Careful preparation for oil production is imperative

Jul 19, 2015 AFC Column, Features / Columnists

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A number of readers, among them business owners and professional engineers, have asked for this column to be re-printed since it contains a key message for policy makers and a “heads-up” for current and potential entrepreneurs.  The latter, they say, must begin immediately to examine the opportunities for new enterprises that should come on stream well before the first barrel of oil is extracted.
Actual oil production from the first significant find in the Stabroek Block is years away.  In the interim, citizens should have already begun to research the many downstream services and the types of trained skills that a hydrocarbon operation would require.
More importantly, the time is now for related courses to be included in the curricula of public and privately-operated trade schools and other institutions of tertiary education, particularly certificate and degree level programmes in Petroleum Engineering.
Below is a truncated version of the column that first appeared on Sunday 31st May, 2015.
“The discovery by ExxonMobil of huge deposits of oil within Guyana’s Exclusive Economic Zone spells progress for every citizen – economically, socially and even psychologically.  One more positive factor is the US Geological study conducted several years ago which surmised that the Guyana Basin was the second largest unexplored area for hydrocarbon deposits in the world.
The Guyana government understands very clearly that the road to massive capital revenues will be long and challenging.  This road is laid with paving stones for thousands of jobs in the manufacturing, services and commercial sectors, since new upstream and downstream support industries will be required many years before oil extraction begins.  The government intends to facilitate specialized technical and vocational training and to invest heavily in health education, research and development, environmental studies and assessments of the likely impacts on the population’s economic activities.
A much broader Education sector is one major benefit for a nation in preparation for a hydro-carbon industry.  The immense range of skills that will be required includes mechanical, electrical, automotive and heavy duty machinery engineering for maintenance of oil extraction rigs, transport vessels, all-terrain cargo and personnel vehicles, peripheral equipment, and specialized communication and other technological systems.  Guyana’s capacity for providing support services is also expected to improve hundred-fold in the hospitality and food industries.
There are an estimated 116 types of secondary industries that could evolve in the preparatory and operational stages of hydro-carbon mining.  The skills of Accountants, Environmentalists and laboratory analysts will be needed alongside research developers and primary to advanced health care providers.
There have already been offers received from oil-producing countries, the United States and Canada in particular, to assist with Guyana’s preparation for an industry of this magnitude.  The most essential stage of the entire process is the crafting of appropriate legislation and strategies for their implementation and sustenance.
The regulations must encapsulate the potential effects of seismic surveys, drilling and extraction operations upon the natural environment and the users of that environment.  It must take into account the effects on marine wildlife, on the livelihoods of the people who subsist on marine life and those who dwell in the vicinity of onshore oil-related operations.  It accounts for every potential environmental emergency (e.g. oil spills) to ascertain that immediate response measures are in place.
THE NEWFOUNDLAND, CANADA EXPERIENCE
The challenge of realizing the potentials of an industry as large and diverse as petroleum production is as immense as the opportunity itself, according to the former Head of a Canadian Mission.  The experiences of the Canadian province of Newfoundland are very instructive.
Since the discovery of huge quantities of oil and gas in the Atlantic Ocean due north of New York State, USA, (1979) the province has prospered and the financial, social and economic benefits spread out to the citizenry and the private sector. Effective Management, foresight and a strict Regulatory Model with Environmental Protection as a key element were the pillars that transformed the province into its current state of wealth.
Newfoundland today records the highest GDP growth in Canada and its capital, St. John’s, is regarded as one of the world’s 16 ‘energy cities’.  It now records the second highest GDP per capita, the second lowest unemployment rate, and high re-migration rates, as jobs became more available in the public and private sectors.  This, of course, translated into a booming housing sector and a wealthier population whose interests were protected, including the people involved in the traditional fishing industry.
The search for oil and gas began in offshore Newfoundland in the 1960’s. The four largest basins were discovered in 1984 and actual production commenced in 1999.  The advanced technologies of today were not available.  The province was poor in 1979, with the lowest per capita GDP in Canada, lowest wage rates, highest unemployment and heavy dependence on fiscal transfers.  Between the first find and actual oil extraction, the provincial government had established the Offshore Petroleum Impact Committee with a mandate to forecast impacts and opportunities and recommend strategies for industry development, economic and social growth.
Widespread training was instituted and as the industry grew along with its downstream businesses, so too did the universities and tertiary vocational institutions that were re-tailored to produce the necessary skills.  A slew of research projects were commissioned to ascertain labour force needs, tax and royalty regimes, environmental impacts and potential complications to marine life.  The development and implementation phase (pre- oil production) also involved close collaboration with the public service to enhance relationships with communities located close to the petroleum installations.
ASSISTANCE FROM THE US
The US embassy in Guyana has already begun to deliver a planned series of Energy Governance sensitization programmes to help boost Guyana’s technical and human resource capacity for creating new laws and regulations for the emerging oil and gas industry.  The appropriate legal mechanisms and effective policing of those regulations will minimize or, at best, remove the likelihood of corruption, mismanagement and sectoral conflict.
The United States has been sharing its experiences on environmental analyses, public input, safety, rigorous oversight and enforcement.  The experts have reiterated that transparent management of the energy sector will deliver and sustain the benefits from the energy resources to the citizens of this nation.”

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