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Transcript of Creating Energy Sustainability in a Global Context Lessons Learned Jamie Sawchuk, Partner The...
Creating Energy Sustainability in a Global ContextLessons Learned
Jamie Sawchuk, Partner
The Pacific Northwest Gateway to Asia
Energy: Asia Demand – Canadian Response
Canadian International Council Conference
October 28th, 2014
© Deloitte LLP and affiliated entities.
Permission, Copyright and Warranty
• Permission– The information, in whole or in part, contained in this presentation can not be
used without the expressed written consent of an authorized official of Deloitte LLP (“Deloitte”).
• Copyright Notice– All ownership rights, title, and other property rights to all text, image and other
materials contained or displayed in this Deloitte document, belong to Deloitte and constitute valuable intellectual property.
• Warranty– The data contained in this presentation, although believed to be accurate, is
not warranted or represented by Deloitte to be so.
2 Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
© Deloitte LLP and affiliated entities.
Global Context
1. Liquefied Natural Gas (LNG) has the potential to become integral to Canada’s natural gas future
2. Asia is interested in Canadian LNG
Diversity of Supply
Canada’s History as an Natural Gas Exporter
Cleaner, Energy Supply
Large natural gas reserves
Friendly, Stable Country
Cold Weather(lower cost to liquefy)
3. Canada, including industry, government – and importantly First Nations – are looking to safely and sustainably export LNG to Asia
3 Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
© Deloitte LLP and affiliated entities.
Global Context
Competing in a global marketplace
Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 20144
4. Multiple consortiums are considering making billions of dollars of investments in Canada and specifically British Columbia
5. Facing global competition from US brownfield as well as Africa, Australia, S.E. Asia, Qatar and Russia
© Deloitte LLP and affiliated entities.
Global Context
Canadian energy projects compete for global capital
5 Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
• The economic benefits to the region getting the capital investment are enormous.• For some regions – like Mozambique – the potential investment is massive relative to the
existing economies
Australia Nigeria Kazakstan Angola Papua New Guinea
Mozambique
1,542
273
201
115
15 15
302
45
10078
19
68
2012 GDP Proposed megaprojects capex
20% 17% 50% 68% 123% 467%
$ billions(not to scale)
Megaprojects as a share of GDPMegaprojects capex versus 2012 GDP
© Deloitte LLP and affiliated entities.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 150
20
40
60
80
100
120
140
160
Canada’s LNG – Will we go through the “Hype” lifecycle?
6
Illustrative LNG Hype Lifecycle
?
Time
Is the HypeHere?
Growing Momentum Overcoming Barriers Build-out & Operations
Expect consolidation over the next two years as consortiums sell down equity positions to reach Final Investment Decision (FID)
Hype
Companies will spend hundreds of millions getting to FID Companies will spend billions post-FID
FID
Long Term Trend
Investment requires a more pragmatic view
A challenge…or an opportunity?
Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
… or here?
© Deloitte LLP and affiliated entities.
A challenge…or an opportunity?
Social License is setting the bar
Source: Urban Institute — National Center for Charitable Statistics, “Foundation Giving Trends, 2009” (Foundation Center),
Legal
Social
Time
Investigate / Posit
PublishMonitor
Activist Action Cycle
Level of Expectation
Gap
7 Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
© Deloitte LLP and affiliated entities.8 Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
28% Economic Trends |
Competition
32% Business
Model
40% Reputation
Today
26% Reputation
28% Economic
Trends
41%Brand
2010
Deloitte: Exploring Strategic Risk:A Global Survey, 2013
A challenge…or an opportunity?
Businesses now cite reputation as the No. 1 risk
© Deloitte LLP and affiliated entities.
A challenge…or an opportunity?Can we learn from Australia’s LNG experience or are we destined to repeat it?
Moving from a “high speed, high cost” mentality to a “low cost / operational excellence” approach
9 Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
© Deloitte LLP and affiliated entities.
Gas
market
A challenge…or an opportunity?
New models for collaborative competition are emerging
10 Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
Incr
easi
ng
co
mp
lexi
ty a
nd
fo
rmal
ity
of
stru
ctu
re Asset value
Industry value
Operations Value
Regulatory/Infrastructure
Basic communicationsE.g., APPEA“Our natural advantage”
E.g., Queensland Resources Council
APPEA
Surplus goods disposal and Shared services
outsourcing
JVs and Common
Engineering
© Deloitte LLP and affiliated entities.
A challenge…or an opportunity?
Key lessons on creating meaningful engagement
BC
United States
Nigeria
Papua New
Guinea
Kazakhstan
Colombia Australia
11
Denmark
Norway
Deloitte Confidential - CIC Energy-Asian Demand-Cdn Response, October 28th, 2014
El Salvador