Client’s Challenging Situation:
A Canadian province was planning a major energy infrastructure expansion. Linked to this expansion, the province’s energy utility affiliates were creating an energy marketing and service company. Before finalizing infrastructure plans and plans for their new unregulated business venture, the energy company wanted advice. They wanted advice on how to structure and operate an unregulated business in a way that would be “fair” to all stakeholders in province. They were concerned about the needs of the current energy marketing and service companies who sold oil and oil-consuming products. They also wanted to ensure the needs of people in cities and people in remote locations were satisfied.
Scope of the Problem:
The province was planning a $1Billion conversion from oil to natural gas. The project was fundamentally flawed.
We had work experience working at a natural gas utility sector, at an entrepreneurial energy marketing company, and at a major oil & gas energy marketing company. We knew the regulated energy utility considerations and we knew the unregulated energy marketing considerations. As we flew over the province [for the first time] on the way to meet with our new client we were struck by the geography… rock formations and lakes everywhere. A major natural gas piping project covering remote areas would be near-impossible and would consume much more than the $1Billion budget.
This success story is not about solving an energy problem. It is about helping people in the energy sector avoid an extremely costly problem. We made our views about the major problem with the planned natural gas piping project clear. While we were not involved after our initial consulting project, the natural gas piping project was radically changed to provide service to just the major cities in the province. The plans to create an unregulated natural gas energy marketing and service company were put on hold.
The Value Delivered:
To be clear, we do not claim to have been responsible for what is described above as ‘radical change’ to the piping project. We believe our advice influenced thinking about building the unregulated energy company. We do know the province saved $Millions by quickly stepping back and rethinking, then redesigning its plans for natural gas supply and service to its residents.