shows an interest in exploring the waters off frontier regions, it generates a range of commonly extreme expectations and concerns onshore. While they evolve and become more realistic over time, they have a significant potential to delay and increase the costs of industry's activities. In extreme cases, they may even lead to a long-term ban on exploration.
This requires that, from the earliest stages, oil companies take great care in managing their relationship with people living in such regions. In particular, they must engage in a careful process of expectations management, such that local residents develop a comfort with the likely effects of the industry. This requires that industry personnel involved in such exploratory activity are familiar with both the characteristics and aspirations of frontier regions and the learning process whereby the local government, business community and public come to understand the industry. This can lead to more effective expectations management and a reduction in misunderstandings, delays and associated costs.
The Creation of Expectations
The oil industry is very challenging to the residents of frontier regions. These are commonly relatively small, intimate, relationship-based economies and societies, isolated from metropolitan centres and the global economy. As such, local people find it quite a shock when one of the world's largest and more powerful industrial enterprises turns up off the coast. This is especially the case because the oil industry is generally seen as both promising major economic opportunities and threatening the local way of life and environment.
Such expectations are an understandable result of popular stereotypes of industry. These are of great wealth, whether in terms of the companies or the individuals who work for them (with fact and fiction blurring between John D. Rockefeller, Red Adair, J.R. Ewing, John Wayne and others). It is also an industry associated with social and economic disruption (for example, associated with activities in West Africa) and environmental disasters (with images of the Piper Alpha, Torrey Canyon, Braer, etc.), an industry which is powerful, threatening and, in the eyes of some, not to be trusted.
The immediate reactions to exploratory interest are a mix of the positive and negative, in part in response to different individuals' and groups' perception of their power and how they may be affected. While some will see (or emphasize) employment or business opportunities, others will expect such benefits to accrue to only a few highly-specialized or already prosperous individuals and companies. There is also likely to be concern about the effects of industry activity on the local culture, cost of living, traditional economic activities and biophysical environment, as well as the ability of government agencies to manage specific effects or the industry in general.
An inevitable and potentially highly-beneficial response to the arrival of the industry is to seek to learn from the experience of others. For example, in the early stages of exploration, Newfoundland politicians, civil servants, business-people, community representatives and media all engaged in comparative research in order to find out how the oil industry might affect them. They consulted articles and magazines about, invited guest speakers from, and visited, other areas with oil industry experience, and especially Scotland, Norway and Alberta. Subsequently, Newfoundland has hosted similar ‘fact-finding' tours from such places as the Faroe Islands, the Falkland Islands, Saint-Pierre et Miquelon, Sakhalin and Greenland.