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Husky Energy SWOT analysis (CRTP group)

Economic Geography
by

simone balondona

on 26 February 2014

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Transcript of Husky Energy SWOT analysis (CRTP group)

Plants and animals of oceans die and settle to the ocean floor.
Over thousands of years, bacterial action and extreme pressure form layers of sediment converting organic matter to oil and gas.
Oil resevoirs are formed when non-porous rock lays above porous rock. The top layer of non-porous rock prevents oil from seeping through and dispersing everywhere.
This is called a trap there are 4 types of traps.
Has a former limestone reef as it's porous rock feeding the reservoir.
AKA: Fold traps, the upfold in the layers of the earths crust form a reservoir.
The salt dome forms an upfold in earths crust not like an anticline caused by tectonic forces.
sco: 4.3.6
Animals can not control what humans are doing
to their ecosystems....... BUT YOU CAN!

* The Upstream involved in oil and gas exploration,
* The downstream segment of the oil and gas industry primarily encompasses the (refining and processing of crude oil, natural gas and derivatives of crude)


Increasing competition
Husky competes with others to:

Acquire additional prospective oil and gas reserves,
Retain drilling capacity and field operating and construction services,
Attract and retain experienced skilled management and oil and gas professionals, Obtain sufficient pipeline and other transportation capacity
Gain access to and retain adequate markets for its products and services.


Environmental Regulations
Numerous laws and regulations ;

The oil and gas industry is also experiencing cost pressures related to increasingly stringent environmental regulations, both in North America and internationally.
These increased cost pressures and environmental regulations may adversely impact the company’s future net earnings, cash flow, and capital projects.

Failure to manage operational risks and hazards effectively could result in unexpected incidents:
personal injuries, loss of life,
environmental damage, property damage,
loss of revenues, fines, penalties, legal liabilities,
disruption to operations, asset repair costs,
This may affect the company’s license to operate. Such events could have a material adverse effect on the company’s operations and financial condition.

Operational Hazard
A world-class reservoir with estimated reserves of 3.7 billion barrels of bitumen.
Husky has a 50 percent working interest in the reserves. Production is anticipated over a 40-plus year life span.
Well Optimization

Substantial subsurface field work included delineation wells, 3-D seismic, core analysis, log analysis, geological modeling, reservoir modeling, production forecasting, and comparisons to industry analogues.
This collection of information is critical to optimize the well placement for recovery of the resource, while enabling the most efficient use of the land and maximum energy efficiency.
In-situ recovery technology called steam-assisted gravity drainage, which is similar to conventional drilling with minimal surface land disturbance. Steam injection heats and mobilizes the bitumen, allowing it to be pumped to the surface more easily.
Environmental considerations are built into every aspect of design, construction and operation of the Sunrise Energy Project.
Emerging technologies have made significant improvements which have enabled the oil sands industry to reduce its emissions intensity by more than 30 percent since 1990.
Using modern, available, and proven technology, Husky will extract bitumen at Sunrise using Steam-Assisted Gravity Drainage (SAGD) technology, which eliminates the need for large tailings ponds and open pit mining.
First Nations and other key stakeholders are actively engaged in consultations around the development and operation of Sunrise to promote best practices in all aspects of resource recovery.
Consultation is carried out through numerous forums including open houses, community events, newsletters and regular meetings with stakeholder groups and Aboriginal advisory committees.
As the project proceeds, Husky will be working to facilitate business and economic benefits for local and Aboriginal groups.
Sunrise Technology
Community

STRENGTHS

Increasing Reserve
* As at December 31, 2012, Husky’s proved oil and gas reserves totaled 1,192 million barrels of oil equivalent to an increase of 1.7% from 1,172 compared to FY2011

THREAT
* Comparing the reserve growth strategy undertaken by the company for
2 years, which was 155%. This reflecting the strong exploration and production activity and at the same time add to its reserve base and increase its production


* The company is adding to its reserves while continuing to advance
a pipeline of projects as it targets an annual production growth rate of
5%–8% through 2017
Strong retail network

* Husky’s integrated strategy helps mitigate volatility in business segments and
secure earnings growth i.e. By focusing on the entire value chain from the
wellhead through to the retail network, Husky has been able to mitigate pricing
risks associated with selling bitumen or synthetic crude oil

* The integrated operations of Husky provide it with opportunities to optimize
its business while minimizing business risks.




The company is one of the major regional motor fuel marketers with 512 retail marketing locations including bulk plants and travel centers with strategic land positions in Canada
and Ontario.



The downstream segment of Husky is engaged in distribution and retail marketing of gasoline,
aviation fuel, diesel, asphalt, ethanol, and related products and services.

Operations concentrated in North America
Sunrise Energy Project
› create approximately 1,800 direct jobs in Alberta for construction and an additional 295 jobs for operations;
› generate an estimated $40 billion in royalties, $6 billion in corporate income tax to Alberta and $8 billion in corporate income taxes to the federal government.
Economic benefits:
Over the life of the project, Sunrise will:
Integrated Operations
Environmental Improvements
End products include: Natural Gas Liquids (NGL), Liquefied Petroleum Gas (LPG), gasoline, jet fuel,
diesel, asphalt, petroleum coke and other by-products


* Husky has further strengthened its retail operations with the purchase
of 98 retail outlets from Suncor Energy in the southern Ontario
market. Having a total network of travel centers, full serve and self serve
retail stations, and commercial bulk plants and card locks in Canada
stretching from British Columbia to the Ontario/Quebec border



Having a strong and expanding retail network gives Husky a competitive advantage.
The strong reserves of the company
added with a high reserves replacement

ratio could result in high levels of production and
improved top-line performance.
Husky Energy Overview
Operations are divided into three business segments:
Upstream
- oil and gas exploration and extraction
Midstream
- oil upgrading, pipeline systems, commodity marketing, electricity cogeneration, oil and gas storage, and processing
Downstream
- upgrading and refining crude oil, and marketing gasoline, diesel, jet fuel, asphalt, ethanol and related products
Plan:
Introduction
Strengths
Opportunities
Weaknesses
Threats
Conclusion
Conclusion
Husky has a substantial portfolio of assets in Western Canada. New technologies are making it possible to economically tap new pools and recover more production from existing reservoirs.
Husky's strategic focus includes an unwavering commitment to process and occupational safety, and responsible and sustainable growth.
Husky Energy Inc. is a publicly traded, large, integrated energy company with interests globally and its head office in Calgary, AB.
* Western Canada's largest producer of ethanol, producing 260 million
liters annually for blending in gasoline. Its ethanol plants in Lloydminster, Saskatchewan, Minnedosa,
Manitoba use non-food grade grain purchased from local producers.

Weakness

Operations concentrated in North America
Husky operates in Canada, the US, China, Indonesia, and Greenland
Global presence is limited with major revenues coming from operations in North America
US and Canada accounted for 98.4% of total revenues in FY2012
competitive disadvantage, because its competitors carry a wider scale of operations
Dependence on joint venture partners
Husky at times establish 50/50 partnerships

1. Sunrise partnership : Operated by Husky and it contributed Sunrise leases

2. Toledo partnership : BP operate and contributed Toledo,OH refinery

3. Liwan projects in China and Madura Strait PSC project in Indonesia – joint venture development with CNOOC

Husky is at times dependent upon its partners for the successful execution of various projects
Project may be delayed in case of a dispute with partners
if partners were unable to fund their contractual share of the capital expenditures, the company may be partially or totally liable for its partner’s share of the project
Sunrise partnership
Toledo partnership
Liwan : Gaolan gas plant, China
Liwan project ,china
Opportunity
Sunrise will use an in-situ recovery technology called steam-assisted gravity drainage (SAGD), which is similar to conventional drilling with minimal surface land disturbance. Steam injection heats and mobilizes the bitumen, allowing it to be pumped to the surface more easily.
Well optimization
Subsurface research and exploration gives Sunrise one of the most comprehensive industry data sets and information regarding reservoir description. Substantial subsurface field work included delineation wells, 3-D seismic, core analysis, log analysis, geological modeling, reservoir modeling, production forecasting, and comparisons to industry analogues
Technologies
Across Canada, over 456,000 jobs are directly or indirectly linked to the construction and operation of oil sand facilities. Every dollar invested in the oil sands creates nine times that amount in economic activity; with one-third of that value generated outside Alberta – in Canada, the U.S. and around the world.
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