Alberta Department of Energy Improves Forecasting

Energy commodity price volatility and production variability in the Province of Alberta can cause wide swings in provincial royalty revenue streams. A $5 barrel of oil equivalent variation in price equates to a royalty revenue fluctuation of US$695 million. With SAS, the Alberta Department of Energy (ADOE) has the system stability and analytical capability to provide the decision makers with information and lead time to respond to changes.

With SAS, the ADOE gets a business intelligence platform solution that provides the means to migrate from the existing Microsoft Excel-based forecasting model. SAS BI Server gives ADOE analysts the ability to build analytical models rapidly; publish reports; and manage data content accessibility via a SAS client, a Web browser or Microsoft Office at the user’s desktop level with greater accuracy and efficiency and with less risk. 

The revenue forecasting process at the ADOE used to be time consuming and manual, says Barry Thompson, Director of Scenarios and Forecasting. “Although the forecasting process had been sound, with efforts consistently made to improve the models employed to prolong their lifespan, there was a growing concern that the limitations of the spreadsheet models were being tested and a more robust methodology needed to be considered,” he says. 

Primary and secondary models contain dozens of working papers with thousands of cell calculations; raw data sourced from one working paper is processed, manipulated and linked to other working papers with the results again manipulated. The resulting multitude of calculation code had the potential of concealing errors that could contribute to a significant risk of data corruption and inaccuracies of revenue forecasts. 

“We were concerned about the limits of Excel and the linkage between the worksheets,” Thompson says. “Forecast analysts were forced to spend 80 percent of their time conducting data collection and integration and only 20 percent on forecasting and what-if scenario analysis. The Excel format would not allow for simultaneous updating of the model, which made updates more time consuming. And that required greater communication and more information sharing in the forecasting group.” 

The forecast process methodology was compounded by demands to provide forecast stability and an increasing inability to keep pace with requests for updates and what-if analysis prompted by the unprecedented levels of price volatility. The forecasting department needed increased automation and enhanced analytical capabilities. 

Using SAS, the ADOE can now take advantage of data loading and storage technologies to form an integrated enterprise-wide system capability. SAS provides a platform with built-in, out-of-the-box functionality that enables users at all levels of the organization to effectively manage data, build analytical models and publish reports at the desktop level in a timely manner. 

An integral part of the platform is SAS Enterprise Guide -- a simple-to-use, wizard-driven Windows application. The analytical workbench enables users to easily access, manage and transform data, perform analyses, and build summaries and reports with high-quality SAS graphics. SAS Web Report Studio is a query and reporting application that gives users the ability to view, author and share reports over the Web. 

The benefits of the SAS solution include:

• Increased analyst productivity through automation.
• Enhanced ability to quickly respond to requests for updated forecasts.
• Faster response time through self-serve access by stakeholders.
• Better insights into the volatile energy marketplace through advanced analytics. 

“We can already see that the application will process more quickly,” Thompson says. “And the powerful analytic capability of the solution will allow us to do scenario analyses that could not have been contemplated with our prior methodology.”

Working with SAS and its knowledgeable staff of professionals made the implementation run smoothly, says Don Keech, Assistant Deputy Minister, Mineral Development and Strategic Resources. “The project was delivered on time and on budget,” Keech says. “I would not hesitate to recommend SAS to my colleagues.”

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