Pest Analysis Encana

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