Success Stories - Strategic Planning
Strategic planning addresses current and emerging industry trends or corporate goals, either of which can change the marketplace. Our solutions are a good fit for meeting strategic planning needs because they are designed to enable customers to analyze the markets with the new landscape after the changes, rather than merely applying historical data representing a previous landscape. There are other benefits to our solutions, such as the easy customization, that enable users to model numerous combinations of potential future events. This flexibility, along with the transparency of our solution, enables customers to better understand the interrelationship of the many factors that contribute to market behavior.
Many of our customers prefer to remain anonymous. We respect this preference and have taken care to give examples of strategic planning applications without providing names or geographic detail. We hope that these examples will help companies who don't know us to better understand how our solutions can help them, and also to see the deep experience of our people, so that they will give us the opportunity to discuss their needs and propose how we can help.
The success story selections listed below provide examples of projects and customer experiences with Deloitte MarketPoint and also with MarketPoint Incorporated and Altos Management Partners. The history goes back a few decades, so in some instances the use cases refer to precursor versions of MarketBuilder and its current suite of models. As MarketBuilder has evolved over time it has been designed to better enable our customers to be more self-sufficient in utilizing our technology in their decision-making processes.
Selected Success Stories
MarketBuilder customer - North American market analysis
A large U.S. producer and transporter of energy in the Southeastern U.S. licensed MarketBuilder for internal use and also asked Altos to conduct extensive ongoing market analysis of North American energy, both in its own region of operation and other regions.
MarketBuilder customer - North American and European market analysis
One of the largest U.S. power and natural gas companies licensed MarketBuilder for internal use and engaged Altos to analyze its natural gas pipeline, upstream, marketing, and trading businesses to help with decisions around operations and potential acquisitions. In addition, Altos provided similar market analysis for its European natural gas businesses.
Detailed analysis for operational and acquisition decisions in Pacific Northwest
A Northwest U.S. natural gas distribution company used MarketBuilder to build a disaggregated model of the Pacific Northwest supply, pipeline, storage, distribution, and consumption system. The degree of disaggregation was sufficient to distinguish all the major assets and portions of assets (e.g., pipeline segments) that affect gas prices, gas volumes, and profitabilities throughout the Pacific Northwest, taking into account the interconnections of that region with the other regions of North America. The company used this analysis in numerous critical operational and acquisition decisions.
Market analysis for asset management and trading
A large U.S. oil and gas company engaged Altos to analyze short-term gas price and storage valuation. The results of the analysis were utilized in making key decisions by their asset management business and also their trading and marketing business.
Fundamental analysis for operational decisions for European natural gas and power
A large U.S. utility engaged Altos to provide analysis which would be used to support decisions in their natural gas business that emanated from its acquisition of an electrical generating utility in Europe. Altos used its Western European Gas Model to perform fundamental market analysis for the utility's use in making decisions on gas acquisition, pipeline entitlement acquisition, and gas marketing strategy in Europe.
Fundamental market analysis for MBTE production
A large integrated oil and gas company retained Altos to provide the fundamental market analysis the company would use in its determination of whether they should produce MTBE and market it into the California market. Altos developed a specialized model for the analysis and the results estimated that the MTBE market would be profitable. Using this analysis in their decision making process, the company decided to move ahead with the venture. The client has commented that the success of the venture was in line with the estimates Altos generated.
Model development for analyzing the supply chain for petroleum in California
The California Energy Commission hired Altos to build a thorough supply-refining-transportation-demand model of the crude oil and products businesses in California. The model, which came to be known as the California Petroleum Economy Model (CAPE), was used by the Commission in its design of the entry of MTBE into California, to forecast the entry and efficacy of alternative automobile designs (e.g., electric and natural gas vehicles), understand how refineries might have to evolve as North Slope oil declines in California, understand possible tradeoffs between importing refined products versus producing them in California, understand the potential impact of alternative growth scenarios in transportation demand, and a number of other policy questions.
Altos' CAPE model is an industry leader in considering the crude-to-finished product-to-final use supply chains in the California market and how they combine to determine price and price differentials.
North American oil and gas portfolio optimization
A leading global energy company engaged Altos to value a large portion of their North American oil and gas asset portfolio. Based on feedback received from the client the use of the Altos results in their decision making, enabled them to optimize their portfolio, including selling the less valuable portions.
Profitability of a vertically integrated gas-to-electricity play and mark-to-market
A global energy company retained Altos to analyze the economics around monetizing the natural gas from one of its basins. The company wanted to determine which would be the most profitable, selling the gas directly to the market or building a cogeneration facility to use the gas and instead sell the electricity and steam to the market.
The Altos analysis helped them to ultimately decide to build the cogeneration facility which, based on published results, has proven to be a profitable alternative. Altos also helped them to mark-to-market all of the internal and external assets of the project.
Assess the feasibility of power plant project and optimize operations
A Southern U.S. utility asked Altos to help perform the analysis for assessing the feasibility and then operating a facility consisting of multiple 100 MW simple cycle combustion turbines. The utility owns and operates the facility in the Southwest. The project combines unique power purchase agreements and operating plans with low cost gas which has appeared to create profitable, low-cost electric energy and capacity.
Fundamental analysis to assess the price risk of pipeline expansion
A large U.S. natural gas producer and pipeline company retained Altos to analyze expected price reductions that might result from the company's pipeline system expansion in southeastern U.S. and the Middle Atlantic. Altos, using its North American Regional Gas (NARG) Model, helped the company assess the market and develop an optimal strategy. The company took a “short” position with regard to the system expansion to offset the long-term price risk that the expansion might impose on the market.
Trades based on valuation of Henry Hub to Florida basis swaps
A large U.S. energy trading company, recognizing the increasingly tight demand causing volatile prices in Florida, retained Altos to value basis swaps from Henry Hub to Florida, taking into account not only the traditional gas basis differential but also the growing prospects for oil-gas substitution in Florida. Altos' analysis helped them understand the fundamentals of oil-gas substitution, and the company was able to make strategic decisions regarding basis differential trades that according to the client have been very profitable.
Contracting and purchasing system for gas distributors to balance firm against spot price
One of the largest U.S. gas distribution companies hired Altos to help them address the fact that spot price had fallen below their acquisition price. Altos developed a suggested definitive gas contracting and purchasing system that was designed to allow the company to balance firm against spot gas; i.e., to balance the risk of shortfall against the high cost of firm supply. The system developed on that project, called the “Contract Mix” program, was later delivered to some 40 companies in the industry to help them manage their gas purchase contract portfolio.
Analysis for deciding whether to impose a tariff against imported oil
A U.S. presidential Administration Department of Energy asked Altos to quantify the anticipated economic losses and gains if the country were to impose a tariff against imported oil designed to subsidize domestic production. Altos used its World Oil Model (updated version in use currently in MarketBuilder) to quantify the economic impacts such a tariff could cause. The analysis results revealed a potential huge loss, which was used by the administration to decide not to support such a tariff. The Altos analysis was selected over alternative analysis advocating imposition of the tariffs. History has demonstrated that Altos' analysis was on point.
Deciding fixed price long-term natural gas contracts
A large U.S. oil company engaged Altos to help them with decisions concerning a number of fixed price natural gas sales agreements. The company had the option to sign long-term agreements guaranteeing them the current price well into the future. They needed to decide whether to lock the current prices or “float” prices into the future. Altos' analysis helped the company decide to secure a series of sales contracts, retaining the high prices that had ensued over the previous years and avoiding the price erosion that was about to ensue.
Natural gas strategy
A North American oil and gas company hired Altos to assist them to assess whether they should emphasize a growing gas business or stick to producing heavy oil and liquids. Altos evaluated their natural gas assets on a forward price basis in the Canadian and U.S. basins and provided an analysis that helped the company identify and pursue the most appropriate gas strategy, given their asset position.
As used in this document, ‘Deloitte’ means Deloitte LLP (and its subsidiaries). Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.