Technology advisory of the year: KWA Analytics

Energy Risk Awards 2021: Tech advisory hits aggressive targets as it expands into complex energy transition projects

Phil Walsh, KWA Analytics

In a year of unprecedented disruption to global commodities markets when numerous projects were shelved, delayed or significantly altered, KWA Analytics – a specialist advisory firm – was able to keep ongoing client projects running, adhering to some aggressive pre-agreed timelines. It also pushed on with its own growth plans, opening a new office in Mexico and adding clients in key commodities markets such as Canada.

The Covid-triggered collapse in oil prices in March 2020 overhauled the economics of many projects and caused oil firms to reassess priorities. But, in many cases, it became even more important to push on with technology projects that would provide the company with better visibility of their risk exposures and better tools to manage and mitigate them.  

An example of this was a greenfield project that KWA was working on in March 2020 with a client in the upstream energy sector. “The collapsed energy prices caused a big reassessment of strategic projects and also of how those projects could be delivered remotely,” says Victor Yu, director of KWA Analytics US. “We worked with the client’s IT and user groups to help them make the case that having an ETRM [energy trading and risk management] system would be key to their business given the market volatility at the time, and that the project could be successfully and effectively delivered by a remote project team.”

While KWA employees often work remotely on projects with clients around the world, having all the staff at client organisations also grappling with remote working added another layer of complexity to project management. However, even projects with face-to-face elements that hadn’t started before the pandemic went ahead.

For example, a European client had signed a new greenfield ETRM project with KWA just before Covid hit.

“KWA and the client, working together, were able to quickly and successfully adapt to a fully remote working arrangement for the remainder of the project,” says Phil Walsh, director of KWA Analytics. All of the pre-agreed project deadlines, which were quite aggressive, were met – even while all involved were working entirely remotely, he adds.

Another significant project completed by KWA Analytics in February 2021 saw the firm working on portfolio optimisation with US liquefied natural gas company Cheniere Energy. Walsh says that the company needed a more efficient way to move data from upstream systems to its portfolio optimisation model, which is used to calculate base cases and construct scenarios to aid decision-making and risk management.

Data required to optimise the portfolio, such as vessel specifications, may not have been maintained regularly in the past. As such, KWA was involved in cleaning this data and establishing processes to ensure quality information was being fed into the model. It also developed a new front-end dashboard from scratch, providing a way to display the scenarios intuitively for various stakeholders.

KWA is also increasingly involved in projects relating to the energy transition. Supporting companies’ transformation to the low-carbon economy is a fast-growing and high-value business area for the company, according to Israr Ahmed, director at KWA Analytics.

The firm’s work in this area typically involves advising clients on how to change their IT landscapes to support such transformations. For example, Ahmed is currently working with a large oil & gas company that is pivoting to power and needs to consider issues such as procurement and bringing new power stations online, as well as how to model and finance these assets and the considerations around operational needs. “We then work with them to overlay an IT strategy that’s going to support the solutions needed to make sure the company can meet this new business strategy,” he explains.

Similarly, in the environmental compliance markets in the US, last year KWA advised on and provided the technical architecture design for a client that needed to manage compliance credits (in this case, Renewable Identification Numbers (Rins) under the federal Renewable Fuel Standard) relating to its US refined products business. This particular company had previously managed this area of compliance off-system on spreadsheets without integration with the firm’s risk management system, according to Fred Reimer, director of KWA Analytics US.

“There is a growing need for solutions in the market to handle the complexities of how compliance credits are managed [alongside] the related liquids, which can either generate the credits or create deficits with regulatory bodies such as the US Environmental Protection Agency,” he says. “We’ve found that no out-of-the-box CTRM solution exists for this yet, so we recommended and helped design an in-house solution for this situation. The need to accurately manage these credits is only growing, as many states in the US develop their own programmes like California has done with the Low Carbon Fuel Standard.”