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Analysis

Energy M&A update: Q2 2018

As crude oil production fell from Q1 to Q2, plans for enhancing fossil and solar energy power in the United States emerge, as new technologies and opportunities from big business and government departments rose. This Energy mergers and acquisitions (M&A) update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the energy industry.

Energy trends

  • US oil production remains robust in April1: US crude oil production in April dipped slightly to 10.467 million barrels per day (mb/d) from March’s record high output of 10.469 mb/d. Much of this production can be attributed to high output from the Permian Basin, the largest oilfield in the United States. These strong production levels are expected to continue going into the future. In particular, production in the Permian Basin is projected to double between 2018 and 2023.
  • Department of Energy (DOE) invests in fossil energy power systems2: The DOE has chosen 15 projects to receive $8.8 million in funding for R&D projects that will enhance fossil energy power systems. The program is divided up into three areas of interest: sensors and controls technology, innovative concepts for water management in coal power generation systems, and improvements to coal combustion power plants. This funding is part of the DOE’s Fossil Energy Crosscutting Technology Program.
  • Growing Pipeline for Utility Solar Projects3: Utility-scale PV makes up the largest share of solar installations in the United States, with 1.4 GW coming online during Q1 2018. An additional 3.8 GW of planned utility PV projects were procured in Q1 2018, representing the first growth in the utility PV pipeline since Q2 2017. With several large proposals underway, such as Portland General Electric and Rocky Mountain Power’s request for 100 MW production facilities each, analysts expect to see continued growth in the utility-scale PV pipeline.
  • Blockchain technology enters the supply chain4: Blockchain, the technology most known for its use in cryptocurrencies, is becoming increasingly prevalent in energy systems today. A community program backed by blockchain enables the consumer to purchase power directly from local storage or the solar panels of their neighbors and reduce power network constraints at peak times. The idea of a decentralized energy system is appealing, however, further evolution of the regulatory model is needed.

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References

1 Devika Kumar, “EIA: US crude output dips in April to 10.467MMbpd,” Rigzone, June 29, 2018, https://deloittenet.deloitte.com/About/BCPR/US/Pages/Toolsandtemplates.aspx, accessed July 10, 2018.

2 “Department of Energy invests $8.8 million in innovative technologies to enhance Fossil Energy Power Systems,” Department of Energy. June 30, 2018, https://www.energy.gov/articles/department-energy-invests-88-millioninnovative-technologies-enhance-fossil-energy-power, accessed July 10, 2018.

3 “US Solar Market Insight,” GTM Research, June 30, 2018, https://www.greentechmedia.com/research/solar#gs.yLtLJcI, accessed July 10, 2018.

4 David Flynn, “How blockchains can empower communities to control their own energy supply,” PHYS. July 12, 2018, https://phys.org/news/2018-07-blockchains-empower-energy.html, accessed July 10, 2018.

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