Australian CEO Jack Browne knew the answers were in the data, the question was, how to find them?Data Science
Jack Browne is the Australian CEO for a global energy provider. After operating for over 50 years, this organisation has amassed a huge amount of data and Jack was sure they could utilize to better inform their decision making.
Prices in energy markets are formed based on supply and demand, but predicting this is fraught with difficulty. Jack knew if natural resource commodities are priced too low, then profitable opportunities are missed.
On the other hand, if the price is too high, there will be no buyers for the commodity, leaving the company facing unhappy shareholders.
Jack knew a long-term strategy was needed for developing new resources and predicting price fluctuations.
Jack connected with Jose who implemented some econometric models, to gain a solid understanding of the underlying factors behind the price fluctuations for the commodities under study.
Jose went on to develop a modelling tool that allowed the business to map different futures for varying conditions. As a decision maker, Jack is now able to assess the risk involved in design and operation decisions and predict the need for the development of future assets.
The first thing Jose did was to explore the existing data, to get a solid handle on the underlying factors that were influencing the price fluctuations for the commodities under study.
After this model has been successfully fitted and validated, he used production projections from known active deposits to create a linear programming model. This model helped to identify the flows between suppliers and consumers in worldwide operations.
The model impacted the operation of the organisation, providing them with critical information. This tool reveals what can be expected from an equilibrium price perspective. Additionally, it provides data modelling to predict outcomes for different futures, enabling strategic decisions to be taken for the development of current and future assets.