MercoPress. South Atlantic News Agency

Falklands’ oil industry socio-economic impact on track with “no major new concerns”

Plexus Susan Dowse, Andy Duffy and Jay Wagner with Rockhopper Exploration Representative Ken Humphrey (Photo by PN)

A socio-economic impact study on the effects of an oil development project on the Falkland Islands did not reveal any, “major new concerns which had previously escaped attention Director of Mineral Resources Stephen Luxton told Penguin News this week.

The Falkland Islands Government (FIG) is also planning to commission its own independent socio-economic impact assessment, said Mr Luxton.

The study presented to the public last Wednesday evening at the Narrows Bar was undertaken by Plexus Energy Ltd on behalf of Rockhopper Exploration in relation to its Sea Lion development and made 68 recommendations. It addressed a number of issues including the impact on employment, economic development, accommodation, local business development, immigration, infrastructure and culture.

At the presentation Plexus representatives, Director Jay Wagner and consultant Susan Dowse, outlined the benefits of the industry including a possible additional £195 million paid to the Falkland Islands Government in tax and royalties after production begins in 2017 plus an estimated annual GDP of £275 million.

Falklands’ onshore employment requirements during the production phase were expected to be similar to that experienced during exploration (around 75 both directly and indirectly related to the industry) although that would be higher by around 50% during the installation of the production facilities.

Direct onshore opportunities might include a range of positions related to administration, warehousing, dock and oil yard support transportation, catering and also accommodation primarily through subcontracting.

Mr Wagner noted that in order to support the oil industry, existing businesses could be expanded or new ones created via international joint ventures if local funding was inadequate. While it was suggested that would require a willingness to take business risks there also existed the danger of a boom followed by a decline.

Other benefits suggested were, new stable sources of income, local training, the import of fresh products via oil flights and revenue available to develop the Camp. Plexus warned, however, that the hydrocarbons’ industry might also draw labour from other industries such as tourism and farming.

On the subject of accommodation; in the first three years around 25 units would be required, however, this would likely subside to 15 and later ten as things stabilised in the production phase. If accommodation was unmanaged demand could increase due to worker influx.

This might be met through new housing, apartments and/or hotels.

At the same time this might also put upward pressure on housing prices and rents. The report recommended an investigation of suitable strategies to address its accommodation needs in ways to minimise that impact.

Plexus also warned about the dangers of overbuilding accommodation units that might later no longer be required.

Although the numbers of full time non-local onshore workers and families were likely to be small, in a place the size of the Falklands that might also affect certain services including schooling and health Plexus advised.

However at the meeting of the Health and Medical Services committee meeting Director David Jenkins noted following meetings with the company he did not anticipate any major difficulties.

Observations were also made by Plexus about the impact on water resources, FIPASS and the potential for inflation.

The representatives noted there was a strong sense in the Falklands that oil development would be positive although the FIG would face challenges relating to regulations, strategic planning and infrastructure, however, they reassured the meeting that FIG already had many things ‘in train’ ahead of the publication of the report.

Mr Luxton commented this week: “It is a very detailed piece of work which has been a year in the making and from our perspective represents an excellent summary of all of the issues and concerns in the Falklands at the time of preparation.”

He said it was significant to note that although it was a recent report, “we have already moved on significantly from the position stated in the report in a number of key areas with regard to oil readiness and good progress is being made towards the position we need to be in by first oil.”

He added that it was satisfying to note that all of the significant issues that had been identified were ones that were already known and were not “insurmountable.” (PN)