US Energy Sector Outlook
The US energy sector is undergoing through a period of transformation driven by technological and competitive forces apart from changing customer expectations. As such forces accelerate, companies are tapping new sources to serve their customers. Natural gas is expanding its share in the market and price volatility is increasing amidst rising business opportunities. This case study will help you better understand the challenges companies face in the US energy sector.
Business Challenges Faced
The client, a leading company in the US energy sector wanted to bid for the right to develop a new gas field. However, before bidding, they wanted to weigh the risks and analyze different factors that can impact their return on investments. Their primary aim was to prepare themselves to meet the increasing demand apart from creating electricity by natural gas-fired power generation plants. As gas is relatively cleaner and becoming the fuel of choice for consumers, they wanted to know how much to bid to explore for oil and gas in blocks asked by the government while complying with regulatory norms. Also, they wanted to address challenges occurring due to uncertainty in prices of new technologies and the associated supplier risks beforehand.
Increasing volatility in prices can make it difficult for companies in the US energy sector to calculate the financial viability of their projects. Request a free proposal to access for specific insights and our experts will get back to you asap.
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Our Research Approach
With a thorough understanding of the factors for supply disruptions and geopolitical risks involved in the US energy sector, the procurement market intelligence experts analyzed the countries where the company could operate in accordance with regulatory laws. They emphasized on financial and non-financial factors and gained necessary insights to make informed business decisions. This helped the client to predict the environment cost involved in extracting and bringing gas to final consumers.
Furthermore, the experts provided in-depth insights into taxation and contract structure and identified suppliers across various regions. This improved their visibility across the supply chain. Also, this enabled the client to implement a discounted cash flow technique for investment appraisal and calculate the value of future returns on investment by assessing the values of these returns in terms of their value today.
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Engagement Outcome
Appraising investments using the discounted cashflow method helped the company to improve their capital allocation process and rank projects based on the value they could deliver to the company. Also, the proper assessment of risks in the US energy sector helped the client to calculate Expected Monetary Value (EMV), bid precisely, and calculate the success of the project.
Calculating EMVs require US energy sector companies to analyze different factors impacting the market. Request a free demo to access our web-based procurement platform and gain industry-specific insights.
US Energy Sector Trends to Watch Out for in 2019 and Beyond
- The federal environmental regulation rollback is expected to continue.
- Local governments are likely to push clean energy and climate policies.
- Advances in hydraulic fracturing and horizontal drilling can increase gas generation.
