Cranes work in the water at the Kitimat LNG site near Kitimat, in northwestern British Columbia on April 13, 2014. British Columbia is on the brink of an energy boom. Domestic and foreign companies are looking to build two oil pipelines, multiple natural
Cranes work in the water at the Kitimat LNG site near Kitimat, in northwestern British Columbia on April 13, 2014. British Columbia is on the brink of an energy boom. Domestic and foreign companies are looking to build two oil pipelines, multiple natural gas lines and a dozen liquefied natural gas plants to gain access to the massive Asian market and reduce their reliance on U.S. Buyers. Reuters/Julie Gordon

Notwithstanding the steep slump in oil prices, the global energy and resources consulting market is still growing and clocked a healthy six percent growth at US$14.7billion (AU$20.12 billion) in 2014, said a recent study.

The Source Information Services (Source) in a report said the low oil prices have not stopped clients in the energy sector from hiring consultancies to plan out strategies. In fact, low energy price is positively impacting the demand for consulting services, reports Commodities Now.

"Demand in the energy and resources market is holding up in 2015, but we expect growth to decelerate through to at least 2016, when consultants may start to feel the impact of lower oil prices more acutely," senior analyst Alison Huntington of Source said.

Rising demand

The study report said consultants are experiencing a surge in demand for technology and M&A services (merger and acquisition) as companies are exploring ways to address the depressing market conditions.

“A key question - that’s very hard to answer - is how long energy clients will carry on spending on consulting. Work in this sector tends to be capital intensive and long-running, but once current programmes come to an end, will cash-strapped clients shell out again on major investments?” asked Huntington.

North American market

The report looks at the consulting markets in various geographies. North America is keeping the overall global picture bullish and commands half of the global market. In 2014, it was in nearly 10 percent growth and a value of US $6.8 billion (AU 9.31 billion). Among the main market drivers are the thriving utilities sector, energy sector companies and the sunrise opportunities in shale exploration.

Utilities companies are offering lots of work to consulting firms in the US, as the North American energy sector is facing the effects of low oil prices and apprehending lower levels of growth in 2016, which may impact the global energy and resources consulting market.

UK market

Regarding UK consultants, the study said there is a wave of assignments that seek solutions on cost cutting and project efficiency. Noting that the odds in extracting oil from the North Sea are relatively high compared to other global markets, the study said, it is presenting consultants the opportunity to offer solutions for reducing costs. One significant contributor to consulting growth has been the planning process for long cycles. Consequently, the market grew 6.1 percent to US$816 million (AU$1bilion) in 2014.

Role of utilities

Within energy consulting, the source report highlighted utilities as the strongest sub-sector, with a growth rate of 8 percent to US$3.4 billion (AU$4.65), thanks to rising competition, regulation, green technology, and smart metering.

The consulting sector has been positively impacted by the introduction of smart meters in European Union, mandating 80 percent of customers to have smart meters for electricity by 2020.

In the UK, all households have been directed to install smart meters by 2020 and Italy has already implemented electric smart meters and working on gas roll out. The demand for consulting from energy and resources industry is high as regulatory requirements and compliance have increased.

Two digit growth

Yet another sub segment, financial management and risk consulting service market grew 13 percent in 2014. It was more than about meeting deadlines or seeking compliance but was also about reducing the cost of compliance, innovation and technology, plus new business strategy. In many mature markets, clients are under pressure to show the regulators that they are competitive, customer-friendly and offering fair prices.

Trenegy goes to Denver

Meanwhile, Houston-based Trenegy Inc. announced its expansion into Denver market, marking the energy-focused management consulting firm's first out of state expansion.

“A number of Denver-based companies have expressed interest in our services in recent years,” said Bill Aimone, managing director of Trenegy, reports Bizjournals.

He said the firm honoured the clients’ need for face-to-face contact irrespective of geographic barriers. Trenegy's Denver client base is almost similar to its Houston clients' profile.

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