A new report by leading global consulting market analysts, Source Information Services (Source) reveals that the energy and resources consulting market grew by 5.7 per cent in 2013 to over $10bn.
After several years of slow growth, this more positive picture can be partially attributed to the strong growth in the US which, with a value of $4.4bn, makes up 39 per cent of the global energy and resources consulting market. The Source report also found that the European energy and resources consulting market was worth $3.65bn.
But while the falling price of oil has so far had little effect on the amount consultants are used — instead simply leading to them being used for different things, like sophisticated operational improvement services — there are concerns that it may start to do so soon.
Alison Huntington from Source Information Services (Source) said: "Energy and resources clients' propensity to spend on consulting depends on the state of commodity prices in their given market, creating volatility when prices significantly rise or fall. When commodity prices are high and climbing, as they were for much of the last ten years, demand for consulting is high, however when prices plummet, consulting is often one of the first things to be cut. With oil prices currently at a five year low, there is concern from many consultants in the oil sector."
A senior figure in one oil major commented: "What's currently driving change is the need to bring costs down. It's about getting as much oil out of the ground as possible while spending as little as possible on anything else."
Valued at $3.29bn, technology is by far the biggest service in the global energy and resources consulting market — making up 33 per cent of all consulting spend. This is followed by operational improvement ($2.64bn) and financial management ($1.94bn). The report says that technology is set to continue growing, not just because it enables clients to improve productivity and cut costs, but also because it's becoming a driver of change in its own right. Big data and digitisation are having a particularly revolutionary effect as clients are eager to collect and analyse vast amounts of data that simply weren't available before.
Environmental issues and consulting...
Prior to the 2008 financial crisis, environmental consulting seemed set for huge growth in the energy and resources sector, but these intentions largely evaporated as the global economy collapsed, with clients going into survival mode and green proposals moved to the bottom of their agendas.
However, following a recent string of high profile disasters — the Deepwater Horizon oil spill being chief among them — concerns over environmental responsibility have moved to the forefront of the energy and resources industry. Government, citizen, and even shareholder expectations of the level of care energy and resources companies should take in performing their work have significantly increased, and the industry has been compelled to respond. The report says that some of those changes have been voluntary while others have been forced, but it's clear that environmental considerations are changing the way the industry works — and that means big opportunities for consultants.
Alison Huntington from Source added: "Given the big advantages environmental consulting can have on both reputation and the bottom line, we expect growth will be very robust over the next few years. Currently, the market is dominated by a few small consulting firms, engineering firms, some traditional consulting, and an abundance of specialist firms, but it could be about to get a lot bigger. It's got all the pieces in place to be a blockbuster consulting service: it's a substantive yet comparatively 'new' issue; it resonates with society; and there is plenty of money to be made, and saved, by it."