1. The different environments within the oil and gas industry require various skills to fill up the roles and responsibility within the industry. The company needs to have centralized functions within the multiple organizations that do help them in being able to meet those resources which are hard to find. One of the featured roles is the operator/duty holder person. This individual is operative during the fixed installation cases and also a holder in the affairs of free installation. The governmental regulator may be understood as an individual who is appointed by the government to make necessary regulations in the oil and gas industry. The oil and gas are extracted just like any other mining, and this means there are several steps involved in coming up with this products to the market. All the safety measures need to be observed as well as the oil and gas regulations. This means that every individual is required to take their roles and responsibilities seriously (Davies et al., pg.239).
Every workplace station requires all the staff members to remain in good health and safe from any hazards that may arise in the line of duty. All the potential risks posed towards the health and safety of individuals has to be practically eliminated. If anyone causes the company to experience any risks, then they need to be responsible enough to take control of it. The duty holders at every primary level have the responsibilities as the installation
Manufacturer operators and also as the possessors of the non-manufacturing installations. Duty holders have the general role of managing the production and non-production installations as well as be able to correlate the activities involved in health and safety within the entire company. There is need to have a goal setting law which might position the duty holders at a state whereby they can be able to select the most suitable ways and available equipment that may ensure all the legal requirements have been attained (Appiah-Adu & Sasraku, pg.27).
The typical operator in oil and gas industry is a significant component since the operators have to implement all the procedures involved in the planning to meet the principal objectives and aims of the company. If the operators have to fulfil their responsibilities, all other projects entailed in the oil and gas industry will come out successfully. Therefore, this industry is required to have highly skilled expertise as well as efficient operators. This grants the contractors the confidence of having an efficacy work in return. The accomplishment of tasks in effecting way also applies to the duty holders who often ensures that the end product is of good quality. The contractors are mostly attracted by the availability of reliable and skilled individuals who provide the work is completed efficiently. The mutual concern is concentrated on the issue of having an adequate job through the skilled and competent workers.
The recent oil price uncertainties have had an impact on both the consumers and the investors. The foreign exchange rate is determined by this uncertainties since the exports and imports strategies of oil-heavy producing countries get influenced. This points out to the economy, in general, being impacted by the recent oil uncertainties. The macro economy has been impacted basin on the econometric works which do depend on historical volatility approximations obtained from the daily oil prices. The investors are the ones who fund the operational activities within the industry, and they are expected to give the funds on a timely basis so that the company may meet the contractual requirements. The significant uncertainties in the oil prices may result in industry expansion which in turn contributes to the improvement and development of the economy. Most contractors are on the look for the most attractive prices before they can present their contracts and these attractive prices reduce the rate of competition in the economy (Wright & Blue, pg.329). Below is a figure illustrating what is usually expected of a typical operator in a hydrocarbon operation. (Wright & Boue, pg.333)
The economic activities experience interests in this uncertainty which may influence the company to change their investments decisions or even cause the end users to postpone making purchases. This uncertainty in oil prices has significantly impacted the output growths in some countries. The output is reduced by the countries experiencing both the increased oil prices as well as the reduced oil prices. The oil uncertainty increased sharply just after the organization of petroleum exporting countries (OPEC) subsided and this caused stagnant growths in the economy during this period. The extensions of the economy are being impacted asymmetrically by this oil price shocks due to the domestic factors such as the taxations. The economic contraction may be encountered following the changes in the prices of the oil that is aligned together with the increase in the uncertainty. The area that is primarily concerned with the growths of the economy is what is most likely able to be impacted by the oil price uncertainties (Kang et al., pg.344).
The countries which produce oil and gas are significant to the economy of the nation as they enhance both the short-term and the long-term goals. The respective government of that particular nation requires the government regulator to represent the country by managing some specific issues that concern the economy of the country. Some necessities that do need to be explored within the business setting, and they include the governmental permits that enable the oil and gas industry to operate accordingly. Every company requires being reviewed most often so that the government may undertake possible measure. The governmental regulator is positioned in the oil and gas industry to ensure that the company can observe all the regulations required by the state. The national regulator is mostly hired from outside the company to ensure that all the necessary laws have adhered to as much as the production operations have been regulated (Kilian & Murphy, pg.454).
2). A joint venture is a voluntary union which consists of two or even more people, and it may as well be between two different entities or more as they all get involved in specific projects or undertakings. This joint venture may include the investor and the government or even a company and another. The most business which partner with other companies take this step to access each of the other’s resources and finances as the complementary abilities that lack in the company. This partnership is always regarded as a single business project that is hoped to result in a long-term business relationship between the two parties. The two parties are engaging in a partnership required to have a documented contract that serves as a proof of their working conditions. As much as they both mutually benefit from this projects, the investors of the joint venture need to weigh the advantages and the disadvantages before engaging in the contract.
The oil and gas joint venture is merely the wilful partnership between the government and the business entity, and the aim is to ensure that the contractual performances have attained. Joint enterprises often do not have a standard structure because of the necessary agreement between the oil industry and the national government having the standard format. The contract states clearly that the hosting government, as well as the oil and gas industry, have to ensure that they work hand in hand to have a successful project which in turn is a benefit to both of the parties. The disagreements are always bound to arise if at all the two partners will be unwilling to work together. The whole contractual relationship will be full of pains because joint venture is not regarded as a separate legal entity. The joint venture can only break once the parties have achieved their goals. Otherwise, due to lack of legal status, all the expenditures, the asset ownership, and the capital has to go through the joint venture before the respective participants can take hold (Olah, pg.104).
The advantages of coming up with a joint venture include; the other partner will always share the risks, the organizations become accessible to more expertise and new opportunities, it provides the companies with a more generous way of pulling out from a non-core business during the period of consolidation, it is also an opportunity that grants the companies to embrace new knowledge in technology, and also offers a chance for the companies to experience more significant resources which includes the manpower resources among others. The disadvantages entailed in this same business decision include; lack of proper leadership styles during the early stages of the venture, cultural differences might cause poor coordination of activities, unclear communications which may not be well communicated as well, more research is needed in order to attain success, and again there is imbalance in certain levels such as the investment, assets, and expertise brought about by the different entities (Weijermars, pg.385). Following is a table showing a comparison between the advantages and disadvantages of a joint venture.
|
Advantages |
Disadvantages |
|
the risks will always be shared by the other partner |
lack of proper leadership styles during the early stages of the venture |
|
the organizations becomes accessible to more expertise and new opportunities |
cultural differences might cause poor coordination of activities |
|
it provides the companies with a more generous way of pulling out from a non-core business during the period of consolidation |
more research is needed in order to attain success and again there is imbalance in certain levels such as the investment |
|
offers a chance for the companies to experience greater resources which includes the manpower resources among others |
expertise brought about by the different entities |
The production sharing agreements (PSA) is also referred to as the output sharing contract (PSC), and it is a standard contract between a resource extraction company and the government. The state is the sole owner of this type of deal. The idea of introducing product sharing idea is objected towards retaining the resources within the government. Some of its regulations may be related to the joint venture since they both depend on the government. A joint venture has part of the ownership while product sharing contract has all the property of the government. The total oil production is issued out systematically as per the principles and speculations that outlined in the production sharing contract. The joint venture operates in two forms which include the primary and secondary. The primary structure has both parties work together and share profits while the secondary form has worked together based on their shares.
The joint venture can be compared to the concession which is a traditional form of generating an agreement in oil and gas industry. Admittance is a one-sided contract since only one of the partners is the one who benefits from the deal. All the resources meant to be used in the partnership are owned by the single owner. In comparison to the joint venture, both agreements grant the partner’s room to explore resources that may enhance benefits though concession do not have governmental interventions yet the joint ventures have. The concession arrangement has an advantage over the joint ventures in the sense that the owner makes all the decisions unlike in joint ventures and again all the financial risks are borne by the contract and not by the owner. Concession agreement has high dangers than joint ventures, and in the context of oil and gas industry, there will be no cost recovery until they approve of all their incurred expenses. The joint venture regime is a better option for investors than this other regimes (Ghandi & Lin, pg.63).
3). The Monte Carlo simulation is a technique utilized in the understanding of the impact of risks and uncertainty in project management, finance, and forecasting model as well as the costs. Every decision requires risk analysis, and as for the oil industry, Monte Carlo technique is used to help in coming up with a better decision making despite the uncertainties. Professional incorporate this kind of a method as it enables the individuals to be able to take responsibility for the risk in both the decision making as well as the quantitative analysis. It gives an individual a room to view all the potential outcomes of a particular decision. This technique analyses the risk by developing models of probable results as it calculates the issues again and again. The different set of projects in the oil and gas industry have a wide range of possible outcomes out of the game of risks involved. When developing an oilfield, possible economic risks are posed by the oil and gas industry (Balezentis, pg.862).Below according to Usmanu, Fahad
During the development of oilfield, the oil and gas industry is most likely to be faced with risks which need to be managed to have success in the industry. The geological risk which involves difficulty in oil extraction will have to be minimized by consequently testing. The level of confidence in findings is conversed using the terms, probable, proven or possible. The risk involved in the pricing of oil and gas is the significant economic concerned, and yet this risk is influenced more so by the geologic factors. Every other company is faced with this risk hence the oil and gas industry would have to try and forecast on the likelihood of the prices over the entire period of the project before restarting the business. Both the small and large oil industry are likely to be faced with this risks, and the board of directors is required manage the same (Mitchel & Mitchel, pg.36).
The cost risk is likely to be transferred to the contractor especially when the prices of the materials keep on fluctuating. Due to the high capital expenditure and time in trying to accomplish operational activities, the supply and demand again possess as a risk in the company. The supply and demand shocks are regarded as severe risks which cause the business operations to take much longer as much as they take up a massive consumption of capital. The irregular production of oil and gas is what makes the prices to be unpredictable causing financial crises and reduced money which affects the industry besides the cost risks. The industry may be facing all these economic challenges, yet the energy, oil, and gas are still in high demand. The investors tend to benefit from the oil and gas rewards as they identify and manage any other arising potential risks in the industry (Yang et al., pg. 356).
The Monte Carlo technique includes the risk analysis technique which involves the use of the CPU intensive calculations. The uncertainty in the output provides the validity measure of the model. In the oilfield development, the technique is utilized in the approximation of the entire risks that are entailed in the development of new projects, validity evaluation of the reservoir models and also the evaluation of development schemes. The other simulation technique is the stress testing, and it illustrates the manner in which the range of investments would behave in moments of facing financial crisis. This technique would help in managing the risks that may be incurred in the organization. The stress tests are simulation models which have been generated from the computer to be able to test theoretical scenarios.
The board of directors in small oil company can still use the Monte Carlo results to embrace change in the company (Xu et al., pg.169). The probability distributions have different outcomes which are capable of helping the small business of oil that would want to expand its operations. The board of directors may be able to weigh the possible options that have minimized risk or even those that have easy to handle risks. The directors may not only be able to make the right decision but also they would be able to adapt to some of this risks and get to learn more about the vast oil company. This individual would be in a position to use the Monte Carlo simulation result to best understand the effects of the risks, and the uncertainties in the project as well as get to know the extent to which it would be possible to develop from one level to another. This way the directors would have weighed all the simulation techniques then use the outcomes for the development of the small company into a large organization.
4). There have been continuous growths in the demand for energy worldwide, and this is expected to increase even shortly. The primary concern is focused on whether the oil and gas demand will be met efficiently. Those countries with enhanced economic power have the highest energy demand. Technology is regarded as the only influential driving force to foster improved supply of oil and gas across the globe. The companies need to set up themselves to be able to meet the future demand of global energy. All the risks involved in the industry need to be managed, proper management of human resource, performance management as well as the operational excellence. This way the oil and gas industry will be able to supply sufficient energy to every country that is in demand. The new oil extracting sources may be identified to help in handling the situation in the coming decades (Shuen et al., pg.5).
It is clear that the current global energy production is not enough to meet the future demands which are increasing. A lot of adjustments need to be met to foster a steady supply of oil and gas in the future. The need to have an alternative for the global energy has been considered though it is still at limited growth. The emergence of the new markets is part of the causatives of energy demand. Therefore, new and improved technology is considered to be the fundamental driving force towards the meeting of oil and gas demands in future. The hydrocarbon resources are distinguished to be enough throughout the whole and can be made useful even in the next century. They only have to be made efficient by using the right technology which ensures the extraction’s goals are met as well as the supply of the end products. By advancing the technology, the industry will be able to improve on their operational activities as well as handle the operational challenges that face the company on a daily basis (Benes et al., pg.207).
As the reserves keep on increasing so does the oil and gas consumption of the industry also increase along with it. The availability of oil and gas is at stake, and this poses a danger to the industry. Most of the extraction firms find it to be a challenge to extract the oil and even the gas. They have shifted their concern from extraction to the creation of reserves since the oil and gas consumption rate is noted to be very high. The oil and gas products are being widely consumed and therefore, creating more reserves is just, but a means of planning for the future demands as this will help in stocking up so that the equilibrium between the demand and supply may be attained. The development of new technologies is fostering the creation of this global reserves and even help in production increment within the oil fields as much as the company venture into other new projects (Joblings & Jamasb, pg. 96). Below is a pictorial by the US Energy Information Administration detailing how global energy demand has grown and their projections of the future.
Pictorial according to (Joblings & Jamasb, pg. 102.)
5). When a small independent British oil company locates in southern Ireland, there are some financial concerns that would feature in, and possible actions need to be incorporated to resolve the issues of concern. The fiscal regimes and licensing are essential factors in Ireland offshore explorations. It is more risky and expensive to take the business offshore, and oil and gas industry is not an exception. Most companies would prefer to stay overseas since they understand better the market conditions. The financial state of the independent British oil company would be significantly influenced considering that the company is developing a new oilfield with a steel platform that is in two hundred meters of water in southern Ireland. A lot of resources are needed to be directed towards the project basing on the point of the establishment as much as the company might be in a position to attract other business opportunities (Griffin et al., pg. 156).
The cost-effective management of the decommissioning offshore can well be achieved through its clear understanding as it is a significant source of liability contractors, public, and even the operators. As much as there are many opportunities involved in this project, there are also some significant concerns engaged since decommissioning is the agile market development in the oil business. The steps involved in this offshore decommissioning include project management, planning, permitting and regulatory compliance, engineering, plugging and abandonment, platform preparation, platform removal, mobilization and demobilization, site clearance, power cable and pipeline, conductor removal as well as the deposal of the material. When decommissioning an offshore, the first vital steps that take place three years prior include the project management, planning as well as engineering. There is a need for the operators to contract, review the contractual commitment, and analyze the engineering besides the planning of activities (Linyaev et al., pg.669).
The next step involves the contracting of the local consultants to make sure that the permits have been obtained before the decommissioning. The platform then gets to be prepared by cleaning and flushing the pipes, tanks and the processing tools. The platform equipment has to be removed as the hydrocarbons get to be disposed of. In the cases of underwater, jacket equipment has to be prepared to remove the marine growths. The plugging and abandonment step is then attained based on the two faces which include the excellent plugging and the first abandonment. The superb plugging phase entails the collection of data, application submission for approval, preliminary inspection and selection of methods of neglect. The other aspect which is well abandonment includes the preparations of the excellent entry, downhole equipment removal, wellbore cleaning, plugging of the annular space and casing tubs as well as the placement of the fluid between the plugs and the surface plugs. The conductor is then removed before the removal of the platform and mobilization and demobilization (Zawawi et al., pg.26).
Project management, planning and
engineering
Above table illustration according to (Zawawi et al, pg.30).
The financial concerns featured in the decommissioning of an offshore company are brought about by several factors which equally affect the cost of removing the platform. The costs of decommissioning are determined by the location, function and also the depth of water. A platform in the decommissioning is directly linked to the magnitude of all the materials that need to be removed. The duties that do aim at eliminating and disconnecting during the process of decommissioning would most definitely save on costs (Griffin et al., pg.156). The government of the Republic of Ireland is at this moment advised finding an alternative to decommissioning. Certain parts of their offshore premises may be reused or even adjust the decommissioned platform into a more permanent structure.
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