Caprica Energy and its Choices

24 Pages Posted: 2 Jun 2017

See all articles by Jared D. Harris

Jared D. Harris

University of Virginia - Darden School of Business

Samuel E. Bodily

University of Virginia - Darden School of Business

Jenny Mead

University of Virginia - Darden School of Business

Donald Adolphson

University of Virginia - Darden School of Business

Brad Carmack

University of Virginia - Darden School of Business

James Rogers

University of Virginia - Darden School of Business

John Malek

University of Virginia - Darden School of Business

Abstract

Jane Barrow, CEO of Caprica Energy, must recommend to the board which of three potential "unconventional" natural-gas development sites in different parts of the United States the company should pursue. The case takes place in January 2011, when the "low-hanging fruit" of natural-gas production in the United States had essentially been picked. All three of the potential sites (shale, coalbed methane, and tight sands) would require hydraulic fracturing, a process of removing gas that was formerly considered inaccessible by injecting water and chemicals into the ground. Because of emerging concerns about the potential harm "fracking" can do to drinking water, Barrow must not only analyze which site might be most profitable but also what the potential risks to the environment and area residents might be.

Excerpt

UVA-QA-0765

Rev. Jan. 10, 2014

CAPRICA ENERGY AND ITS CHOICES

As she got off the phone with Milo Peterson at the Geology and Science Institute, Jane Barrow, CEO of Caprica Energy, tried to reconcile the information she had just received with a conversation she had had earlier in the week. In that previous conversation, Barrow had spoken with Douglas Brown, a manager at a petroleum-industry organization, as she tried to finalize her thoughts on an impending decision. To momentarily distract herself, Barrow looked at the pile of papers and geographical charts on her desk. They contained information and analysis of the various options her independent natural-gas and oil company was faced with as it looked to expand its resources and increase production. Barrow's job over the next 48 hours was to prepare a recommendation for the company's board of directors. Caprica had three development possibilities, each with its own potential risks and rewards, and Barrow and company management, as part of their analysis and presentation, had to rate the three possibilities for extracting what was known as unconventional gas: shale, coal bed methane, and tight sands. It was January 2011, and the “low-hanging fruit” of natural-gas production in the United States had essentially already been picked. Caprica, like many other oil and natural-gas companies, was now considering expanding its use of hydraulic fracturing, also referred to as “fracking” or “frac'ing” to identify and develop gas supplies that formerly were considered inaccessible.

. . .

Keywords: quantitative analysis, decision analysis, hydraulic fracturing, environmental issues, stakeholder management, natural gas, uncertainty, ethical issues, risk analysis, uncertainty, probability, moral frameworks, decision tree, Environmental Protection Agen

Suggested Citation

Harris, Jared D. and Bodily, Samuel E. and Mead, Jenny and Adolphson, Donald and Carmack, Brad and Rogers, James and Malek, John, Caprica Energy and its Choices. Darden Case No. UVA-QA-0765. Available at SSRN: https://ssrn.com/abstract=2975135

Jared D. Harris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://faculty.darden.virginia.edu/harrisj

Samuel E. Bodily

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4813 (Phone)
434-293-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/bodily.htm

Jenny Mead

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Donald Adolphson

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Brad Carmack

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

James Rogers

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

John Malek

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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