Innovation And Capacity Management Of Refined Oil: Challenges And Solutions

Background

Discuss about the Innovation And Capacity Management of Refined Oil.
 

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Oil can be distilled into different products such as gasoline, diesel and heating oil. Petroleum refinery is the industrial plant where oil is processed. In petroleum refineries, the crude oils are refined and processed into serviceable products like naphtha, diesel fuel and liquefied petroleum gas. The set of operations that are performed in order to get widest possible set of quality products for usage. The unprocessed oil is not useful for industrial purposes but the light and sweet crude oil are used widely as burning fuel to produce steam while the sea going vessels surge forward. Refinery industries are large and sprawling that has extensive pipes that carry the fluid streams between the operational units of the chemicals.  The plants that produce oils process the feedstock’s of the crude oils. The major portion of the petroleum is transformed to petroleum products that include different levels of fuels. As per the constitution of the crude oil, the refineries can manufacture different petroleum products. Asphalt, paraffin and tar are produced from the heavier fractions that are produced after the distillation of petroleum (Olcay et al. 2013).

Oil refineries blend different feedstock, combine appropriate additives, supply short-term storage, and prepare for loading to product ships and trucks. Operation management is the procedure through which continuous improvement of the existing operations are done in a sequential manner. The objective of the operations management deals with optimum utilization of the resources for the purpose of production refined oil. The operational objectives also aims at reducing the time required for the various sequential activities. The petroleum industry plays a significant role in developing the economic condition of a country. That is why performance of operations management of an organization is very important. The oil should be free from contaminants so that the fuels can be traded easily. Petroleum fuels are used for the combustion engine and it helps to supply power for automobiles, ships and other machines (Anirudhan and Ramachandran 2014).

Operations management is very complex in nature. The ultimate goal of operations management is to achieve competitive advantages. Operations management plays vital role in increasing the competitive advantages of petroleum industry.  In this volatile industry, flexibility is the vital source that provides competitive advantage.  Long lead-time and pay procurement are the inflexible factors of the operations management of an industry related to the production of refined oil. The operational efficiency is brought about by operating model, asset reliability, cost efficiency, integrated planning, suppliers and contractors.  (Moslehyani et al.2015).

Problem Statement

The report shows some of the various problems in the oil and natural gas industry due to the following reasons:

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Problem 1

Problem of frontier acreage and accessibility to reserves:

Political events, unforeseen events put impact on the price of petroleum. International situations and political changes are the catalyst that affects various operations of the petroleum industry. The oil operational procedure is very complex as it is divided into up and downstream classification based on the functions before and after the stage of refinement. The procedure that crude oil has to go through is complicated and the refinery procedure is capital intensive.

Problem 2

Unconventional Resources in the Upstream Sector

The operational management in the upstream sector becomes very challenging in nature due to ascertaining of intensive and extensive effort towards actual location of crude oil. Therefore, the exploration process in these areas becomes very difficult and the upstream sector needs to locate prospective underwater source of oil and gas fields. The drilling and the exploration activities in these sites prove to be very labor-intensive in nature.

Problem 3

Deteriorating Fiscal Terms

The deteriorating condition of the fiscal regime has put tremendous pressure on the oil companies especially in the first meeting of UK oil and gas fiscal forum it was found that the oil industry needed to secure a stable fiscal regime with more than £ 2.3 billion.

Problem 4

Operational Issues Due to Logistical Challenges

There are many challenges in the area of logistics of the petroleum industry. The challenges that they face in logistics prominently affects the cost of the oil and derivatives. The main challenge is to maintain the proper supply of oil in pipeline transportation and keep the cost as low as possible. The demand growth, technological growth and trade barriers are the fields that help building competition among other petroleum industry.

Problem 5

Investment Cost and Innovation, Technology and R&D

Innovation, research and development in the major part of operational management of oil industry play a vital role in the operations management. The several types of operational challenges are seen in the rising cost of research and development. The major problem is also observed in maintaining the stability of information technology into the different operations of oil and gas industry. The implementation of information technologies data related to SGML and HTML to the cost intensive in nature and at two operational management problems. 

Research Objectives

The basic purpose of the study is to determine the challenges that the operational efficiency is confronting. It will also help to determine what practices petroleum companies are adapting in order to manage the constraints that they regularly face in managing the various operational goals existing in the oil and gas industry.

  • A basic review of oil refinery and refinement process
  • Options that the petroleum industry undertakes for optimizing the stages of uncertainty in operations management.
  • The decisions regarding the location of the refinery of oil needs to considered.
  • The researcher will also develop a model that will assist in increasing the efficiency of the various operations.

Research methodologies indicate various tools and techniques in order to gather data and information about the innovation in refining petroleum and making improvements in operations management. The researcher with the help of technology has accumulated data on the research topics. The researcher has utilized qualitative research methodology in order to analyze effectively the data available in the market.  The investigator evaluates the data and information by applying explanatory, exploratory and descriptive methods of assessing. The exploratory research is often implemented for exploring the existing facts and details about the research topics. The researcher here collects data about the past innovations made in the field of oil refinery. Through investigation is made on developments and advancement in oil refining technologies. The exploratory research method has largely helped the researcher to evaluate the research procedure. There are two ways of conducting the research, one is inductive and another is deductive. In this research, the researcher chooses inductive approach because it assists the researcher to collect specific data about the research topic. The researcher makes observations, chooses pattern and applies theory in order to conduct the research effectively.  The research topics contain intense data that is why the researcher selects inductive research method to collect and evaluate the data properly.

The researcher executes the research procedure through a systematic method. At the initial stage, the researcher chooses the research area in details. The researcher determines the aim and objectives so that the research can be conducted in a systematic way. The aim of the research is to develop answers to the questions asked while progressing with the research. The researcher involves the literature review in order to establish the facts that will help to understand the research topic.  While investigating, the researcher scrutinizes in detailed approach. The researchers implements different stages in order to highlight the key issues of the research topics. The researcher investigates and collects data and generate research proposal that fulfills aims and objective of the topic. The investigator accumulates information from different sources including respondents and participants. At the final stage of the research the aims and objective of the research is achieved.  The researcher gathers data from several reliable sources in order to achieve research objective.

Methodology

According to Pickard (2012), Data collection is the procedure through which primary and secondary data is accumulated. With the help of primary data, the researcher can accumulate extensive data on the research topic. Primary data is collected from the respondent present in the market. The researcher visited British Petroleum Company and Shell in order to collect primary data. With the help of primary data, the researcher investigates the innovations that the petroleum company is undertaking. The major part of the data collection comprises of primary data collection.  The researcher involves 50 people from managerial posts and worker class. The quantitative research data is collected from the organization (Abdelrehim et al. 2015).

From both the organization, the researcher questions 50 employees in order to collect information about the innovations.  The researcher here uses probability-sampling method to diminish the discrimination from the research process. While making quantitative analysis, the investigator scrutinizes several statistical data including standard, mean, median and mode deviation from the data that he has accumulated. The quantitative analysis will help the researcher to conduct the research project in an effective manner. The researcher in this part asks questions to the respondents about the importance of innovation in an organization. The researcher with assistance of the answers deduces how the organizations are implementing the innovative ideas (British Petroleum 2012).

According to Liang et al. (2013), the primary data collection helps the researcher to gather the needed data. The researcher collects secondary data from the company website and reliable sources. Then the researcher combines both primary and secondary data in order to derive the expected aims and objective of the research. Primary and secondary data accumulation is important because in order to get vivid idea about the research topic. The researcher investigates the oil refineries so that he can accumulate data about the new and improved implementations that the organizations are adapting. Secondary data are also collected from company indexes and databases. In order to increase reliability of the data peer reviewed scholarly articles are used. Student researcher will produce comprehensive study on refinery to display how the location affects the operational efficiency.   (Afergan et al. 2015). 

In the research outcome, a broad range of data is provided on the research topic. By the use of analytical framework, the researcher analyses the rationale of the topic. Two organizations British petroleum and Shell has made innovation like chemical cracking of the heavy oil and transformation of natural gas into liquid form. It has been seen that innovation affects the competitive factor of the organization. The innovations affect the commercial and financial aspects of the organization. The manager and supervisors plays vital role in approving the innovations (Zhao et al. 2014).

Research Process

According to Ince et al. (2015), the geographical location of oil refinery is essential to carry out the operations. The global demand of petroleum is changing rapidly that is why the organizations are applying new techniques so that they can upgrade the refining procedure. Global refinery capacity has shifted to the emerging markets. The researcher has scrutinized the aspects and need of innovation in organization. The researcher has methodically assessed the necessity of innovation is the procedure of retrieving oil from the wells. The organizations invest large sum of money so that they can undertake projects and make innovations in oil refinery (D’Andrea et al. 2014).

It is important to understand the critical elements of the operations at British petroleum.  The process starts with the identification of the availability of the natural resources related to the oil. The next step is to explore and track the various sources by the means of Geophysics navigation technology used in the boats. The process of operational efficiency starts with construction of the refining plants which are located nearest to the oil wells. The storage is done on the basis of short term and long term storage of the oil supplies. The short term storage is done on the basis of storage containers. For the purpose of the long term storage the oil is stored in the SPR. The refinery is maintained in  accordance with the excess capacity to the grids. The refinery is further attached to the power plants which is responsible for the carriage of the oil supply to the nearest terminals. In the blending area the ethanol is further blended. The final distribution is done on the basis of the pint of sales. The main carriage of the oil supplies is done through air transport (Selley and Sonnenberg 2014)

According to Boudreaux et al. (2013), the first step of the operational efficiency deals with the production activities. At the time of the production activities both at land and at sea the production procedure involves activities such as drilling, extraction and recovery of the oil supplies from the underground. In the year 2012 the U.S. production reached to a level of more than 2.3 billion barrels of production. The crude oil production has increased since the year 2008; this increase was observed in the beginning of the year 1986. The amount of the production of the refined oil production increased from an astounding amount of 5 million barrels each day in the year 2008 to 6.5 million barrels every day in the year 2012. The British petroleum’s downstream operation deals with telling of the refined oil products which are directly in the alignment with the present global trends. On order to further improve the service of the British petroleum the company is looking forward to reposition its operations based in the United States and improve the customer service.  The present operational activities of the company are comprised in the large modern refineries of British Petroleum, which is carried out at Cherry Point. The installation and the total capacity of the processing capacity consist of processing up to 744000 barrels of oil every day. This will further make up the significant part of the British Petroleum through worldwide network of the oil refineries situated across the globe (Massie 2015).

According to Veil et al. (2013), The major supplies of the oil aids wide range of usage such as in petrochemicals and lubricants which are used to serve the America’s highway and support the various types of the activities needed in the transportation purpose of the air, rail, home, commercial and institutional heating systems for the purpose of power generation and used by the industry.  The reseller of the British Petroleum brand is done by Amoco ultimate, Castrol and air BP. The total market composition consists of the 10% of the market share (Petroleum 2012).

According to Jacobs and Chase (2013), the oil refineries located in the BP follows an augmented refining strategy with sophisticated refining procedures. The feedstock advantaged refineries of British Petroleum is tied to the strong logistics and the various types of the fuels resources available in a particular country. The company has further completed a large number of the investments activities which are essentially tied to the logistics system and aims to increase the production activities and support the efficiency if the various types of operations performed for the purpose of the production of the oil (D’Andrea and Reddy 2014).

Figure: SPH Features: High Yield, Less Residue

(Source: Jccp.or.jp. 2016)

According to Ten Kroode et al. (2013), BP has a major oil refinery for the production of the refined oil which is situated at Oregon, Ohio. This refinery of the company is known as BP-Husky Refinery.  This particular refinery is responsible for the prediction of the total of 3.8 million gallons of the oil supplies. The total volume of the production has the capability to fuel more than 95000 ambulances. The entire distribution operation is carried out with 700 semi trucks. These trucks drive from New York City to Los Angeles and travel back to daily diesel for the purpose of the fuel production.  The Whiting Refinery of the company is located in the Whiting, Indiana. This plant is spread across 1400 acres of area and the plant is nearly three times the size of the Indianapolis motor speedway. The plant is further responsible for the groups production of 19 million gallons producing refined fuel per day. This service is spread across the entire Midwest region and other region which has enough amount of fuel to run each day. The refinery is further equipped with a total of 430000 cars and total of 222000 commercial trucks and a total number of 10000 tractors. The innovation on the above mentioned equipment is seen through the various types of the implementation of the RFID technologies and the use of the GPS tracking technologies in the vehicles which are used for the oils distribution purposes. The Cherry point oil refinery of the company is located at Baine, Washington region. The total number of employee strength in this refinery is around 750 approximately.  The primary output unit used is Diesel Gasoline and Jet fuel.  The refinery responsible for the supply of total of 20% of the refinery supplies to aid the Oregon’s auto fuel (bp.com. 2016). 

Figure: SPH Features: High Yield, Less Residue

Source: Jccp.or.jp (2016)

Some of the major initiative taken at BP for the purpose of the innovation activities includes the monitoring of the sand particles near the oil wells. The sand particles present near the oil wells are often responsible to cause the leakage of the equipment related to the supplies of the oils. The sand particles are often known to cause damage to the various types of the carrying equipment and lead to reduction in the total production activities. The major need for eliminating the and particles starts when the rock starts to break and an the reservoir pressure reduces, leading to lose grains which has the ability to travel along with the hydrocarbons in to the well. Due to this the erosion can take place and the equipment may get damaged and lead to the reduction in the total production. Various types of the initiatives includes restricting o the well’s flow rate, but the major flaw of this technique is that the oil and the gas production is also restricted. The technique assists the stoppage of the sands entering the well while the oil and the gas continues to flow. The technological measure used in order to prevent this includes using of metal screens and coarser grained gravel that act as a filter that are installed in the wells. The main drawback of these improvements is the rising amount of cost constraint (Petroleum 2014).

A significant portion of the BP’s hydrocarbon storage reserves is found in the weakly consolidates reservoirs mainly in the areas of the Gulf of Mexico and Angola. The innovation activities are carried out by the means of specialized teams often known as sand control specialists, who are focused on the various type of the development technologies which focus on the developing technologies which enable the equivalent level of the hydrocarbon recovery from the reservoirs which consists if lower level of the supplies. The present team of the sand control specialists focuses on the three major areas which include well productivity, reliability, and predictive capability in order to better understand the time of the sand production. The monitoring of the sand production is done to better pinpoint the area where the sand is entering the well and the framing the various types of the remediation to stops the sand from entering in the first place (Chengzao et al. 2012).

It is also an important step to predict the capability of the gathered information by the determination of the reservoir rocks and studying the histories of the well. This is often performed through sophisticated numerical calculations and various types of the models to asses he condition which result in the disaggregation and the overall production of the sand particles. The team of expert is involved in the selection of the most suitable method for the completion of the method and also advises for the wells optimal operating limits in order to minimize the sand production. The teams of experts are further involved to study the immediate expectations of the production and also predict how the reservoir conditions might change over the year. (Veil et al. 2013).

According to Chuu (2014), the process of the sand management is done through the identification of the sand entering the well and the way the change could be managed. This is done by using a process known distributed acoustic sensing, which is based on the fiber optic cable which is placed inside the well and the sand face, which is related with the point where the well crosses the reservoir. The team is responsible to locate the change on the sound by sensing the noise and the various types of the vibrations which will enable to locate the exact location of the entry of the sand particles. As soon as the source of the sand graining is identified the team of the experts is ready to take the actions. The various types of the mechanical tolls used are used for the purpose of the installation done in the well which is used to isolate the sand producing intervals. British Petroleum is also responsible for making an investigation of the new form of a chemical glue which can be used to bind the sand particles together which will prevent the sand particles to leave the reservoir, at the same time letting the oil and gas to flow uninterrupted . The technology team at BP is also responsible for performing the onshore trials in the oil fields and these specialists are gaining the same expertise in both onshore and offshore procurement of the oil supplies.  The main goal for innovation at BP is done in order to produce at a optimum level for eh maximum amount of tine possible. In order to achieve this BP has combined the predictive capability with the data from the distributed acoustic sensing and thereby prevent he sand from entering the well at all. The acoustic sensing also helps in providing an early warning so that the problem can be identified from beforehand and preventive measures can be taken with ease (Chen et al. 2013). 

The major source of the change management at Shell can be seen though the limitation of the CO2 emissions during the burning of the gas during the production of the petroleum product. The limiting of the Carbon dioxide emissions aids the productions activities by collection mire volume of oil from the refineries. It has been observed that the natural gas has many pros which include generation for the electric supply and fuelling of the trucks. Shell group is responsible providing a wider mix of the energy resources for the increasing population of the world. The role of the engineers is to provide critical solutions to meet the various demands related to the sustainability of the technologies. The company is responsible for bringing the innovation by implementing global energy system and tracing of new sources of energy. The Shell Sulphur solution has various types of the activities which aim to bring about new form of innovation for the company (Prett and 2013).

According to Chuu (2014), the several types of the innovation activities involve forming of new partnerships and alliances with e major oil and gas resources holders. The company’s resource friendly solution is provided by the company in form of Sulphur rich hydrocarbons. The main expertise of the company lies in the recovery of the high volumes of sulphur components which is used in the oil and gas refining. The company has major amount of experience in the transportation fit eh of the elemental Sulphur safety components which is responsible for the efficient production s and distribution of the oil resources. The main initiative by the company lies in the patenting of the technology in order to secure the technologies used I the innovation procedure. The company  has made many type of the target markets which are responsible for taking various types of eh innovation activities .the partners of the company includes shell Thiogro, which is known for using of the Sulphur enhanced fertilizer technologies in to its system. This has further increased the amount of the crop yields related to the soils which are sensitive to the Sulphur reactions.  The company has performed a major amount of the innovation for the purpose of the development in the lubricant used. This particular technology of the company was an initiative of the prelude FLNG project. The program was found in the year 1996 with an aim to prove financial assistance and technical support tin all the major oil refineries (Campbell 2014).

According to Yuan. and Bingbing (2012), the Company is responsible for incorporating various types of the innovation technologies into its system by studying the way the fluid move through the porous rocks. This particular idea was submitted by Danies Pusiol who is a specialist in nuclear magnetic resonance (NMR). It was proposed by him that the adoption of the NMR would be used to measure the fluid flow in an oil and gas pipeline. The game change technology was introduced by a prototype known as “flow meter”. This particular technology was first tried by the company at the refinery at Netherlands. The flow meter is used by shell to measure the amount of the variance in the magnetic field. The various types of the reaction on the magnetic field with the oil allow the experts at shell to assess the fluid compositions and the measure the rate of flow of the liquid (Shell.com. 2016).

According to Lingeswara et al. (2016), the operational activity at Shell involves the usage of the various type of the innovation activity through the tracking technology used in the vehicles in the refineries. The company is also responsible for tracking the long distance vehicles by the usage of GPS tracking facility in the vehicles. The entire operation of the company is further monitored by enterprise resource planning, which is useful in the tracking of the changes leading to the various type of purchasing operations performed with the vendors at Shell. The operational activities have a great deal of impact in performing he cross functional activities which ranges from the seamless interaction made with the manager with the colleagues made at all levels of the organization (He and Shortes 2013).

The company ensures that the engagement with the marketing team of the company helps to understand the customer in a better way and also lead to the accurate forecasting of the various types of the demand activities (Grivas et al. 2012).

According to Grant (2013), the various types of the downstream activities at shell ensure that the company is able to minimize the cost of the supply of the various type containers used in the supply of the oil. The main technology used in the supply of the oil is done through pipeline transportation. The oil barrels are placed in a series of batches for the interrupted flow of the oil supplies. The oil supplies are further controlled from the various types of natural disasters which can be prevented from the oil spillage and waste of the materials (Abdulkadir 2014). 

This section discusses about the varies similarities and the differences in the process of the crude oil production. Crude petroleum is a combination of various hydrocarbons. To get distilled petroleum the refiners separate the hydrocarbons. British petroleum is using new technology for cracking procedure. They are using hydro treating processes in order to separate the impurities of the petroleum. The refiners are also utilizing methods of chemically cracking the heavy oil. The chemical cracking procedure is helping to split the bigger hydrocarbon into smaller and simpler particles. British petroleum is a leading amalgamate oil and gas organization. This company supplies transportation fuel and lubricants for better functioning of the engine. British Petroleum is investing disruptive technologies in order to accelerate the commercial factors of the company. They are making innovations in technologies, business models and hiring technical experts to make new developments in both carbon management and downstream field.  British petroleum has adapted technology called fiber optic monitoring in order to monitor oil wells.

Shell is an organization that is trying to meet the need of global energy and limiting the emission of carbon dioxide by producing cleaner burning gas. Shell has experimented for decades and developed technologies in order to operate deep-water oil bodies. They have developed advanced technology to carry on the deep-water projects. Shell approves and nurtures the ideas of the innovators that are unproven. The technical teams of Shell support the need of the innovators and provide independence to the innovators to take their own decision.  They have innovated revolutionary idea of manufacturing and cooling of natural gas into liquid form. (Srivastava and Hancsók 2014).

Conclusion

The report shows the background and purpose which is required to study the various types of the aspects which can be brought about in the innovation in the sector of refined oil. The report is mainly focused on the innovation strategy which is sourced as a result of the primary data collection techniques. The primary source of the data is collected from the direct survey conducted in the various oil refineries of the both BP and at shell. The secondary information of the company was collected from the company websites, blogs, journals and newspapers which states about the various types of the initiatives taken by the company focusing in innovation. The main survey question was based on the various types the main innovation of the BP is seen in the chemical tracking of the heavy oil. The main innovation which is seen at shell is related to cooling of the natural gas while procure of the petroleum products. The innovation activities at BP also include prevention of the formation of the sand particles in the oil refineries.  This allows for the company to innovate in the various fields of the monitoring f the impurities which have to be excluded in the refining process. The main innovation used at Shell involves the usage carbon efficient technologies which involves the limiting of the carbon emission technologies. The report further looks into the several aspects of innovation which state about the usage of the Sulphur rich hydrocarbons. The Sulphur technology used at shell not only ensures the minimization of carbon technologies but it also ensures that the company is able to keep the cost to minimum level for the procurement activities involved from the oil wells. The company has further taken several initiatives in teaming up with the major global partners for the supply of the oil supplies and tracing of the best vendors for offering supply of the materials at a reduced rate. The report also state about the various types of the operational activities which are followed both at BP and shell. The common part in the operational innovation can be seen through the incorporation off GPS technology in the vehicles of both the companies. It can be also seen that the partnership with the several types of the vendors both at BP and shell has helped the company to source the suppliers. 

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Innovation And Capacity Management Of Refined Oil: Challenges And Solutions

Background

Discuss about the Innovation And Capacity Management of Refined Oil.
 

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Oil can be distilled into different products such as gasoline, diesel and heating oil. Petroleum refinery is the industrial plant where oil is processed. In petroleum refineries, the crude oils are refined and processed into serviceable products like naphtha, diesel fuel and liquefied petroleum gas. The set of operations that are performed in order to get widest possible set of quality products for usage. The unprocessed oil is not useful for industrial purposes but the light and sweet crude oil are used widely as burning fuel to produce steam while the sea going vessels surge forward. Refinery industries are large and sprawling that has extensive pipes that carry the fluid streams between the operational units of the chemicals.  The plants that produce oils process the feedstock’s of the crude oils. The major portion of the petroleum is transformed to petroleum products that include different levels of fuels. As per the constitution of the crude oil, the refineries can manufacture different petroleum products. Asphalt, paraffin and tar are produced from the heavier fractions that are produced after the distillation of petroleum (Olcay et al. 2013).

Oil refineries blend different feedstock, combine appropriate additives, supply short-term storage, and prepare for loading to product ships and trucks. Operation management is the procedure through which continuous improvement of the existing operations are done in a sequential manner. The objective of the operations management deals with optimum utilization of the resources for the purpose of production refined oil. The operational objectives also aims at reducing the time required for the various sequential activities. The petroleum industry plays a significant role in developing the economic condition of a country. That is why performance of operations management of an organization is very important. The oil should be free from contaminants so that the fuels can be traded easily. Petroleum fuels are used for the combustion engine and it helps to supply power for automobiles, ships and other machines (Anirudhan and Ramachandran 2014).

Operations management is very complex in nature. The ultimate goal of operations management is to achieve competitive advantages. Operations management plays vital role in increasing the competitive advantages of petroleum industry.  In this volatile industry, flexibility is the vital source that provides competitive advantage.  Long lead-time and pay procurement are the inflexible factors of the operations management of an industry related to the production of refined oil. The operational efficiency is brought about by operating model, asset reliability, cost efficiency, integrated planning, suppliers and contractors.  (Moslehyani et al.2015).

Problem Statement

The report shows some of the various problems in the oil and natural gas industry due to the following reasons:

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Problem 1

Problem of frontier acreage and accessibility to reserves:

Political events, unforeseen events put impact on the price of petroleum. International situations and political changes are the catalyst that affects various operations of the petroleum industry. The oil operational procedure is very complex as it is divided into up and downstream classification based on the functions before and after the stage of refinement. The procedure that crude oil has to go through is complicated and the refinery procedure is capital intensive.

Problem 2

Unconventional Resources in the Upstream Sector

The operational management in the upstream sector becomes very challenging in nature due to ascertaining of intensive and extensive effort towards actual location of crude oil. Therefore, the exploration process in these areas becomes very difficult and the upstream sector needs to locate prospective underwater source of oil and gas fields. The drilling and the exploration activities in these sites prove to be very labor-intensive in nature.

Problem 3

Deteriorating Fiscal Terms

The deteriorating condition of the fiscal regime has put tremendous pressure on the oil companies especially in the first meeting of UK oil and gas fiscal forum it was found that the oil industry needed to secure a stable fiscal regime with more than £ 2.3 billion.

Problem 4

Operational Issues Due to Logistical Challenges

There are many challenges in the area of logistics of the petroleum industry. The challenges that they face in logistics prominently affects the cost of the oil and derivatives. The main challenge is to maintain the proper supply of oil in pipeline transportation and keep the cost as low as possible. The demand growth, technological growth and trade barriers are the fields that help building competition among other petroleum industry.

Problem 5

Investment Cost and Innovation, Technology and R&D

Innovation, research and development in the major part of operational management of oil industry play a vital role in the operations management. The several types of operational challenges are seen in the rising cost of research and development. The major problem is also observed in maintaining the stability of information technology into the different operations of oil and gas industry. The implementation of information technologies data related to SGML and HTML to the cost intensive in nature and at two operational management problems. 

Research Objectives

The basic purpose of the study is to determine the challenges that the operational efficiency is confronting. It will also help to determine what practices petroleum companies are adapting in order to manage the constraints that they regularly face in managing the various operational goals existing in the oil and gas industry.

  • A basic review of oil refinery and refinement process
  • Options that the petroleum industry undertakes for optimizing the stages of uncertainty in operations management.
  • The decisions regarding the location of the refinery of oil needs to considered.
  • The researcher will also develop a model that will assist in increasing the efficiency of the various operations.

Research methodologies indicate various tools and techniques in order to gather data and information about the innovation in refining petroleum and making improvements in operations management. The researcher with the help of technology has accumulated data on the research topics. The researcher has utilized qualitative research methodology in order to analyze effectively the data available in the market.  The investigator evaluates the data and information by applying explanatory, exploratory and descriptive methods of assessing. The exploratory research is often implemented for exploring the existing facts and details about the research topics. The researcher here collects data about the past innovations made in the field of oil refinery. Through investigation is made on developments and advancement in oil refining technologies. The exploratory research method has largely helped the researcher to evaluate the research procedure. There are two ways of conducting the research, one is inductive and another is deductive. In this research, the researcher chooses inductive approach because it assists the researcher to collect specific data about the research topic. The researcher makes observations, chooses pattern and applies theory in order to conduct the research effectively.  The research topics contain intense data that is why the researcher selects inductive research method to collect and evaluate the data properly.

The researcher executes the research procedure through a systematic method. At the initial stage, the researcher chooses the research area in details. The researcher determines the aim and objectives so that the research can be conducted in a systematic way. The aim of the research is to develop answers to the questions asked while progressing with the research. The researcher involves the literature review in order to establish the facts that will help to understand the research topic.  While investigating, the researcher scrutinizes in detailed approach. The researchers implements different stages in order to highlight the key issues of the research topics. The researcher investigates and collects data and generate research proposal that fulfills aims and objective of the topic. The investigator accumulates information from different sources including respondents and participants. At the final stage of the research the aims and objective of the research is achieved.  The researcher gathers data from several reliable sources in order to achieve research objective.

Methodology

According to Pickard (2012), Data collection is the procedure through which primary and secondary data is accumulated. With the help of primary data, the researcher can accumulate extensive data on the research topic. Primary data is collected from the respondent present in the market. The researcher visited British Petroleum Company and Shell in order to collect primary data. With the help of primary data, the researcher investigates the innovations that the petroleum company is undertaking. The major part of the data collection comprises of primary data collection.  The researcher involves 50 people from managerial posts and worker class. The quantitative research data is collected from the organization (Abdelrehim et al. 2015).

From both the organization, the researcher questions 50 employees in order to collect information about the innovations.  The researcher here uses probability-sampling method to diminish the discrimination from the research process. While making quantitative analysis, the investigator scrutinizes several statistical data including standard, mean, median and mode deviation from the data that he has accumulated. The quantitative analysis will help the researcher to conduct the research project in an effective manner. The researcher in this part asks questions to the respondents about the importance of innovation in an organization. The researcher with assistance of the answers deduces how the organizations are implementing the innovative ideas (British Petroleum 2012).

According to Liang et al. (2013), the primary data collection helps the researcher to gather the needed data. The researcher collects secondary data from the company website and reliable sources. Then the researcher combines both primary and secondary data in order to derive the expected aims and objective of the research. Primary and secondary data accumulation is important because in order to get vivid idea about the research topic. The researcher investigates the oil refineries so that he can accumulate data about the new and improved implementations that the organizations are adapting. Secondary data are also collected from company indexes and databases. In order to increase reliability of the data peer reviewed scholarly articles are used. Student researcher will produce comprehensive study on refinery to display how the location affects the operational efficiency.   (Afergan et al. 2015). 

In the research outcome, a broad range of data is provided on the research topic. By the use of analytical framework, the researcher analyses the rationale of the topic. Two organizations British petroleum and Shell has made innovation like chemical cracking of the heavy oil and transformation of natural gas into liquid form. It has been seen that innovation affects the competitive factor of the organization. The innovations affect the commercial and financial aspects of the organization. The manager and supervisors plays vital role in approving the innovations (Zhao et al. 2014).

Research Process

According to Ince et al. (2015), the geographical location of oil refinery is essential to carry out the operations. The global demand of petroleum is changing rapidly that is why the organizations are applying new techniques so that they can upgrade the refining procedure. Global refinery capacity has shifted to the emerging markets. The researcher has scrutinized the aspects and need of innovation in organization. The researcher has methodically assessed the necessity of innovation is the procedure of retrieving oil from the wells. The organizations invest large sum of money so that they can undertake projects and make innovations in oil refinery (D’Andrea et al. 2014).

It is important to understand the critical elements of the operations at British petroleum.  The process starts with the identification of the availability of the natural resources related to the oil. The next step is to explore and track the various sources by the means of Geophysics navigation technology used in the boats. The process of operational efficiency starts with construction of the refining plants which are located nearest to the oil wells. The storage is done on the basis of short term and long term storage of the oil supplies. The short term storage is done on the basis of storage containers. For the purpose of the long term storage the oil is stored in the SPR. The refinery is maintained in  accordance with the excess capacity to the grids. The refinery is further attached to the power plants which is responsible for the carriage of the oil supply to the nearest terminals. In the blending area the ethanol is further blended. The final distribution is done on the basis of the pint of sales. The main carriage of the oil supplies is done through air transport (Selley and Sonnenberg 2014)

According to Boudreaux et al. (2013), the first step of the operational efficiency deals with the production activities. At the time of the production activities both at land and at sea the production procedure involves activities such as drilling, extraction and recovery of the oil supplies from the underground. In the year 2012 the U.S. production reached to a level of more than 2.3 billion barrels of production. The crude oil production has increased since the year 2008; this increase was observed in the beginning of the year 1986. The amount of the production of the refined oil production increased from an astounding amount of 5 million barrels each day in the year 2008 to 6.5 million barrels every day in the year 2012. The British petroleum’s downstream operation deals with telling of the refined oil products which are directly in the alignment with the present global trends. On order to further improve the service of the British petroleum the company is looking forward to reposition its operations based in the United States and improve the customer service.  The present operational activities of the company are comprised in the large modern refineries of British Petroleum, which is carried out at Cherry Point. The installation and the total capacity of the processing capacity consist of processing up to 744000 barrels of oil every day. This will further make up the significant part of the British Petroleum through worldwide network of the oil refineries situated across the globe (Massie 2015).

According to Veil et al. (2013), The major supplies of the oil aids wide range of usage such as in petrochemicals and lubricants which are used to serve the America’s highway and support the various types of the activities needed in the transportation purpose of the air, rail, home, commercial and institutional heating systems for the purpose of power generation and used by the industry.  The reseller of the British Petroleum brand is done by Amoco ultimate, Castrol and air BP. The total market composition consists of the 10% of the market share (Petroleum 2012).

According to Jacobs and Chase (2013), the oil refineries located in the BP follows an augmented refining strategy with sophisticated refining procedures. The feedstock advantaged refineries of British Petroleum is tied to the strong logistics and the various types of the fuels resources available in a particular country. The company has further completed a large number of the investments activities which are essentially tied to the logistics system and aims to increase the production activities and support the efficiency if the various types of operations performed for the purpose of the production of the oil (D’Andrea and Reddy 2014).

Figure: SPH Features: High Yield, Less Residue

(Source: Jccp.or.jp. 2016)

According to Ten Kroode et al. (2013), BP has a major oil refinery for the production of the refined oil which is situated at Oregon, Ohio. This refinery of the company is known as BP-Husky Refinery.  This particular refinery is responsible for the prediction of the total of 3.8 million gallons of the oil supplies. The total volume of the production has the capability to fuel more than 95000 ambulances. The entire distribution operation is carried out with 700 semi trucks. These trucks drive from New York City to Los Angeles and travel back to daily diesel for the purpose of the fuel production.  The Whiting Refinery of the company is located in the Whiting, Indiana. This plant is spread across 1400 acres of area and the plant is nearly three times the size of the Indianapolis motor speedway. The plant is further responsible for the groups production of 19 million gallons producing refined fuel per day. This service is spread across the entire Midwest region and other region which has enough amount of fuel to run each day. The refinery is further equipped with a total of 430000 cars and total of 222000 commercial trucks and a total number of 10000 tractors. The innovation on the above mentioned equipment is seen through the various types of the implementation of the RFID technologies and the use of the GPS tracking technologies in the vehicles which are used for the oils distribution purposes. The Cherry point oil refinery of the company is located at Baine, Washington region. The total number of employee strength in this refinery is around 750 approximately.  The primary output unit used is Diesel Gasoline and Jet fuel.  The refinery responsible for the supply of total of 20% of the refinery supplies to aid the Oregon’s auto fuel (bp.com. 2016). 

Figure: SPH Features: High Yield, Less Residue

Source: Jccp.or.jp (2016)

Some of the major initiative taken at BP for the purpose of the innovation activities includes the monitoring of the sand particles near the oil wells. The sand particles present near the oil wells are often responsible to cause the leakage of the equipment related to the supplies of the oils. The sand particles are often known to cause damage to the various types of the carrying equipment and lead to reduction in the total production activities. The major need for eliminating the and particles starts when the rock starts to break and an the reservoir pressure reduces, leading to lose grains which has the ability to travel along with the hydrocarbons in to the well. Due to this the erosion can take place and the equipment may get damaged and lead to the reduction in the total production. Various types of the initiatives includes restricting o the well’s flow rate, but the major flaw of this technique is that the oil and the gas production is also restricted. The technique assists the stoppage of the sands entering the well while the oil and the gas continues to flow. The technological measure used in order to prevent this includes using of metal screens and coarser grained gravel that act as a filter that are installed in the wells. The main drawback of these improvements is the rising amount of cost constraint (Petroleum 2014).

A significant portion of the BP’s hydrocarbon storage reserves is found in the weakly consolidates reservoirs mainly in the areas of the Gulf of Mexico and Angola. The innovation activities are carried out by the means of specialized teams often known as sand control specialists, who are focused on the various type of the development technologies which focus on the developing technologies which enable the equivalent level of the hydrocarbon recovery from the reservoirs which consists if lower level of the supplies. The present team of the sand control specialists focuses on the three major areas which include well productivity, reliability, and predictive capability in order to better understand the time of the sand production. The monitoring of the sand production is done to better pinpoint the area where the sand is entering the well and the framing the various types of the remediation to stops the sand from entering in the first place (Chengzao et al. 2012).

It is also an important step to predict the capability of the gathered information by the determination of the reservoir rocks and studying the histories of the well. This is often performed through sophisticated numerical calculations and various types of the models to asses he condition which result in the disaggregation and the overall production of the sand particles. The team of expert is involved in the selection of the most suitable method for the completion of the method and also advises for the wells optimal operating limits in order to minimize the sand production. The teams of experts are further involved to study the immediate expectations of the production and also predict how the reservoir conditions might change over the year. (Veil et al. 2013).

According to Chuu (2014), the process of the sand management is done through the identification of the sand entering the well and the way the change could be managed. This is done by using a process known distributed acoustic sensing, which is based on the fiber optic cable which is placed inside the well and the sand face, which is related with the point where the well crosses the reservoir. The team is responsible to locate the change on the sound by sensing the noise and the various types of the vibrations which will enable to locate the exact location of the entry of the sand particles. As soon as the source of the sand graining is identified the team of the experts is ready to take the actions. The various types of the mechanical tolls used are used for the purpose of the installation done in the well which is used to isolate the sand producing intervals. British Petroleum is also responsible for making an investigation of the new form of a chemical glue which can be used to bind the sand particles together which will prevent the sand particles to leave the reservoir, at the same time letting the oil and gas to flow uninterrupted . The technology team at BP is also responsible for performing the onshore trials in the oil fields and these specialists are gaining the same expertise in both onshore and offshore procurement of the oil supplies.  The main goal for innovation at BP is done in order to produce at a optimum level for eh maximum amount of tine possible. In order to achieve this BP has combined the predictive capability with the data from the distributed acoustic sensing and thereby prevent he sand from entering the well at all. The acoustic sensing also helps in providing an early warning so that the problem can be identified from beforehand and preventive measures can be taken with ease (Chen et al. 2013). 

The major source of the change management at Shell can be seen though the limitation of the CO2 emissions during the burning of the gas during the production of the petroleum product. The limiting of the Carbon dioxide emissions aids the productions activities by collection mire volume of oil from the refineries. It has been observed that the natural gas has many pros which include generation for the electric supply and fuelling of the trucks. Shell group is responsible providing a wider mix of the energy resources for the increasing population of the world. The role of the engineers is to provide critical solutions to meet the various demands related to the sustainability of the technologies. The company is responsible for bringing the innovation by implementing global energy system and tracing of new sources of energy. The Shell Sulphur solution has various types of the activities which aim to bring about new form of innovation for the company (Prett and 2013).

According to Chuu (2014), the several types of the innovation activities involve forming of new partnerships and alliances with e major oil and gas resources holders. The company’s resource friendly solution is provided by the company in form of Sulphur rich hydrocarbons. The main expertise of the company lies in the recovery of the high volumes of sulphur components which is used in the oil and gas refining. The company has major amount of experience in the transportation fit eh of the elemental Sulphur safety components which is responsible for the efficient production s and distribution of the oil resources. The main initiative by the company lies in the patenting of the technology in order to secure the technologies used I the innovation procedure. The company  has made many type of the target markets which are responsible for taking various types of eh innovation activities .the partners of the company includes shell Thiogro, which is known for using of the Sulphur enhanced fertilizer technologies in to its system. This has further increased the amount of the crop yields related to the soils which are sensitive to the Sulphur reactions.  The company has performed a major amount of the innovation for the purpose of the development in the lubricant used. This particular technology of the company was an initiative of the prelude FLNG project. The program was found in the year 1996 with an aim to prove financial assistance and technical support tin all the major oil refineries (Campbell 2014).

According to Yuan. and Bingbing (2012), the Company is responsible for incorporating various types of the innovation technologies into its system by studying the way the fluid move through the porous rocks. This particular idea was submitted by Danies Pusiol who is a specialist in nuclear magnetic resonance (NMR). It was proposed by him that the adoption of the NMR would be used to measure the fluid flow in an oil and gas pipeline. The game change technology was introduced by a prototype known as “flow meter”. This particular technology was first tried by the company at the refinery at Netherlands. The flow meter is used by shell to measure the amount of the variance in the magnetic field. The various types of the reaction on the magnetic field with the oil allow the experts at shell to assess the fluid compositions and the measure the rate of flow of the liquid (Shell.com. 2016).

According to Lingeswara et al. (2016), the operational activity at Shell involves the usage of the various type of the innovation activity through the tracking technology used in the vehicles in the refineries. The company is also responsible for tracking the long distance vehicles by the usage of GPS tracking facility in the vehicles. The entire operation of the company is further monitored by enterprise resource planning, which is useful in the tracking of the changes leading to the various type of purchasing operations performed with the vendors at Shell. The operational activities have a great deal of impact in performing he cross functional activities which ranges from the seamless interaction made with the manager with the colleagues made at all levels of the organization (He and Shortes 2013).

The company ensures that the engagement with the marketing team of the company helps to understand the customer in a better way and also lead to the accurate forecasting of the various types of the demand activities (Grivas et al. 2012).

According to Grant (2013), the various types of the downstream activities at shell ensure that the company is able to minimize the cost of the supply of the various type containers used in the supply of the oil. The main technology used in the supply of the oil is done through pipeline transportation. The oil barrels are placed in a series of batches for the interrupted flow of the oil supplies. The oil supplies are further controlled from the various types of natural disasters which can be prevented from the oil spillage and waste of the materials (Abdulkadir 2014). 

This section discusses about the varies similarities and the differences in the process of the crude oil production. Crude petroleum is a combination of various hydrocarbons. To get distilled petroleum the refiners separate the hydrocarbons. British petroleum is using new technology for cracking procedure. They are using hydro treating processes in order to separate the impurities of the petroleum. The refiners are also utilizing methods of chemically cracking the heavy oil. The chemical cracking procedure is helping to split the bigger hydrocarbon into smaller and simpler particles. British petroleum is a leading amalgamate oil and gas organization. This company supplies transportation fuel and lubricants for better functioning of the engine. British Petroleum is investing disruptive technologies in order to accelerate the commercial factors of the company. They are making innovations in technologies, business models and hiring technical experts to make new developments in both carbon management and downstream field.  British petroleum has adapted technology called fiber optic monitoring in order to monitor oil wells.

Shell is an organization that is trying to meet the need of global energy and limiting the emission of carbon dioxide by producing cleaner burning gas. Shell has experimented for decades and developed technologies in order to operate deep-water oil bodies. They have developed advanced technology to carry on the deep-water projects. Shell approves and nurtures the ideas of the innovators that are unproven. The technical teams of Shell support the need of the innovators and provide independence to the innovators to take their own decision.  They have innovated revolutionary idea of manufacturing and cooling of natural gas into liquid form. (Srivastava and Hancsók 2014).

Conclusion

The report shows the background and purpose which is required to study the various types of the aspects which can be brought about in the innovation in the sector of refined oil. The report is mainly focused on the innovation strategy which is sourced as a result of the primary data collection techniques. The primary source of the data is collected from the direct survey conducted in the various oil refineries of the both BP and at shell. The secondary information of the company was collected from the company websites, blogs, journals and newspapers which states about the various types of the initiatives taken by the company focusing in innovation. The main survey question was based on the various types the main innovation of the BP is seen in the chemical tracking of the heavy oil. The main innovation which is seen at shell is related to cooling of the natural gas while procure of the petroleum products. The innovation activities at BP also include prevention of the formation of the sand particles in the oil refineries.  This allows for the company to innovate in the various fields of the monitoring f the impurities which have to be excluded in the refining process. The main innovation used at Shell involves the usage carbon efficient technologies which involves the limiting of the carbon emission technologies. The report further looks into the several aspects of innovation which state about the usage of the Sulphur rich hydrocarbons. The Sulphur technology used at shell not only ensures the minimization of carbon technologies but it also ensures that the company is able to keep the cost to minimum level for the procurement activities involved from the oil wells. The company has further taken several initiatives in teaming up with the major global partners for the supply of the oil supplies and tracing of the best vendors for offering supply of the materials at a reduced rate. The report also state about the various types of the operational activities which are followed both at BP and shell. The common part in the operational innovation can be seen through the incorporation off GPS technology in the vehicles of both the companies. It can be also seen that the partnership with the several types of the vendors both at BP and shell has helped the company to source the suppliers. 

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Our Experience

No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
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Free Features

Free revision policy

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Free

Free bibliography & reference

$8
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Free title page

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Free formatting

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How Our Essay Writing Service Works

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First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.

Complete the order form
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Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.

Writer’s assignment
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As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.

Completing the order and download

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