Uncertainty continues into the new decade. Energy companies must control costs and continue to weigh the risks versus benefits of new projects, new products, how much capital to invest and how to generate funds.
Foreign investment, particularly in the oil sands, has been fundamental in generating capital to develop one of the largest oil resources in the world. The fact that Canada has attracted investments, especially recently, is a reflection that the oil sands have achieved a level of acceptance. Companies and governments are allocating significant components of their spend to development and funding is coming in everywhere. By accessing global resource pools, companies have the ability to develop the resource in a way that wasn’t possible 5-10 years ago.
Energy companies must also consider how the outcome of the proposed Keystone pipeline, west coast LNG and Northern Gateway projects could impact their operations. With Keystone, the proposed expansion of the gulf coast pipeline has an important impact toward long term stability and is a resource that can supply the largest base of refineries in the world. The expansion would facilitate a steady supply of raw materials for many decades and construction of the pipeline would solidify Canada as a major source for commodities.
The west coast LNG project is considered a game changer in the export of natural gas. Currently, the commodity is landlocked, its destination to one customer, the US. This has led to price differences around the world. Technology advances — the combination of horizontal drilling and multi-stage fracturing – has led to large quantities of gas in North America with no place to go, leading to lowered prices. The LNG project, if successful, will allow Canadian companies to export to Asia and access prices that Asia is willing to pay, gradually opening up the Canadian market on a global scale. The Northern Gateway twin pipeline project, if approved, will also play a significant role in how Canadian energy companies reach international markets. Such opportunities could mean changes in how companies operate and structure their businesses.
At PwC, we are not only watching these developments, but we are analyzing these changes from the perspective of how they will impact our clients, and how we can best help companies prepare and manage the changes. Our professionals understand the issues and have the knowledge and experience to proactively address these challenges and recommend solutions.
As a leading advisor to the energy industry, we are experienced working with every segment of the business — from upstream to midstream to downstream, juniors and service companies. For more than 100 years, we have helped energy companies and we look forward to the opportunity to work with you.