Out of the Gates in 2019 - Project Cost Data and a Permian Dashboard from LawIQ
Whether you’re a financial or commodities analyst, VP of commercial, FERC project manager or rate analyst, we are grateful that you, our partners, have collaborated with us in expanding our product offering. We are committed to minimizing your risks, reducing data collection efforts, and maximizing your project and portfolio returns. Today’s Insights details our new project cost module, previews our 2019 product roadmap, including LawIQ’s Permian Project Dashboard, and recaps our 2018 service enhancements.
Cost and Permitting Predictability - Can’t Have One Without the Other
In Pennies from Heaven - Rising Costs May Lead to Financing Issues, we noted the most pressing business concern facing project developers -- as explained by several pipeline CEOs -- is the ability to improve permitting and project cost predictability, which, as every developer can attest, are closely connected. As cost estimates become increasingly variable, most recently due to permitting and litigation, there’s a greater likelihood early-stage projects will not make it in front of the regulator or generate expected returns.
At LawIQ, we’ve listened carefully and developed intelligence to help improve the predictability of project costs, so our partners now use cost data, analytics, and modeling for:
- Peer-to-peer benchmarking to support internal estimating
- Contractor selection and negotiations informed by prior project performance
- Financial modeling of the impact of capex on cash flows
- Business development support for developers and contractors
Delivering solutions to address these issues involves a three-stage effort. We’re excited to release Stage One - following months of acquisition and analysis, our web platform now contains past project estimated cost and final reported costs, itemized and exportable.
Stage Two standardizes key cost line items to allow deeper dives into our cost database by viewing standardized analytics, such as dollar per inch-mile, or searching by cost line item (e.g., “materials,” “labor”) across all projects.
Stage Three involves integrating project schedule modeling and new cost models to provide a window into cost variability during project development, an area without visibility during the three-to-five year period. Increased transparency allows project and regulatory teams to revise payback periods, enable meaningful negotiations with shippers, and allow financial parties to more precisely model returns.
Permian Dashboard - Labor No More
We’ve all seen the same Permian chart. You know the one - a production curve line overlaid on pipeline capacity. Squabbling by market analysts then ensues. But based on what? Who verifies those takeaway capacity expectations? Which project is actually making the most progress? Does FERC have a moratorium on approving petitions to set initial tariff structures for new services on interstate pipelines? For example, the planned 900,000 barrels-per-day EPIC Crude Pipeline reported this perceived moratorium has called into “jeopardy” its plans for when it can place the pipe in service.
We have heard the call for deeper analytics of crude, NGL, and gas pipeline project developments in the Permian so you can anticipate risks and opportunities tied to differentials and production bottlenecks. Monitoring these developments presents a real challenge (Texas doesn’t help much), but we believe the truth is out there and offer a promising new perspective: a proprietary combination of permitting, land acquisition, and tariff data distilled into key scoring metrics.
To deliver these viewpoints most effectively, we acted on feedback from all of our value chain partners (project developers, commodities desks, engineering and construction, and financial investors). Our release, planned in a few weeks, includes both contextual analysis and supporting data. Interested to learn more? Send us your specific questions.
Here’s a screenshot of the Beta version of an NGL summary from our Permian Dashboard:
Other 2018 Recent Releases and 2019 Planned Features
Our growth is associated with our ability to increase the delivered value of our service to our partners. To do so, we focus on our technical and industry expertise, coupled with an enterprising focus, to create new value.
Examples from 2018:
Our widely-used proprietary model forecasted the impact of the Tax Cut and Jobs Act on the pipeline industry, as described in LawIQ’s Tax Cut White Paper. Shortly thereafter, we pre-populated the FERC Form 501-G filings:
and designed a model to evaluate the various decisions made by pipeline companies to alter rates - capital structure, ADIT time frames, etc.
We also increased our expertise in order to expand the depth and breadth of our weekly Insights, viewpoints on regulatory, permitting, litigation and policy matters impacting the oil and gas pipeline, LNG, and financial markets. Here’s a picture of our team - We’re Hiring!
In 2019 we’ve got a lot in the hopper, including an LNG “second wave” dashboard for the next group of pipelines and terminals, highlighting commercial activity, regulatory developments, and temporal analytics.
For our gas marketing and commodities customers, we’re rolling out a daily market share analytics report, called electronic bulletin board transactional activity (we love acronyms, so thought “ETA” would be appropriate). Commercial teams can now effectively monitor the competitive landscape, deals they missed, and contractual terms surrounding key services, such as park and loan and capacity releases.
Insights Coming Soon
- Deep dive on Stack/Scoop
- Permian Dashboard product launch