Another Trip to the Wishing Well

A View for the Coming Decade in Resource Extraction Job Opportunities

Today’s Presentation

• The Pacific Rim Economy-• 2009: Who’s up? Who’s Down?• The outlook for 2010

• The AEDC 10-Year Resource Extraction Projects Projection• The evolution of the projection since 2004• The 50/50 model• The less than 50/50 model• The combined view• Projects that bear watching

Exports to the US from select countries Exports to the US from select countries in millions of dollarsin millions of dollars

08 Jan-Sept 09 Jan-Sept % Change

China $250.4 $212.8 -15%

Japan 107.9 67.7 -37%

S. Korea 36.7 29.1 -21%

Taiwan 27.7 20.2 -27%

Total $422.7 $329.8 -22%

Global GDP Trends: Global GDP Trends: 2009 Estimates2009 Estimates

Global GDP Trends: Global GDP Trends: 2010 Outlook2010 Outlook

GDP Trends:GDP Trends:Key Pacific Rim Nations Key Pacific Rim Nations 2005 2005 -- 20102010

What Are The Possibilities The Future Holds?

• Projects that will add FTE positions in:

• Oil & Gas Projects• Mining Projects• Related Issues

A More Robust Analysis

• Previous projections were based on “back of the napkin” analysis through media stories, company news releases and direct discussions with company officials

• New partnership with- Petroleum NewsNorth of 60 Mining News

• PN and North of 60 provide background research and views on project viability while maintaining proprietary/confidentiality

Optimism Does Not Drive This Forecast

• Projects are challenged by taxation issues• Projects are challenged by permitting issues• Projects are challenged by public opinion• Projects are challenged by commodity market conditions

We Are Doomed to Repeat the Mistakes of the Past

• If we don’t think strategically • If we don’t embrace projects and seek common ground

to develop them• If we don’t prepare for growth that results from

projects we are able to move forward• If we don’t train Alaskans to compete for high demand

jobs

The First Attempt to Look Forward- 2004

Last Year's Point of View (2008)Potential Annual Workforce Requirements

Over the Next Decade

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Num

ber

of J

obs

ANWR

Bristol Bay Oil&Gas

Cook Inlet OCS

Pebble Construction & Ops

Beluga Coal to Liquids

Cook Inlet CO2 EOR

Pt. Thompson

ANS Gas Line

Donlin Creek Construction & Ops

C.I. Spur Gas Line

Copper River Basin

Chuitna Coal Construction & Ops

Kenai Gasification Project

Renewable Energy

General Hard Rock Expl. & Dev.

Rock Creek

Kensington Mine

ANS Offshore

Upper Cook Inlet

Prudhoe Region

NPR-A

Aging O&G Workers

Power Generation

General Construction

11/03/09

2010 to 2021: The 50/50 or Better OpportunitiesPotential Annual Workforce Requirements

2010 through 2021

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Num

ber

of J

obs

Pt. Thompson Armstrong ANSBP LibertyEni NikaitchuqNPR-A All ProjectsNorth ForkEnstar South Peninsula ExtensionCook Inlet Spur/BulletANS Gas Pipeline OpsANS Gas Pipeline Construct ionAging O&G Workers Trucking Industry DriversGeneral Hard Rock Expl. & Dev.Pebble Ops.Pebble Construct ionNixon Fork OpsDonlin Creek OpsDonlin Creek Construct ionRock Creek OpsRock Creek Construct ionLivengood OpsLivengood Construct ionKensington OpsKensington Construct ionChuitna OpsChuitna Coal Construct ion

2010 to 2021: The Less Than 50/50 Opportunities2010 to 2021 Projects with Less than 50% Opportunity for Success

0

1000

2000

3000

4000

5000

6000

7000

8000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Alaska OCSCosmopolitanANS Small Project OpsANS Small ProjectsGubik Field

2010-2021:In a Perfect World, the Combined View

0

5000

10000

15000

20000

25000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Alaska OCS

Cosmopolit an

ANS Small Project Ops

ANS Small Project s

Gubik Field

Pt . Thompson

Armst rong ANS

BP Liber t y

Eni Nikait chuq

NPR-A All Project s

Nort h Fork

Enst ar Sout h Peninsula Ext ension

Cook Inlet Spur/ Bullet

ANS Gas Pipeline Ops

ANS Gas Pipeline Const ruct ion

Aging O&G Workers

Trucking Indust ry Drivers

General Hard Rock Expl. & Dev.

Pebble Ops.

Pebble Const ruct ion

Nixon Fork Ops

Donlin Creek Ops

Donlin Creek Const ruct ion

Rock Creek Ops

Rock Creek Const ruct ion

Livengood Ops

Livengood Const ruct ion

Kensingt on Ops

Kensingt on Const ruct ion

Chuit na Ops

Chuit na Coal Const ruct ion

Projects Dropped From Projection

• ANWR• Cook Inlet OCS• Bristol Bay Anything Oil & Gas• General Construction and Power Generation Projects• Copper River Natural Gas• Upper Cook Inlet Oil & Gas• Kenai Gasification Project (Agrium)• Cook Inlet CO2 EOR• Beluga Coal To Liquids

Projects Not Included In The Projections-An Abbreviated List• ConocoPhillips’ Bear Tooth Prospect - NPR-A• TAPS Strategic Reconfiguration• Alaska North Slope Renewal (ANSR) Projects - estimated

$15 to $30 Billion• Pioneer’s Oooguruk Oil Field - possible future expansion • FEX ANS - state leases outside NPR-A• CIRI Coal Gasification & CO2 EOR Cook Inlet Project• ANS Heavy Oil- the 20 billion barrel prize

Thank you!

www.AEDCweb.comwww.petroleumnews.com

www.miningnewsnorth.com

1

Another Trip to the Wishing Well

A View for the Coming Decade in Resource Extraction Job Opportunities

Good afternoon! It’s a pleasure to be here today and I would like to thank RDC for inviting me to speak at this year’s conference and batting clean-up for a great set of presentations over the last two days.

2

Today’s Presentation

• The Pacific Rim Economy-• 2009: Who’s up? Who’s Down?• The outlook for 2010

• The AEDC 10-Year Resource Extraction Projects Projection• The evolution of the projection since 2004• The 50/50 model• The less than 50/50 model• The combined view• Projects that bear watching

Today, I am presenting an outlook for the next decade’s proposed oil & gas and mining projects in Alaska.In order to do that I will first present a view of the world economy with an eye towards its effects on energy and mineral prices. Then I will provide an overview of the history of the projection and how it has evolved over the last several years.As you will see, the projection has come from very humble beginnings and has evolved over the last six years into what AEDC believes is a much more comprehensive projection.I’ll then present the outlooks for resource extraction project opportunities for the next decade, as well as a list of projects that bear watching to see how they progress.And before you jump to the conclusion that this is some kind of rosy outlook for Alaska, allow me to explain in more detail later in this presentation why that is not the case.

3

Exports to the US from select countries Exports to the US from select countries in millions of dollarsin millions of dollars

08 Jan-Sept 09 Jan-Sept % Change

China $250.4 $212.8 -15%

Japan 107.9 67.7 -37%

S. Korea 36.7 29.1 -21%

Taiwan 27.7 20.2 -27%

Total $422.7 $329.8 -22%

To begin with, let’s set the stage for what will likely drive any attempts at developing Alaska’s resources in the next decade. The global economy.More specifically, the key economies of the Pacific Rim. In particular, China, Japan, South Korea and Taiwan.First, I want to thank Jim Calvin at the McDowell Group for providing the current global economic data I am about to present. As you can see by these figures, this has been a tough year for the countries that rely so much on exports to drive their national economies. Exports to the U.S. in particular drive much of the economic growth for these key trading partners. 2009 has seen significant drops in exports to the U.S from all four countries, though China has shown only modest losses compared to other countries, in particular Japan.

4

Global GDP Trends: Global GDP Trends: 2009 Estimates2009 Estimates

Here is a perspective on global GDP, or Gross Domestic product, a key measure of all economies.China and India continue to show strong results compared to global GDP. The U.S. will see a significant decline in GDP for 2009, though many indicators show the nation returning to positive GDP growth in 2010.Japan, Alaska’s long time major trading partner, is having a very tough year in 2009, but should also return to positive GDP growth in 2010.And as a last comparison, Russia has had a disastrous year in 2009, but the outlook for 2010 does turn modestly positive.

5

Global GDP Trends: Global GDP Trends: 2010 Outlook2010 Outlook

And here is the outlook for 2010 GDP.Overall, the world should return to positive growth, with China and India seeing much stronger growth in 2010.The U.S. will return to modest growth next year, with Russia and Japan also projected to have similar results.

6

GDP Trends:GDP Trends:Key Pacific Rim Nations Key Pacific Rim Nations 2005 2005 -- 20102010

From 2005 to 2007, these four key trading partners with the U.S. and Alaska saw pretty solid growth in annual Gross Domestic Product, or GDP. However, in 2008 the first signs of the seriousness of the greatrecession began to impact the GDP figures for all four countries. And even though China still seemed in solid positive territory, GDP less than 10% is considered a problem given China’s current economic and social situation.2009 will be a tough year for GDP in all four countries. However, 2010 projections show a much improved situation developing, though China is still lagging below that all important 10% growth threshold. GDP growth for all of these countries are driven by exports. Exports that require significant amounts of energy and raw materials to produce. Energy and minerals that Alaska has in abundance, strategically located closer to these countries than any other region in North America. If you look at these figures from a marketing 101 perspective, these are the customers you most want to engage in trade talks with right now to secure a strong future for Alaska’s resource extraction industries.

7

What Are The Possibilities The Future Holds?

• Projects that will add FTE positions in:

• Oil & Gas Projects• Mining Projects• Related Issues

So what are able to sell these countries and the rest of the world in the coming decade. Seafood is an obvious choice, and we do a pretty good job of that today, though we can always do more.But my focus today is on oil and gas and mining. From a total economic impact perspective, these resources offer the greatest value in high paying jobs, cash into the state treasury, and general economic impact on a statewide basis. With those points in mind, let’s now turn to the 10-year projects projection.The components of this 10-year projection are proposed new projects in the oil & gas and mining sectors, as well as industry related issues such as aging workforce. Most of these issues and projects are those that could create new direct, full time equivalent jobs not currently in existence in Alaska. Others will require significant replacement numbers for existing workers. There are no indirect jobs accounted for in this projection.

8

A More Robust Analysis

• Previous projections were based on “back of the napkin” analysis through media stories, company news releases and direct discussions with company officials

• New partnership with- Petroleum NewsNorth of 60 Mining News

• PN and North of 60 provide background research and views on project viability while maintaining proprietary/confidentiality

This is not the first time this projection has been presented. And I’ll give you a retrospective of previous projections in a few moments.

What’s different this year is the more comprehensive nature of the research put into this projection. In the past, this projection has been more of a “back of the napkin” estimate, with modest levels of peer review given to the projection.

This year, AEDC is pleased to announce that Petroleum News and North of 60 Mining, Alaska’s two premier oil & gas and mining publications, have joined AEDC in preparing this projection by providing the key research the projection is based on. I’d like to thank Kay Cashman and Shane Lasley for their help in putting this projection together.

9

Optimism Does Not Drive This Forecast

• Projects are challenged by taxation issues• Projects are challenged by permitting issues• Projects are challenged by public opinion• Projects are challenged by commodity market conditions

Before we begin our look at projects proposed for the next 10-years, I also want to make it very clear that optimism does not drive this forecast.This forecast offers a view of possible projects, all of which are challenged by issues that could delay or kill most of the opportunities described today. Issues such as taxation, permitting, public opinion and commodity market conditions that effect the price of a barrel of oil, an ounce of gold, a pound of copper, a ton of coal, etc. Today, AEDC presents a list of opportunities with varying odds for potential success in the future. Polarized points of view have created gridlock for many of theseprojects and unless we begin to seek out how we can successfullylaunch these projects on terms that benefit all stakeholders, most of these projects will not come to pass.Simply put, we must find a way past “no” and instead ask “how” we can collaboratively make these projects happen to the benefit of Alaska and industry.

10

We Are Doomed to Repeat the Mistakes of the Past

• If we don’t think strategically • If we don’t embrace projects and seek common ground

to develop them• If we don’t prepare for growth that results from

projects we are able to move forward• If we don’t train Alaskans to compete for high demand

jobs

Unless we can begin to think more strategically, we will miss future opportunities as we have in the past.Unless we can embrace projects and seek common ground between all stakeholders to develop them, we will lose many of these opportunities.If we don’t prepare for the growth that results from these projects, we will face the same social and economic problems we saw in the 1970’s during TAPS construction, and more recently the inflationary spiral seen in oil industry project costs during the 2007/2008 run up of the price of oil to over $140 per barrel.If we don’t train Alaskans to compete for the high demand jobs these projects could create, we will again repeat the mistakes of the past.Alaska must have a vision that looks beyond the coming year from an economic perspective and think strategically in terms of decades in the future. Alaska must also have a memory that goes beyond the previous year and clearly remembers the economic lessons of previous decades to improve our odds of not repeating those mistakes in the future.

11

The First Attempt to Look Forward- 2004

So first, let’s look back at previous projections.

In 2004, in my previous role as Oil & Gas Liaison for the Kenai Peninsula Borough, I was asked to give a projection of future worker demand for a workforce conference at the BP Energy Center hosted by the University of Alaska.I was amazed to find that there was no entity or agency offering any kind of future projection for projects in Alaska, other than individual projects. Mostly, North Slope gas pipeline projections.So in my first swipe at trying to develop some kind of forward looking view of possible projects, here is the original projection. As you can see, it was pretty simple. And boy, has the world changed in just five years. ANWR was going to happen, given the state of congress and the presidency in 2004. Pebble mine was on the cusp of permit applications. The natural gas pipeline should be just getting ready to break ground next year. And Bristol Bay oil & gas appeared to be gaining local support. Those were the days! Given how most of these projects have been either seriously delayed or have been scrapped all together, this clearly underscores the challenges these kinds of projects face in the future.

12

Last Year's Point of View (2008)Potential Annual Workforce Requirements

Over the Next Decade

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Num

ber

of J

obs

ANWR

Bristol Bay Oil&Gas

Cook Inlet OCS

Pebble Construction & Ops

Beluga Coal to Liquids

Cook Inlet CO2 EOR

Pt. Thompson

ANS Gas Line

Donlin Creek Construction & Ops

C.I. Spur Gas Line

Copper River Basin

Chuitna Coal Construction & Ops

Kenai Gasification Project

Renewable Energy

General Hard Rock Expl. & Dev.

Rock Creek

Kensington Mine

ANS Offshore

Upper Cook Inlet

Prudhoe Region

NPR-A

Aging O&G Workers

Power Generation

General Construction

Over time, the projection became more sophisticated and grew to include multiple proposed projects. This is the 10-year projection AEDC presented in late 2008. With over 20,000 possible FTE’s being created if all these projects went forward, the latter part of the next decade seemed to hold a lot of opportunities. But as this last projection was developed, it became clear it needed a more robust review by well informed 3rd parties. Some projects were added that, in hindsight, didn’t really fit in the projection. And some projects were marginal and perhaps should have been separated from projects with a higher likelihood of being successfully launched.So today, with the help of the Petroleum News and North of 60 Mining, I am pleased to present the updated version of the AEDC 10-year Oil & Gas and Mining projects projection.

13

11/03/09

2010 to 2021: The 50/50 or Better OpportunitiesPotential Annual Workforce Requirements

2010 through 2021

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Num

ber o

f Job

sPt. Thompson Armstrong ANSBP LibertyEni NikaitchuqNPR-A All ProjectsNorth ForkEnstar South Peninsula ExtensionCook Inlet Spur/BulletANS Gas Pipeline OpsANS Gas Pipeline Construct ionAging O&G Workers Trucking Industry DriversGeneral Hard Rock Expl. & Dev.Pebble Ops.Pebble ConstructionNixon Fork OpsDonlin Creek OpsDonlin Creek Construct ionRock Creek OpsRock Creek Construct ionLivengood OpsLivengood Construct ionKensington OpsKensington Construct ionChuitna OpsChuitna Coal Construct ion

Here is the 50/50 projects projection for the next ten years. As you can probably guess, these are projects that we believe have a even chance or better of actually being developed in the next decade.There are seven mining projects on this list and eight oil & gas projects and developments. Where appropriate, projects have been broken up into a construction/development phase and an operations phase.Aging oil & gas workers, renewable energy projects, general hard rock mineral exploration employment, and truck driver demand also contribute to this projection.Using basic workforce demand modeling ratios provided by the McDowell Group, AEDC has taken the total workforce figures for each project and proportioned them over the timeline for the construction or development of the given project.As you can see, peak workforce demand, if all projects went forward on time, takes place in about seven years. Again, that is not a likely outcome unless significant, proactive measures are taken to increase the odds these projects will become a reality.

14

2010 to 2021: The Less Than 50/50 Opportunities2010 to 2021 Projects with Less than 50% Opportunity for Success

0

1000

2000

3000

4000

5000

6000

7000

8000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Alaska OCSCosmopolitanANS Small Project OpsANS Small ProjectsGubik Field

New to the projection this year is the profile of projects with less than a 50/50 chance. This is a short list, but one that could have a big impact on Alaska if some of these projects gain momentum and actually move forward.There are a few smaller projects included, but most notable are the Gubik Field and the OCS offshore developments on the North Slope. Gubik is dependent on finding commercial quantities of natural gas, and the success of the gas pipeline project open season process and whether or not shipments from Gubik successfully bid for capacity in any pipeline built.The OCS figures were developed by ISER and Northern Economics aspart of an economic analysis commissioned by Shell Oil. OCS exploration is highly dependent on achieving permits to even begin to explore, let alone produce the vast resources available in the Outer Continental Shelf and given the challenges to date from North Slope stakeholders, this development is highly challenged and has not achieved better than even odds that it will actually go forward in the next decade.It was deemed important to define these projects as part of the projection, even though their odds of success are not the best at this time. More progress needs to take place to move these projects up to an even chance or better of success.

15

2010-2021:In a Perfect World, the Combined View

0

5000

10000

15000

20000

25000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Alaska OCS

Cosmopolit an

ANS Small Project Ops

ANS Small Project s

Gubik Field

Pt . Thompson

Armst rong ANS

BP Libert y

Eni Nikait chuq

NPR-A All Project s

Nort h Fork

Enst ar Sout h Peninsula Ext ension

Cook Inlet Spur/ Bullet

ANS Gas Pipeline Ops

ANS Gas Pipeline Const ruct ion

Aging O&G Workers

Trucking Indust ry Dr ivers

General Hard Rock Expl. & Dev.

Pebble Ops.

Pebble Const ruct ion

Nixon Fork Ops

Donlin Creek Ops

Donlin Creek Const ruct ion

Rock Creek Ops

Rock Creek Const ruct ion

Livengood Ops

Livengood Const ruct ion

Kensingt on Ops

Kensingt on Const ruct ion

Chuit na Ops

Chuit na Coal Const ruct ion

As a final perspective, this graph presents the combined view for the next decade of possible projects and includes both the 50/50 and less than 50/50 projects.It is interesting to note the effect the OCS could have in the latter part of the decade just as several other projects begin to achieve completion of construction or development. Speculatively speaking, this view represents over $70-80 billion in new capital investments in the next decade and at peak demand, over 20,000 full time direct jobs created by these projects if all projects are sanctioned and go forward as proposed.In any case, this is the rose-colored glasses, pie in the sky, sunshine and puppy dogs point of view. Don’t count on it unless there are significant successes in developing consensus and unified efforts between Alaska and industry to join in a strategic effort to move these projects forward.

16

Projects Dropped From Projection

• ANWR• Cook Inlet OCS• Bristol Bay Anything Oil & Gas• General Construction and Power Generation Projects• Copper River Natural Gas• Upper Cook Inlet Oil & Gas• Kenai Gasification Project (Agrium)• Cook Inlet CO2 EOR• Beluga Coal To Liquids

In developing this projection, it needs to be noted that several projects included in the previous 2008 projection were dropped.ANWR speaks for itself.Cook Inlet OCS is not generating any real interest from industry that we can identify.Bristol Bay Oil & Gas seems to have lost all momentum.General construction, as well as power generation projects, do notbelong in this projection.Copper River natural gas has also seemed to lose momentum.Upper Cook Inlet oil & gas has been dropped until the current lack of commercial alignment has been solved. For now, there is little optimism for upper Cook Inlet until this situation is resolved.The Agrium project has be been shelved.Cook Inlet CO2 EOR was dropped based on the Agrium decision, though there is still reasons to keep an eye on this in the future.And the Beluga Coal to Liquids project has now shifted to a gas to liquids model based on North Slope natural gas coming to Cook Inlet. Until there is a firm pipeline project, we have dropped this project from the projection.

17

Projects Not Included In The Projections-An Abbreviated List• ConocoPhillips’ Bear Tooth Prospect - NPR-A• TAPS Strategic Reconfiguration• Alaska North Slope Renewal (ANSR) Projects - estimated

$15 to $30 Billion• Pioneer’s Oooguruk Oil Field - possible future expansion • FEX ANS - state leases outside NPR-A• CIRI Coal Gasification & CO2 EOR Cook Inlet Project• ANS Heavy Oil- the 20 billion barrel prize

There are several possible projects that we should keep an eye on that may be added in the future as plans develop. Most are centered on the North Slope with the exception of the CIRI underground coal gasification project in Cook Inlet. The CIRI project could lead to CO2 EOR being restored to the projection. But both of these projects need more time to see how they develop.The Alaska North Slope Renewal Projects could generate significant new investments in upgrades to handling and delivery systems on the Slope, with billions of dollars spent if sanctioned.And ANS Heavy oil continues to loom as a huge resource opportunity waiting for the right ideas and a huge investment to make it a reality.We’ll continue to track these project opportunities and update the projection when warranted.

18

Thank you!

www.AEDCweb.comwww.petroleumnews.com

www.miningnewsnorth.com

This concludes my presentation. As I have noted repeatedly, don’t walk away thinking this is an optimistic projection. It’s not.Rather, it represents a series of opportunities that Alaska, in partnership with industry, must decide whether or not to pursue them. Theseprojects won’t happen with out a well thought out strategy and unified effort to push them forward.There is opportunity in the future. But opportunity is meaningless unless all of “us”, the public, the government and industry, are willing to work together to find the common ground to exploit these opportunities to their full potential.

But I don’t want to end on a somber note. So heads up! Make sure to check tomorrows edition of North of 60 Mining. There’s some great news about the Lucky Shot gold mine!

Thank you for giving me the opportunity to present this year’s AEDC 10-year Oil & Gas and Mining projects projection.