Corp. Research Paper - Grade: A+ PDF

Preview

Summary

Corp. Research Paper final project...

Description

Business and Its Environment Section: A03

Miraj Patel

Corporate Research Paper

Bruce MacKeen April 05, 2016

Table of Contents Introduction......................................................................................................................................2 Nonmarket Environment.................................................................................................................3 Integrated Strategy...........................................................................................................................4 Conclusions......................................................................................................................................6 References........................................................................................................................................8

1

Introduction The Canadian oil sands company, MEG Energy Corp. is focused on a sustainable in situ production and development in the southern region of Alberta (MEG Energy, 2016). It recently acquired a high quality resource base that may hold the best in situ resources in all of Alberta. This acquisition will likely make them one of the larger players in the industry with a strong strategic plan. They are positioning themselves to make a real stand for themselves for years to come. The company has built a state of the art facility harnessing an alternative energy source that will become increasingly important as the oil preserves run dry. Oil is essential to our processes today. It is what is used by almost everyone on a daily basis. It helps companies run and is a major energy source. This company is one of the companies that are using advanced technology to find through the oil sands underneath the Earth’s surface to obtain particles that are used to produce this type of energy. MEG Energy Corp. also holds interest in two main assets. These are Stonefell Terminal and Access Pipeline. The Stonefell Terminal is owned completely by the company and is a 900,000-barrel storage facility. It was completed in 2013 and allows MEG to lessen the risks associated with pipeline restrictions. It also allows them to store diluent when the conditions in the market are favourable. There is a proprietary pipeline that connects the terminal to the Canexus Bruderheim rail location. That allows for a train connection to Canada. The Access Pipeline is jointly owned with Devon Energy evenly. It connects their project in Christina Lake to the transportation connection hub in Edmonton. This means that it provides access of their product to many end markets.

2

Nonmarket Environment The term nonmarket environment deals with the political, legal, and social agents that are interacting outside of the company that work with the organization. These are things like the public perception, legal issues, and regulatory concerns (Baron, 2012). One of the nonmarket environment conditions that should be examined is in relations to the public perception of MEG Energy Corp. In 2013, they announced that one of their principle shareholders entered into an agreement with them for 5,000,000 shares of the company (Market Wire, 2013). This large investment in the company shows that the company has a strong public perception. For a company to invest $ 157 million into their company has a solid perception and a positive outlook in regards to what they believe the company will be able to accomplish. Each common share was worth $ 31.40 at the time of purchase. They will still hold 17 % of the shares with the company, but have agreed to sell their shares to this other investor for a large sum. As for the legal concerns affecting the company, the United States Commodity Futures Trading Commission headed an investigation on the top Canadian oil and gas producer, Canadian Natural Resources Ltd and their affiliate BP PLC has entered into a legal showdown. It has also dragged the Alberta Securities Commission and MEG Energy Corp into the investigation. MEG States stated that they hadn’t’ been dealing or trading with the exchange or securities contracts for oil production. They also stated that they were suing the ASC for pursuing the unreasonable search and seizure under the Canadian Charter of Rights and Freedoms. The company stated that it has been a serious and ongoing issue that infringes on their constitutional rights (Cattaneo, 2013). MEG was not a target of the probe, however it was drawn into the issue in 2012. The CFTC in New York ordered that the company show a wider range of

3

records regarding their trade strategies, minutes in the board room, emails, calendars, oil shipments, and phone records. They got a subpoena for these materials MEG stated that the request was time-consuming because it involved “hundreds of thousands of documents” (Cattaneo, 2013). There was even a request for information regarding the employee’s assets. They asked for things like the employees personal expenses, cell phone photos, real estate assets, emails between employees, person tax returns, and their medical and personnel records. MEG was producing 30,000 barrels each day from a gravity and stream assisted project tried to cooperate, while they had never traded in crude oil in the United States with BP or its affiliates (Cattaneo, 2013). In 2012, MEG Energy released the regulatory process for the Surmont Project on their website. The project was targeting at 120,000 barrels per day. This announcement is a great way to look at the regulatory process within the company that may apply in part with other types of projects. This announcement stated their intension to begin the advanced consultation of its regulatory application to own, operate, and build the oil sands facility for production that is designed to facilitate 120,000 barrels each day (MEG Energy, 2012). This was the aforementioned project that would lead them to long-term stability in the market and allow for long-term growth. MEG anticipated that by submitting the regulatory application for the project in the middle of 2012, they would be able to begin operations and were using the facility at the time the legal issues arose. It was one of the reasons why the company could not devote ample time to the overall collection of the data that was being requested. Integrated Strategy MEG Energy Corp developed a long-term growth strategy that will allow them to compete in the market today and in the future (Long-Term Growth Strategy). It includes the large

4

resource base and the strategic midstream assets that will provide them with a cost effective connection to their markets that is also reliable. The oil sands project uses steam-assistedgravity-drainage (SAGD) technology. It is a staged approach to the help manage the company’s capital and their overall operating costs. The system will also allow for the reduction of the company’s impact on the environment. The development methods will cause less detriment to the environment then the traditional methods of mining. The Steam-Assisted Gravity Drainage system will recover the bitumen from the oil sands. It works as pairs of horizontal wells that are stacked are drilled into the reserve around 400 metres below the surface of the land. The well on the top will inject the steam to heat the bitumen up and that will separate it from the sand. This then collects with water in the lower well and then the bitumen is pumped back up to the land’s surface. This separates it from the water and then the water is treated and recycled. The system is repeated. The company integrated effectively and has become a major player in the energy business. They have found the investments, initiated the proper procedures for sustainability, and pushed to find the best ways to reduce costs and therefore, make higher profits. They have chosen the ideal industry to get involved in. “The International Energy Agency reports that global demand for oil will rise from 84.7 million barrels per day in 208 to 105 million barrels per day in 2030,” (Griesly et al, 2010, p. 951). The major issue is that the crude oil reserves are depleting and that means a shift form the conventional oil production to the development of nonconventional methods will be important. Oil is extracted from the oil sands and is used. The company was able to create the storage facility space as well that can be used to hold the tailing water until it can be recycled, because the Alberta Environmental Protection and Enhancement Act of 1993 has a zero-discharge policy (Griesly et al, 2010, p. 951).

5

Conclusions MEG Energy Corp has made a name for themselves because of their long-term sustainability efforts. The world’s oil reserves are depleting and that means that these alternative methods must be used. They have found a way to create a facility and a system that can pull the oil sands and the chemicals that are needed from beneath the surface to preserve the natural resources that are available and needed to ensure the continuation of business processes as it is. MEG Energy Corp needs to continue to push towards sustaining their current assets while pushing to open up more facilities that will be able to create similar results. It will be essential for them to make sure that they are following regulations and securing investments. Recommendations Further research should be done on the overall process. There was an article written by Weinhold in 2011 regarding that there was some hard evidence proving that there were contaminants in the oil sands (Hrudley, 2011). The report stated that the Royal Society of Canada report lacked some important evidence in regards some missing data. The air quality problems extended beyond the odor issue. This can be a future issue that the company has to consider. With the overall issues regarding global warming and the overall release of contaminants and toxins into the atmosphere currently, it is safe to say that this will become a concern before long. The company has to find a way to determine and counteract any of the possible issues that may arise from the processes that are used to retrieve the chemicals and particles that are needed in the process. The consolidation of the clay particles in the water trailings are a major problem to the management of the oil sands tailings ponds in Alberta (Siddique et al, 2014). The microorganisms that are indigenous to the tailings pond have been studied and changes have occurred. The microbes alter the pore water chemistry and increase the consolidation of mature

6

fine tailings consolidation. (Siddique et al, 2014). The pore water may egress as a result of the processes and this can have lasting effects on the Earth and the organisms, wildlife, and even humans in the area. It is vital that more research be conducted regarding the overall processes to consider whether or not they are valid, safe, and beneficial to the future environment. It is essential that the corporation spends time focusing their attention on building a strong system that will allow them to continue to monitor every process and regulate how they are conducting various processes to stay in accordance with the overall expectations of the local and international regulatory bodies, especially as more and more research is done regarding the possible contaminant in the oil sands. Also, as the company deals with the continued research regarding what these new innovations may mean for the company and their future processes.

7

References Baron, D. P. (2012). Business and its envionmnet. New Jersey: Pearson.

Catteneo, C. (2013). U.S. probe into Canadian Natural, BP unit sparks oilpatch legal shutdown. Financial Post. Retrieved from http://business.financialpost.com/news/energy/oilpatchlegal-showdown?__lsa=294d-5083 Giesy, J. P., Anderson, J. C., & Wiseman, S. B.. (2010). Alberta Oil Sands Development. Proceedings of the National Academy of Sciences of the United States of America, 107(3), 951–952. Retrieved from http://www.jstor.org/stable/40535580 Hrudey, S. E.. (2011). Oil Sands Contaminants. Environmental Health Perspectives, 119(8), A330–A330. Retrieved from http://www.jstor.org/stable/41233435 Market Wired. MEG Energy Announces Warburg Pincus $ 157 Million Secondary Offering. Retrieved from http://www.marketwired.com/press-release/meg-energy-announces-warburg-pincus-157million-secondary-offering-tsx-meg-1856351.htm MEG ENERGY. (2012). MEG Energy announces launch of regulatory process for Surmont Project. Retrieved from http://www.megenergy.com/news-room/article/meg-energyannounces-launch-regulatory-process-surmont-project MEG Energy. (n.d.). Steam-Assisted Gravity Drainage (SAGD). Retrieved from http://www.megenergy.com/operations/steam-assisted-gravity-drainage-sagd Siddique, T., Kuznetsov, P.,Kuznetsova, A., Li, C., Young, R., Arocena, J., & Foght, J. (2014). Microbially-accelerated consolidation of oil sands tailings. Pathway II: solid phase biogeochemistry. Retrieved from

8

http://journal.frontiersin.org/article/10.3389/fmicb.2014.00107/abstract

9...