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Pest Analysis Encana

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Autor:  anton  03 January 2011
Tags:  Analysis,  Encana
Words: 717   |   Pages: 3
Views: 408

PEST CASE STUDY: ENCANA CORPORATION

PERTINENT FACTS:

The province of Alberta has an abundant source of energy resources and the industry leading player is the EnCana Corporation. It has helped to provide an economic boom to the province which has brought with it job and economic growth, a rising housing market lifestyle changes and has also provided a large population of immigration/emigration workers. With this boom a number of disadvantages have also been identified such as the impact on the environment, homelessness and the idea that the oil & gas industry are the gatekeepers of the province.

Here are a few more pertinent facts about the corporation before I begin my PEST analysis.

EnCana has an industry leading land position with approximately 21 million net acres, of which 12.1 million are undeveloped

Approximately one third of the land is owned in fee title by EnCana, which means that all production is subject to mineral tax which is less than the Crown royalty imposed for production on government owned mineral rights land

EnCana is the leading North America unconventional natural gas and integrated oil sands company

The company is involved in the exploration, production and marketing of oil & gas and natural gas liquids

Natural gas sales averaged 2,185 million cubic feet per day in 2006 and are expected to increase

Crude oil and natural gas liquids sales averaged 142,210 barrels per day in 2006 (1)

PEST ANALYSIS

The purpose of a PEST analysis is to examine the changes in a market place or company which are caused by Political, Economical, Social and Technological factors. Below you will find my brief analysis of the EnCana Corporation.

Political Analysis:

The oil and gas industry has to follow a string of both provincial and federal government regulations when it comes to the production of energy resources. There are potential fines and sanctions that can be set by various governmental depart at both levels if standards are not meet.

The following are some factors that could cause the EnCana Corporation and the oil & gas industry to have varying results.

a major issue effecting the industry is the revision of the Alberta royalty system, which would reduce the number of wells drilled

the federal Government aligning with other nations to establish Kyoto targets

Federal/Provincial elections as each jurisdiction wants more from the industry

Federal issues such as market based trade, equal tax treatment

Canada and US trade relations, the export of energy products is a growing issue

Environmental issues for infill well and off shore drilling

Economic Analysis

EnCana’s reserves are developed in some of the most challenging terrain and climate in the world in the world if accessibility becomes an issue the corporation or industry could lose millions per project

The ability to maintain cost competitiveness with the global market

Industrial inflation

The exchange rate of the Canadian dollar has helped to triple the value of oil

The oil boom in Alberta is contributing to the oil patch inflation

Increase payment in government royalties and taxes could mean less oil & gas activity

Environmentalists challenging drilling sites could also cause delays which in turn would see loses in revenue

Social Analysis

Helped to increase the inter provincial migration in Alberta

The industry relies on highly skilled & educated labour which has led to Alberta having the lowest unemployment rate

Earning capacity has increased which has driven the influx of workers, and in turn has driven the housing market to rise

Homelessness has become an issue within the province. Because of high housing prices and low occupancy rates workers are forced to live in shelters, trailers or any other means they find. This is also driving people out of the province

EnCana employees approximately 6,500 staff (2) and 60% percent of oil & gas workers hold a university degree or post secondary diploma/certificate (3)

Technological Analysis

the importance of regional geosciences mapping studies that provide insight to the geologic and commercial potential

decreasing finding costs through technology and logistics innovations;

development of oil sands technology;

reducing environmental impacts, reducing infrastructure footprint; (4)

References:

EnCana Corporation, www.encana.com, 22 January 2008

EnCana Corporation, www.encana.com, 22 January 2008

Alberta: It’s Irresistible, www.areadevelopemtn.com, 22 January 2008

Innovation in Canada, www.innovationstrategy.gc.ca, 23 January 2008



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