SPE-165618-MS Social Challenges of Unconventional Oil and Gas in Latin America

1. SPE-165618-MSSocial Challenges of Unconventional Oil and Gas in Latin America Mary Beth Snodgrass, Acorn International The full paper on which this presentation is based is available through this link.

2. Slide 2 While the financial, technical and environmental challenges of shale development are significant “social challenges are likely to present the most problems.” The UK Energy Research Center’s project on  Global Gas Security and Governance www.ukerc.ac.uk/support/article2580 SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

3. Slide 3 INTRODUCTION Key social aspects to consider for shale developments: Six countries discussed: SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

4. Slide 4 Unconventional Experience in the U.S. Impacts: Perceived and Potential SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

5. Slide 5 Unconventional Experience in the U.S. • Lessons Learned • Community perception varies by region. • Assess impacts and risks, disclose information and engage the public early • Regulatory frameworks continue to evolve • Historical Indigenous rights issues can be exacerbated • Innovation for water recycling and conservation needed. • Continued research is needed on social risks and impacts Source: Tara Lohan, http://www.alternet.org/fracking/10-photos-oilfields-north-dakotas-bakken-shale SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

6. Slide 6 Latin American Context • Social aspects explored on the slides that follow: • Administrative Frameworks • Property Rights • Physical and Social Infrastructure • Water • Indigenous Peoples • Conflict and Insecurity • Workforce and Skilled Labor SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

7. Slide 7 Latin American Context • Administrative Frameworks • Strength of legal frameworks and institutions • Nascent legal frameworks and institutions • National economic development strategies SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

8. Slide 8 Latin American Context • Property Rights • Government primarily owns mineral resources • Different dynamics between communities and corporations • Land titles are often disputed or do not exist Source: Social Progress Index, http://www.socialprogressimperative.org/data SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

9. Slide 9 Latin American Context • Physical and Social Infrastructure • Less physical infrastructure for onshore O&G • Support services, technology and equipment • Argentina: $7-$8 million/well vs. U.S.: $3 million/well • Social infrastructure • Utilities and sanitation • Information and mobile technology: • Internet: 36% to 51% • Cellular: ~98% SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

10. Slide 10 Latin American Context • Water • 77 million lacked access to clean water (2004) • Water is a natural right • Uruguay: achieved universal coverage for safe drinking water. Millennium Development Goals (MDGs) for water will not likely be met Source: Social Progress Index, http://www.socialprogressimperative.org/data SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

11. Slide 11 Latin American Context • Indigenous Peoples • Indigenous groups historically under-represented in legal frameworks • Relationship with corporate developers has been contentious. • Resistance/aggression against oil and gas projects • ”As poor communities experience pipeline construction …and indigenous communities discover that gas lies under their lands, easements will become public policy issues” • Harvard University’s Belfer Center and • Rice University’s Baker Institute, • Geopolitics of Natural Gas: • Political Economy of Shale Gas in Argentina • November 2013 SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

12. Slide 12 Latin American Context • Conflict and Insecurity • Risks: crime and theft, uprisings or riots, pipeline or facility sabotage and kidnappings • Strong community relations counteracts security risks (International Alert) • Workforce and Skilled Labor • Technical training and expertise: shortage of skilled workers • Worker accommodations: impacts on public utilities, housing, medical care, etc. • Labor policies and unions SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

13. Slide 13 Recommendations (1) Social risk and impact assessment (2) Good international industry practices (GIIP) (3) Disclosure and transparency (4) Community engagement and participatory mapping (5) Stakeholder analysis (6) Mobile phones and other leapfrogging technologies (7) Research trends in shale’s socioeconomic impacts and risks (8) Utilize local skills and expertise; build capacity of workforce (9) Collaborate across public and private sectors (10) Develop a vision for the legacy of shale SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

14. Slide 14 Conclusions • Opportunity for Latin American shale operators and investors • Minimize the risks and impacts experienced in the U.S. with strategic planning • Sufficient resources and integrated project planning are required • A new era of energy in Latin America – based on thoughtful, tailored and innovative approaches -can bring economic value to corporate and public sector actors and also create shared value for generations to come. SPE-165618-MS Social Side of Unconventional Oil and Gas in Latin America

15. Thanks to my colleagues at Acorn International A special thanks to our company’s clients who are working diligently on these issues and enabling us to gain insight into the realities, struggles and progress made managing social risk and performance. Further questions? Please contact Mary Beth Snodgrass mbsnodgrass@acornintl.net Paper # • Paper Title • Presenter Name The full paper on which this presentation is based is available through this link.