Friday Sep 13, 2013

Top Challenges, Implications, and Strategic Solutions for Energy and Utility Companies

The International Energy Agency (IEA) forecasts roughly a $38T capital outlay over the next 15 years for the energy sector. Global energy and utility demand isTop Challenges, Implications, and Strategic Solutions for Energy and Utility Companiesexpected to increase by over one-third in the period to 2035, while the primary energy supply mix shifts considerably to natural gas and unconventional sources. The ability for global power and process owners, operators, contractors, and E&C companies to meet demand will largely depend on their ability to overcome five pain points: a constrained capital market, erratic supply and demand, aging infrastructure, a heightened regulatory environment, and declining global skills.

Iain Graham, director of Process Manufacturing Strategy, Oracle Primavera, hosts a Webcast available On-Demand that spotlights three strategic drivers—operational excellence, financial discipline, and risk mitigation—which are key in driving success and helping to identify, select, execute, operate, and maintain assets in an increasingly complex world. During the Webcast, Iain discusses how financial discipline can help manage capital expenses and focus capital on areas that drive greater shareholder value. Through examples that Iain provides, you can learn how operational excellence enhances efficiency, optimizes resource pools, and reduces waste and inefficiencies. He also covers how improved awareness of cash flow and capital expenditures can help any power and process company better manage and react to uncertainty.

Read the full edition of Engineering News Record’s 2nd edition of Construction Connection to discover more successes and stories in the current and emerging environment in the engineering and construction industry. 

Visit the microsite to read highlight articles from the digital magazine.

Thursday Aug 29, 2013

Top Strategic Drivers to Success in an Unpredictable, Changing World

Whether they are in the power or process industry, owners, operators, and their E&C partners face extraordinary demands in the next 20 years. The International Energy Agency (IEA) 2012 World Market Report estimates that a cumulative investment of US$37 trillion is needed in the world’s energy supply system by 2035.1 Of that investment, US$19 trillion will need to go to oil and gas facilities and infrastructure and US$17 trillion to meet generation, transmission, and distribution needs with the remaining targeted at other energy solutions.

The $19 trillion in oil and gas investments is expected to span the globe from U.S. shale and Canadian oil sands to Iraq’s new oil fields and Brazil’s deepwater drilling. IEA also points out that the current energy renaissance in the U.S. will have significant implications for energy markets and trade. By 2030, the U.S. should be self-sufficient in net energy needs and a net oil exporter because of its increased production of oil, shale gas, and bioenergy as well as improved fuel transport efficiency. As a consequence of the U.S. shift, international oil owners will place more emphasis on Asian markets and strategic links to the Middle East. Utilities face unprecedented pressures, as well, given IEA’s estimating $17 trillion investment in power infrastructure. Global electricity demand is expected to increase over 70% by 2035, according to IEA, with over half that demand from China and India. As well, electric utilities in the U.S. are expected to invest at least $51.1 billion in transmission projects through 2023.2 The Edison Electric Institute (EEI) estimates that more than three-quarters of the $51.1 billion will be used to support the integration of renewable resources in an effort to meet growing demand, relieve congestion, improve reliability, and support new generation sources to power grids.

Whether owner, developer, utility, or E&C company, success in the current and emerging environment will most certainly depend on an organization’s cost control, operational efficiency, and risk mitigation—read the full article in Engineering News Record’s (ENR) 2nd edition of the Construction Connection digital magazine to discover why.

Visit the microsite to read highlight articles from the digital magazine.

Friday Aug 16, 2013

SOLV Provides Accurate Risk Estimates for Oil and Gas Customers with Monte Carlo-based Simulation—Saves Customer US$550 Million

SOLV is an engineering consultancy and software developer based in the United Kingdom. It provides flow measurement engineering and consultancy services for fiscal, allocation, and process flow

measurement in upstream oil and gas production, pipelines, transportation, downstream petrochemical

refining, and power generation.SOLV’s experience stems from North Sea oil and gas, fiscal,

and allocation flow measurement, which is subject to stringent regulation by the

UK Department of Environment and Climate Change, the Norwegian Petroleum Directorate,

and other regulatory bodies.

 Challenges:

- Provide accurate estimates of uncertainty around the measurement of oil and gas output from pipelines

to enable global oil and gas organizations to manage exposure to risk.

- Assess accuracy of oil and gas allocation to multiple partner organizations, working in oil fields with

shared interest throughout the world.

Read more

 Solutions:

- Deployed Oracle Crystal Ball to perform Monte Carlo simulations to more accurately measure

the uncertainty around oil and gas flow measurement and calculate the probability that

measurements and allocations of oil to individual partners are correct.

- Saved one oil and gas client US$550 million by providing better risk estimates with the help of

Oracle Crystal Ball.

Read more….

"Oracle Crystal Ball enables us to use Monte Carlo simulation to estimate allocation uncertainties

in oil and gas flows and advise oil and gas clients on minimizing risk exposure."

– Martin Basil, Senior Flow Measurement Consultant, SOLV Limited

Read complete customer snapshot here.

Friday Sep 07, 2012

How to Reap Anticipated ROI in Large-Scale Capital Projects

Only a small fraction of companies in asset-intensive industries reliably achieve expected ROI for major capital projects 90 percent of the time, according to a new industry study. In addition, 12 percent of companies see expected ROIs in less than half of their capital projects.

The problem: no matter how sophisticated and far-reaching the planning processes are, many organizations struggle to manage risks or reap the expected value from major capital investments.

The data is part of the larger survey of companies in oil and gas, mining and metals, chemicals, and utilities industries. The results appear in Prepare for the Unexpected: Investment Planning in Asset-Intensive Industries, a comprehensive new report sponsored by Oracle and developed by the Economist Intelligence Unit.

Analysts say the shortcomings in large-scale, long-duration capital-investments projects often stem from immature capital-planning processes. The poor decisions that result can lead to significant financial losses and disappointing project benefits, which are particularly harmful to organizations during economic downturns.

The report highlights three other important findings.

Teaming the right data and people doesn’t guarantee that ROI goals will be achieved. Despite involving cross-functional teams and looking at all the pertinent data, executives are still failing to identify risks and deliver bottom-line results on capital projects. Effective processes are the missing link.

Project-planning processes are weakest when it comes to risk management and predicting costs and ROI. Organizations participating in the study said they fail to achieve expected ROI because they regularly experience unexpected events that derail schedules and inflate budgets. But executives believe that using more-robust risk management and project planning strategies will help avoid delays, improve ROI, and more accurately predict the long-term cost of initiatives.

Planning for unexpected events is a key to success. External factors, such as changing market conditions and evolving government policies are difficult to forecast precisely, so organizations need to build flexibility into project plans to make it easier to adapt to the changes.

The report outlines a series of steps executives can take to address these shortcomings and improve their capital-planning processes. Read the full report or take the benchmarking survey and find out how your organization compares.

Monday Jan 02, 2012

How effective is your company at capital planning?

Asset-intensive industries are presented with many challenges when it comes to effectively managing the capital planning process. And failing to make good decisions when the stakes are high can lead to huge financial losses. Is your company making good investment decisions?

A recent survey by the Economist Intelligence Unit, sponsored by Oracle, found that:

  • Only one in ten companies in the utilities, oil & gas, chemicals and metals & mining industries consistently achieve the expected return on investment on capital projects
  • 47% of executives surveyed rate their organizations as "effective" at planning, prioritizing and selecting capital investment opportunities, and just 8% say they are "extremely effective"
  • Fewer than one in five organizations involve program managers in capital investment planning decision-making

With the cost of projects running into the millions, and even billions of dollars, the stakes have never been higher: timelines are long, investments are huge and lifecycles are even longer. Good decision-making in the planning stages can have a tremendous impact on the bottom line and mean the difference between the success and failure of a project.

How does your company compare? Take the EUI five-minute benchmarking survey to find out. See how your views of the capital planning process compare with those of more than 425 asset-intensive industry executives around the world.

Monday Dec 26, 2011

How portfolio management can reduce project portfolio costs and speed time to completion

In today’s increasingly complex and volatile business environment, companies in asset-intensive process industries need to achieve the expected return on their capital investments. Portfolio management can help companies make critical enterprise investment decisions by simplifying the investment selection process. In addition, portfolio management solutions can help organizations balance short and long-term planning, integrate planning groups across the organization, and align planning with execution, resulting in better decision-making that delivers enterprise value.

The Benefits:

  • Select, prioritize and align initiatives to achieve objectives
  • Understand the impact of changing or adding initiatives to portfolios
  • Track performance throughout the investment lifecycle process

Here is a 2 minute flash demo explaining how to improve capital investment portfolios with portfolio management. 

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