Encana Corporation is the largest producer of natural gas and oil in North America. However Encana often appears in the headlines is over a controversial practice of removing natural resources from the ground called fracking. The Western Canada Wilderness Committee and the Sierra Club of B.C came together to form coalition to express their concerns about the use of water during the fracking process. The coalition declares that the B.C.’s Oil and Gas Commission has allowed multiple short term approvals to allow Encana to drain millions of litres of fresh water. The Coalition was pushing for regulatory changes to the Water Act stating that granting multiple short term approvals to Encana for the same project is no different than exceeding the two year time frame.
Environmental protection, regulation and media coverage are just few nonmarket issues that are high on Encana’s agenda that require extensive managerial attention. The nonmarket environment can be portrayed by Baron’s “Four I’s” (Baron, 2012, p.5) seen the breadth of the report. Encana’s integrated their nonmarket strategy to align with market strategy, not only to become the profitable oil and gas producers but also become one of most sustainable producers as well.
As there is a lot of skepticism around Encana’s practices I would recommend Encana could raise the bar for fracking regulations. This could be done through lobbying key officeholders to change the current regulations for all firms. My second recommendation for Encana would be to work with NGOS to find better solutions together for all natural resources.
Table of Content
Nonmarket environment: Regulatory Changes 5
Integrated Strategy 7
Conclusion and Recommendations 9
Encana Corporation is the largest producer of natural gas and oil in North America. Originally Encana was formed in 2002, from two Canadian independent oil and gas companies. Encana headquarters are located in Calgary AB, with operations across Canada and the United States. Encana is a fairly stable company with a Stand and Poor rating on unsecured debt of Baa2. Encana experienced a record breaking profits in 2014, even with the decrease in oil prices in the last four months of the year.
However Encana has been in the news headlines over the last few years for a number of reasons. One of those reasons Encana is the headlines is over a controversial practice of removing natural resources from the ground called fracking. At some point you may have heard of fracking but not quite understand it, on Encana’s website they define fracking for us. “Hydraulic fracturing is a controlled operation that pumps a mixture of fluids (water, sand and a small amount of chemical additives) at high pressures into the wellbore and into the target formation. As the mixture is forced into the surrounding rock, the pressure causes the rock to fracture. These fractures create pathways for the gas to flow to the well and up to surface” (Water use and Hydraulic fracturing n.d para. 5).
Currently Encana has two sites located in B.C, one being Horn River in northern B.C, Horn River is what Encana calls a Base asset, and only 25 percent of capital investments are allocated to all base assets. Although the other location Montney located between B.C and Alberta is a site Encana calls a growth asset. Encana’s growth assets locations is where they are focusing 75 percent of its capital, to in turn generate competitive returns.
One group formed by a coalition: The Western Canada Wilderness Committee and the Sierra Club of B.C is concerned with the use of water during the fracking process. The coalition declares that the B.C.’s Oil and Gas Commission has allowed multiple short term approvals to allow Encana to drain millions of litres of fresh water. “Activists typically seek to change practices in an industry but targeting an individual firm rather than an industry is preferred because the threat…