Personal Blogs

POLITICAL:

Sadly, the oil and gas industry is heavily influenced by politics. This has a major effect on the overall global oil price and supply, which the world heavily relies on as a fossil fuel burning planet. Politically this can cause numerous tensions between countries. A prime example is the tensions between Iran and the US. Such tensions, and similar, cause an increase in terrorist attacks and even wars, which have spiked since the 9/11 attacks. 

(Derica Lambrechts & Lars B. Blomquist (2017) Political–security risk in the oil and gas industry: the impact of terrorism on risk management and mitigation, Journal of Risk Research, pp., 1320-1337)

Governments also have great influence on the oil and gas industry. This is as a result of the huge profits that can be made and control that can be asserted over this asset, especially if it is produced locally. Many countries will keep control of this asset through legal frameworks, contract enforcement, pricing regulations, taxes and Industrial safety.

(Howard L. Lax (1983) Political risk in the international oil and gas industry, International human resources development corporation, Boston, pp., 3-6

From an Environmental impact, none can be more damaging to the environment to that of the oil and gas industry and use of the by-product that currently powers our cars and industry. As COP 26 it is clear that the oil producing nations must look to the future and other forms of energy. 

(OPEC Statement to the UN Climate Change Conference (COP 26/CMP 16/CMA3) https://www.opec.org/opec_web/en/press_room/6704.htm

[accessed online 16 November 2021]

The potential impacts that politics could play on my organisation are around the ‘Energy Transition’ and the fact that they are not yet set up to deal with the delivery of new technologies and clients. The organisation will exploit new ‘renewable energy’ clients but, as I write this, are not set up to effectively deliver. A recent industrial client win has proven this. 

The other pollical impact is one of funding, grants and initiatives. In order to exploit these new renewable clients and technologies, funding in R&D, acquisitions and partnerships are a must, but this is proving slow to be granted with a fear that the organisation goes down the long-trodden path of ‘this is the way we have always done it’ 

ECONOMIC:

As the oil price starts to rise (https://oilprice.com) the top oil producing countries in the world; USA, Russia, Saudi, Iraq etc (https://www.worldometers.info/gas/gas-production-by-country feed the top oil consuming countries, USA, China, India, Japan etc (Aljazeera, 2021). Any economic decline in any of these countries usually has an impact on the oil and gas industry. For instance, oil prices fell in the first week of August 2021 as the growth in factory activity in China slipped sharply (Aljazeera, 2021). The oil and gas industry also supports jobs globally. High oil prices means more recruitment and many more in jobs, however, it impacts other industries negatively as oil prices push fuel prices up. A countries inflation will also impact this as fuel prices rise in line with other domestic goods and services. 

SOCIAL:

The Oil and Gas industry is going through a huge change as it progresses the ‘Energy Transition’, this has only brought it’s [negative] image back to the forefront as a huge polluter. This image effects everything! This image is being exploited by many of the big oil companies as they promote their move to greener, renewable energy. 

(OPEC Statement to the UN Climate Change Conference (COP 26/CMP 16/CMA3) https://www.opec.org/opec_web/en/press_room/6704.htm

[accessed online 16 November 2021]

Cultural trends are being affected [even before the energy transition] as developing countries see an increase in their population buying automobiles. On the flip side, many cultural trends are pushing toward greener, renewable energy and so customer buying trends are shifting to electric cars, greener energy (solar, wind). 

 My organisation, although wanting to move to renewable energy as their primary revenue stream and servicing these clients, it has done so, arguably to make up for the loss in revenue that is likely as the transition occurs. My project will aim to ensure that an engineering process is in place to allow delivery of complex engineering solutions, rather than trying to use the existing older Oil and Gas related systems that are currently in place.  

Customer buying trends have also changed dramatically since the financial crash of 2009, which also caused a oil and gas down turn.  I have found that our clients want value for money, efficiency, and projects to deliver on time. Smaller companies are coming online that can deliver more efficiently.

TECHNOLOGICAL:

As my organisation chase work outside the usual Oil and Gas industry it is clear that the renewable industry and industrial (including the MOD) are looking for contractors outside their normal 'go to' organisations in an attempt to get more Commercial Off the Shelf (COTS) equipment. Defence Contracts Online, 2020,https://www.contracts.mod.uk/do-features-and-articles/cots-increasing-land-capability/

As a result, my organisation have been approached and have started to win contracts within this 'industrial' field. This is outside the 'norm' for these organisations and also mine, who would expect to deliver. As a result, producing goods and services cannot be carried out, entirely 'in-house' we do not have the expertise to deliver. As a result the classic old delivery process has to be updated to accept the use of partnerships and outside technological help from other companies. This 'coupled' approach (Gassmann and Enkel, 2004) would ensure the expensive, slow process of R&D could be avoided.  

Other companies out there will already have developed some of the technology being asked for and are often at the forefront of emerging technology.

ENVIRONMENTAL:

The oil and gas industry is a major polluter, not only in the extraction of oil and gas but as result of its use in heavy industry, aviation and automobiles worldwide.  This is a major source of airborne particulate matter and a key contributor to the mortality and disease.

https://www.wilderness.org/articles/blog/7-ways-oil-and-gas-drilling-bad-environment

Karn Vohra, Alina Vodonos, Joel Schwartz, Eloise A. Marais, Melissa P. Sulprizio, Loretta J. Mickley: Global mortality from outdoor fine particle pollution generated by fossil fuel combustion: Results from GEOS-Chem, Environmental Research, Volume 195, 2021, https://www.sciencedirect.com/science/article/abs/pii/S0013935121000487

Health is not the only aspect of this by product, but also climate change where global environmental legislation is being pushed froward as the industry go through the energy transition . 

(OPEC Statement to the UN Climate Change Conference (COP 26/CMP 16/CMA3) https://www.opec.org/opec_web/en/press_room/6704.htm

[accessed online 16 November 2021]

My organisation is, therefore, looking to exploit technologies through growth in the renewable and industrial sectors to promote their business ethics to show they are moving away from fossil fuel type operations and moving to the renewable energy. 

https://www.sparrowsgroup.com/news-and-updates/sparrows-group-wins-large-contract-in-defence-sector

https://www.sparrowsgroup.com/renewables

LEGAL:

At the top of any Legal agenda is ‘safety’. The Oil and Gas industry have always been safety conscious. This is evident in the very long design process that my organisation go through when designing engineering solutions. This can often be very time consuming before the first ‘parts’ are fabricated or built. Many clients (non engineers) can find this quite frustrating and will often question the timelines.  Piper Alpha and The Deepwater Horizon are worst case scenarios of why health and safety are so important. That said, there are still more efficient ways of delivering this portion of a solution to a client. Product Safety, and the design of this does not always HAVE to be carried out in-house, there are partnerships and outside companies that can assist in helping develop a solution. This delivery process is what my project will focus on, rather than carrying out the entire R&D part in-house. As automation and electrical systems become more common place, more legal standards and processes are required to design and deliver a ‘system’ to what is best practice. 

Different countries have different acts that govern the oil and gas industry e.g. the Petroleum Act in the UK, Federal Oil and Gas Royalty Management Act, Resource Conservation and Recovery Act in the USA, and the Petroleum and Natural Gas Rules in India.

https://www.legislation.gov.uk/ukpga/1998/17/contents

https://uscode.house.gov/view.xhtml?path=/prelim@title30/chapter29&edition=prelim

By the use of partnerships and a coupled approach to engineering, competitive legislation and the need to carry out patents and keep IP is simplified.