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Projecting the jobs AEDC CEO Bill Popp works with Petroleum News and Mining News on new project forecast Alan Bailey Petroleum News
Like one of Scrooge’s Christmas apparitions, a ghost of Alaska’s future could portend doom, or could just prove to be a warning of the consequences of not taking appropriate action.
And from the perspective of Bill Popp, president and CEO of the Anchorage Economic Development Corp., that action must include thinking strategically about where the state is heading, while finding common ground in resolving some of the issues that have polarized people for and against resource development.
“If we don’t find that common ground we are doomed to repeat the mistakes of the past,” Popp told the Resource Development Council annual conference on Nov. 19. “If we don’t think strategically we’re going to miss opportunities.”
Popp was presenting to RDC the results of his new AEDC projection of potential future new jobs in oil, gas and mineral projects in Alaska, a jobs projection in which AEDC is working collaboratively with Petroleum News and Mining News North of 60 to identify and assess upcoming projects.
New opportunities As the world economy emerges from recession, gross domestic product growth in the Pacific Rim countries of China, Japan, South Korea and Taiwan could create significant new markets for Alaska mineral products, and for Alaska oil and gas, especially natural gas or natural gas value-added products. Exports of these products could prove a significant driver for investment in Alaska, provided that people actively market the products and engage the appropriate countries as trading partners, Popp said.
“It could be a significant driver in what we could see in the next decade, but without a forward looking vision and a forward looking strategy, and leaving it to laissez-faire capitalism, we may not be as competitive as other countries who are aggressively pursuing these players,” Popp said.
Strategic planning includes ensuring that there are sufficient Alaskans trained and ready to compete for high-paying jobs in new projects, he said.
With the help of data modeling done by the McDowell Group and information provided by Petroleum News and Mining News, Popp has assembled an inventory of actual and potential Alaska projects in the oil and gas and mining industries over the next decade, with estimates of how many new jobs each project might produce during each year of the decade, and with evaluations of the likelihood of each project happening.
“Optimism does not drive this forecast,” Popp said. “I’m not here to tell you that this is what’s going to happen in the next decade. As a matter of fact, I’m a little disheartened at the opportunities for these projects to actually go forward because of our lack of strategic vision and the many issues that challenge these projects, whether it’s taxation, environmental permitting, social compact, public opinion, or even the condition of commodity markets.”
Times change And in issuing this caution, Popp referenced a previous incarnation of his jobs projection, presented at a workforce development conference in December 2004. At that time it appeared that the Pebble Mine project was entering its permitting phase, with construction expected to begin in 2008; ANWR was likely a done deal, because of the Republican domination of Washington, D.C.; the North Slope gas line should be preparing to break ground in 2010; and the public appeared to support oil and gas development in Cook Inlet and on the Bristol Bay outer continental shelf.
“It’s amazing what a difference five years can make,” Popp said.
But the project forecast model presented in 2004 really needed more third-party review, and more consideration of the probabilities of different projects actually taking place. In fact, the model is now split into two graphs: one graph for projects that appear to have at least a 50-50 chance of happening and another graph for less secure projects, Popp said.
The 50-50-or-better graph indicates a peak job level in excess of 15,000 full-time-equivalent positions in 2017. Dominating this graph is a huge peak of work associated with the construction of a North Slope gas line, a project that Popp thinks has a good chance of progressing.
“We’ve got two competitors. We’ve got all three of the major players involved. And we’ve got a federal government that, for whatever reason, has taken an even higher interest in this project in recent months,” Popp said.
And the eight oil and gas projects in the graph include a bullet or spur gas line into Southcentral Alaska, ENI’s Nikaitchuq project, BP’s Liberty project and Exxon’s Point Thomson project.
There are seven mining projects on the graph, including Kensington, Livengood, Rock Creek, Donlin Creek, Nixon Fork and Pebble.
Outer continental shelf uncertain The graph of less certain projects is dominated by the potential growth of jobs from the oil and gas development that Shell and ConocoPhillips are hoping to pursue on the outer continental shelf of the Beaufort and Chukchi Seas — Alaska jobs from the OCS development could climb steadily to reach a total in excess of 7,000 positions by 2021, when combined with the other uncertain projects presented in this graph.
“We give it at least some odds of going forward, given the billions of dollars spent on this project, but there is a lot of work to do to overcome the challenges that face development in the offshore of the North Slope,” Popp said of OCS oil and gas development.
And when the jobs from less certain projects are layered onto the job projections for the 50-50 chances or better list, it appears that the ramp up of work associated with the outer continental shelf would start to kick in at around the time when several major projects on the North Slope are starting to ramp down.
Popp has included natural gas development by Anadarko in the Gubik area in the Brooks Range foothills within the list of less certain projects, given the combined challenges of proving sufficient gas reserves for development and bidding for space on a future North Slope gas line. Pioneer’s Cosmopolitan project on the Kenai Peninsula is also in the less certain project list, along with up to 15 small potential oilfield developments in the Prudhoe Bay area.
Other projects In addition to the projects listed on the two graphs, people need to watch out for several other potential projects, to see whether these projects develop into something significant, Popp said. These other projects include further work on renewing the North Slope oil and gas infrastructure; possible future expansion of oil developments around Pioneer’s Oooguruk field in the nearshore state waters of the Beaufort Sea; development of some of FEX’s North Slope oil and gas leases; a Cook Inlet Region Inc. underground coal gasification project on the west side of the Cook Inlet; and the development of the 28 billion-barrel heavy oil resource on Alaska’s North Slope.
But Popp repeated his caution about excessive optimism when looking at the buoyant jobs figures depicted on his graphs.
“There’s no sunshine and roses, no puppy dogs and kittens involved in this particular projection,” Popp said. “We think that this is a really tough time for the State of Alaska in the long term. We lack a vision that goes beyond next year and we seriously lack a memory that goes past last year. We’ve ended up as a state that is polarized into absolutely ‘yes’ or absolutely ‘no,’ with no middle ground. … How do we find the common ground between all of the stakeholders? And how do we find the common vision that’s going to carry us forward in the next several decades? These (projects) are the opportunities that we have to just reach out and grasp.”
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