Category: Petroleum

Post-1945, there emerged an international oil establishment named the postwar petroleum order. Before 1939, the output of petroleum in the Middle Eastern countries was not high and the region contributed only a marginal share to the world petroleum production.

Before the postwar years, British Petroleum (BP) was the dominant player in the petroleum market however, after the war, five American companies broke BPs monopoly.

This postwar order was characterized by a corporate consolidation of the major oil companies in the Middle East. The primary aim of the order was to maximize the production of petroleum in the Persian Gulf and supply the increased postwar energy requirement of the Europe (Citino 137).

By 1948, United States had become one of the major importers of petroleum from the Middle Eastern countries. The era of Cold War diplomacy saw a rise in the energy requirement of the country, which made the rich oil resources of the Gulf indispensable to the endeavor (Painter Oil, Resources, and the Cold War 489).

The oil from the gulf was important as this provided a cheap source to help reconstructing the damage World War II had done on Europe. Further, defending the tattered Europe after the war was essential to guarantee development in the US.

The postwar petroleum order consisted of a tangible infrastructure resource to deliver oil to the European countries. The only infrastructure that supported the petroleum order then was the Suez Canal, and two other pipelines in the Middle East (Citino 137).

The political volatility of the Middle East in the postwar years only created greater problems for the petroleum order. Further, the creation of Israel in 1948 only added to the problems of the order as the Arab League members were skeptical of the Jewish nation and created a state embargo on supplying petroleum to the Western countries.

Thus, the postwar petroleum order, marred by volatility in oil supply due to regional conflict and political condition of the Gulf, was annihilated. Thus, post 1970s the United States under the administration of President Bush started diversifying the oil sources. This ended the postwar petroleum order to bring forth a new order.

This paper probes into the postwar petroleum order. Initially the paper will concentrate on delineating the reasons behind rise of the post petroleum order and the reasons that contributed to their downfall.

The paper will then discuss what the new petroleum order was and the reasons why this order came into being. Then drawing from the reasons of rise and demise of postwar petroleum order, the paper will try to intuitively understand the probable fate of the new order.

Rise and Fall of the Postwar Petroleum Order

One of the key outcomes of the World War II was postwar control over natural resources (Painter, Oil, Resources, and the Cold War 486). The prewar and postwar petroleum order saw a marked coalition between the United States and Great Britain to control the production and supply of oil in the market in order maintain stability in the oil market.

In 1944, the two countries were signatories of the Petroleum Agreement, which formally established the joint control over the oil resources of the Gulf. Thus, the emergence of an Anglo-American collaboration created a postwar oil order (Citino 139).

As early as 1933, Standard Oil of California had signed agreement with the King of Saudi Arabia, as the US oil companies were skeptical of the influence of the United Kingdom over the Saudi oil reserves due to the financial constraints of the Arab king.

In 1943, the US government survey pointed out that the Middle East had become the center of gravity and the world oil production was shifting from the Gulf-Caribbean region to the Middle East (Painter, Oil, Resources, and the Cold War 493).

Before World War II, the US government provided diplomatic support to the private US companies like Standard Oil Company of California and Texas Company, to receive concession in foreign countries. However, with the end of the war, the US government entered into an agreement with Britain to collaborate and not compete in pursuing the oil resources in Middle East.

However, this Anglo-American oil agreement was opposed by private US companies, who feared would reduce oil prices, due to cheap imports from Gulf due to government intervention (Painter, Oil, Resources, and the Cold War 493).

These issues were believed to be strong by a few members of the Congress, which resulted in a return to the Open Door diplomacy where private companies would operate in security, and profitably as government, initiative was limited to indirect involvement with oil matters in the Gulf. However, the US government had to take an active interest in the volatile political situation in the Middle East due to rise in Islamic nations.

During the World War II, Iran was occupied by the erstwhile USSR and the UK. Strategic analysts believed Iran to be vital for both the US and the USSR due to the critical geopolitical location of the country and its abundant oil resources. Right after the war, in the early forties, Iran too wanted to attract US oil companies in order ease the influence of the USSR and Britain.

US on the other hand, wanted to remove foreign influence and military occupancy in Iran, sought to influence the Iranian government to recover the natural resources.

The Truman Doctrine helped the US established its control over the northern region of Iran, Turkey, and Greece, therefore, establishing control over the eastern parts of the Mediterranean and Middle East (Painter, Oil, Resources, and the Cold War 495). This helped the country to retain control over the oil resources in the Middle East and prevented the entry of the USSR in the region.

The reason for this political move of the US was vested with two intent  first was to ease off the balance of payment problems of the country through increasing business of oil through US companies in the US, and second, keeping the Soviet out of Middle East thus, establishing control, in order to establish a military base, which can launch an attack on Soviet Russia in the event of a war (Citino 140).

This was the time when there occurred all the great oil deals in order to secure the expansion of the oil supply in Middle and Near East.

The result of this was the formation of the private system of an international production management that helped in oil production in Middle East and its incorporation with the global market. The US government strategically gained control over half of the oil share in Middle East by coordinating with the large private oil companies and the oil rich Arab nations.

The postwar petroleum order was a profitable venture for the US oil companies and a political and strategic success for the US until the formation of Palestine in 1947. President Truman supported the UN plan to partition Palestine into two parts and recognize the state of Israel was the first step to offend the Arab partners.

This created an opening for the USSR to enter the Middle Eastern oil industry in 1950 and 1960s. This helped in the expansion of the automobile industry in Western Europe and Japan in between 1950 and 1970 (Painter, Oil, Resources, and the Cold War 498).

The main issue with the arrangement of the west with the Middle East arose with the rise of the question of limiting western military capability in the Middle East and the declining power of Britain. The main issue that the US faced strategically was not military threat from the USSR, rather the growth of anti-Western feeling and Islamic nationalism in the Middle East.

This instilled a fear among the US policymakers that this rise of Arab nationalism could facilitate the expansion of the Soviet in the region. Both Britain and the US wanted retain control over the Middle Eastern oil resources for strategic reasons, but disagreed on the nature of diplomacy to be used to counter the rise of nationalism in the region (Painter, Oil, Resources, and the Cold War 499).

The US was in favor of meeting the demand of the nationalists of higher share in profits from the oil industry as long as they did not post a threat to the US strategic control and the operations of the private corporate in the Middle East. On the other hand, Britains balance of payment was more dependent on the oil revenues from the Gulf and therefore, was reluctant to give into the demand of the nationalists.

The Anglo-Iranian oil venture was critical for Britain as this was its most important overseas investment and the countrys balance of payment was largely dependent on it (Painter, Oil, Resources, and the Cold War 499).

United States too shared similar apprehensions regarding the rising Arab nationalism but it was more concerned with the effect the forceful reverse-nationalization in Gulf by Britain would have on the emerging turmoil in Iran (Painter, Oil, Resources, and the Cold War 499).

The US believed any adverse move by the British would undermine the position of the Iranian shah enhancing the position of the pro-Soviet Tudeh party, and may result in an intervention from within the region. The nationalization of the Suez Canal by the Egyptian nationalist leader, Gamal Abdel Nasser, created problems for the passage of oil from the Gulf to the West, as the canal was the chief passage for the western companies.

To worsen the situation, Britain along with France and Israel developed a plan to gain control over the canal and avenge Nassers action through military retaliation. Due to this, Syria and Saudi Arabia stopped their supply of oil to these countries.

Britain and France believed that the US would help them by supplying oil during the war torn years. However, President Eisenhower refused to provide petroleum to Britain and France and threatened to cut away all aid to Israel if they did not refrain from the attack. This strong pressure from the US government helped to stop the impending war, and major oil companies supplied Europe with oil as long as the canal did not open.

The Suez crisis was a burning example to the western world the rising Arab nationalism posed to the western world. Thus, it altogether was a threat to US plans to rebuild Western Europe with the oil from the Gulf. Nasser pushed the cause of Arab nationalism to gain control of their oil resources and use to further political agenda of the Middle East.

The main aim was to reduce western dominance in their oil resources, economic development of the Arab nations who were not rich in natural resources, and annihilation of Israel (Painter, Oil, Resources, and the Cold War 501). The fear was surmounted due the mutual distrust between the USSR and the US.

The latter constantly feared that turmoil in the Middle East would open the doors for the Soviet and their allies to take control over the oil rich region, adding to their military and economic position.

The US was always skeptical of the Soviet influence in the region, and therefore, Eisenhower helped the rise of the conservative Islamists in the region to drive away communism and nationalism from the region (Painter, Oil, Resources, and the Cold War 500).

The key rout through which oil was marketed to the Western Europe was through Egypt, Syria, Lebanon, and Jordan (Painter, Oil, Resources, and the Cold War 501). For formation of the United Arab Republic through the joining of Syria and Egypt in 1958 only created additional problem to the oil route.

Further, a coup on the pro-west monarchy of Iraq through a nationalist revolution in July 1958 created additional problems. US assumed Nassers interference in the coup but refrained from any military retaliation, as it would have destabilized the situation further.

However, the leaders of the nationalist party who helped the coup, agreed to respect the agreement with US and Britain regarding oil supply from the country (Painter, Oil, Resources, and the Cold War 502).

Both the western countries sent army to Lebanon and Jordan, to reestablish control over the region (Painter, Oil, Resources, and the Cold War 502). However, the possibility of communist control of Iraq and other Middle Eastern countries posed a special problem, especially during the Cold War era.

Iraq posed a threat to the Arab nationalism and garnered support from Britain who viewed Nasser of Egypt as a greater threat. However, the US believed that communist inclination of the Iraqis could pose a greater threat to the volatile condition of the Middle East and by extension to the oil issue of the west.

With the disassociation of General Abd aI-Karim Qasim from the Baghdad Pact and his increasing association with the Iraqi Communist Party created further drift between Nasser and Qasim (Painter, Oil, Resources, and the Cold War 502). In 1961, after Kuwait gained sovereignty, Qasim declared that Kuwait was a part of Iraq.

Kuwait being the fourth largest oil producing country was the largest supplier to Britain (Painter, Oil, Resources, and the Cold War 503). If Kuwait was to become a part of Iraq, it would be an unprofitable situation for Britain and US, and so they sent troops to Kuwait to safeguard the country from Iraqi attack (Painter, Oil, Resources, and the Cold War 503).

The Arab League quickly followed suit with troops from Saudi Arabia, Jordan, and United Arab Emirates, thus helping in successful evacuation of troops from Kuwait, yet maintain control over their stakes in Kuwaits oil resoruces (Painter, Oil, Resources, and the Cold War 503). The US along with Britain aimed to annihilate the rising power of Qasim and the communist party in Iraq, and therefore brought forth the Bath Party in 1963.

With the formation of the Organization of Petroleum Producing Countries (OPEC) consisting of the major oil producing and exporting countries like Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela in Baghdad in 1960 (Painter Oil, Resources, and the Cold War 504).

OPEC gained power over the prices of oil in the international market, reducing the dominance of the western oil companies to control the international oil prices; it was greatly detrimental to the goals of Arab nationalism.

Further, the breaking up of the United Arab Republic and the building of super tanks that could bypass the Suez Canal created further impediment on the nationalist agenda. Thus, it was in the 1960s that the fears of any further soviet take over of the Middle Eastern oil, almost subsided.

The New Oil Order

The postwar petroleum order thus, emerged through a continuous process of political diplomacy in the Middle East which primarily aimed at gaining control over the oil resources by the US and Britain. The US employed soft diplomacy to control the oil resources of the Middle East and their desire to keep communism away from the region led to various event, which eventually led to the demise of the order.

The aim of the US and Britain was simply to establish themselves as the leaders in oil production in the world during the postwar era (Painter, Oil and the American Century 24-26).

Some critics of American policy believe that the soft political approach of America to intervene in the Middle Eastern issues and the creation of the postwar oil order was simply a vehicle to establish American hegemony in the world (Kubursi and Mansur 8).

Britain was completely out of the political scenario by 1979, when after the gradual fall of the appeal of the Arab nationalists, there arose a wave of Islamist allegiance in the Middle East.

The Suez crisis in 1957 clearly demonstrated that the US would not deter from using force on Middle East if there was a need for it, as was pointed out by President Eisenhower in 1957: I think you have, in the analysis presented in the letter, proved that should a crisis arise threatening to cut the Western world off from the Mid East oil, we would have to use force. (Kubursi and Mansur 8).

This point of view came into effect almost two decades later in the conflict between the USSR and US on Afghan soil, after the fall of the shah of Iran to the rising Islamic forces. Many believe that hegemonic control over the Middle Eastern oil remains the source of global power for the US (Kubursi and Mansur 9).

Thus, the picture became clearer in 1973 when OPEC quadrupled the prices of oil in the wake of Israel-Arab conflict (Kubursi and Mansur 9).

Critics of American hegemony in Middle East have pointed out that the Gulf War orchestrated against Iraq in the nineties was aimed at establishing democracy in an authoritarian rule of Saddam Hussein and the western intervention aimed to safeguard Kuwait from the autocratic, illegal, invasion but the a means to control over the Kuwaiti oil resources (Frank 268).

Had the intentions of the western allies and champions of democracy been pure they would have waged similar war against South Africa for continued apartheid policy, or Iraqs invasion of Iran, or the USSRs invasion in Afghanistan (Frank 268).

Thus, evidently the reason was oil and managing some other domestic economic problems (Frank 271). Iraq was also trying to handle the economic pressure that oil industry had posed on its economy due to the recession (Billion 691).

The oil politics shaped the foreign policy of the US in the postwar era. The petroleum order then created was through soft politics, which established the private, oil companies from the US to have control over petroleum from the worlds oil rich regions.

However, with the Gulf War, political and military volatility, and increasing dependence of the US on the oil resources of the Middle East created major economic problems for US. Further, the rise of OPEC as a monopolistic controller of the oil supplies globally also posed a major problem to the hegemonic control of the US over the oil resources.

This led to the establishment of the new oil order by the Bush administration to maintain their supremacy and continue the flow of oil to the western hemisphere. The aim of the US was to look for new oil rich regions that would become sources of cheap oil.

However, the lessons from the past history of the control over oil has led to believe that even if initial control can be established over the poor, but oil rich regions, eventually they emerge as a force in the world politics undermining the hegemony of the west.

Works Cited

Billion, Phhillipe Le. Corruption, Reconstruction and Oil Governance in Iraq. Third World Quarterly 26.4-5 (2005): 685  703. Print.

Citino, Nathan J. Defending the postwar petroleum order: The US, Britain and the 1954 SaudiOnassis Tanker deal. Diplomacy and Statecraft 11.2 (2000): 137-160. Print.

Frank, Andre Gunder. Third World War: A political economy of the Gulf War and the new world order. Third World Quarterly 13.2 (1992): 267-282. Print.

Kubursi, Atif A. and Salim Mansur. Oil and the Gulf War: An American Century or A New World Order. Arab Studies Quarterly 15.4 (1993): 1-17. Print.

Painter, David S. Oil, Resources, and the Cold War. T (2010):. Leffler, Melvyn P. and Odd Arne Westad. The Cambridge History of the Cold War 1. Cambridge: Cambridge University Press, 2010. 486-506. Print.

. Oil and the American Century. The Journal of American History 99.1 (2012): 24-39. Print.

BP, with a tagline Beyond Petroleum, is a company that centers its primary goals in terms of meeting the incessantly heightening demand for fossil fuels, product advancement and transitioning to a lower carbon future. BP learnt some indispensable lessons from the Gulf War when its expansive strategies were undermined.

The lessons have since resulted into spectacular success through efficient investments, which have proved worthy, both in short and long term while also ensuring that the company has access to growth markets while being able to maximize value chains and reduce costs.

In reference to cost cutting and efficient investment, BP in order to reduce costs which was greatly being incurred in wood burning and the use of electricity, BP has resorted to using solar power. Notably, it is always encouraged that financial leadership goals must be in line with company values which in this case are mutual advantage, environmental care and constructive engagement when a company wants to cut costs.

In order to achieve these, long and short term goals such as maximization of value chains flexibility and judgments are essential as a result of imposed external events. BP is also in the process of developing a technology to capture and store carbon dioxide.

The company officials believe that carbon capture and storage is an overly pertinent contribution in light of the growing need to tackle carbon emission. Also notable is the BPs 10 point plan which can be viewed as a unique aspect of the financial strategies used by BP.

BPs 10 point plan to increase value in transparency for its shareholders is in measure to its strengths which include gas value chains, technology, relationships, giant fields and deep water. The 10-point plan also strives to build a stronger and safer company which will in turn guarantee a sustainable value for the company.

These strategies measure active portfolio management of investors, they also give insight to whether there is strong balance sheet with gearing which refers to the groups net debt plus equity in the lower half of the 10-20% range, for re-investment purposes half of incremental operating cash to be used while the other half for other purposes, new upstream projects on-stream with unit operating cash margins double the 2011 average (constant oil price $100 per barrel) and lastly generate around 50% more annually in operating cash (Dudley 1).

Statements of directors responsibilities, consolidated financial statements and notes on the same, unaudited supplementary information on oil and natural gas, board performance reports whose primary focus is to provide guidance, resources and support required by the organization are all clear proofs that the company has been able to manage its finances effectively.

Nonetheless, the annual reports on management, shareholders, directors and senior management as well as competent and skilled employees and management also prove this (BP 1). The proof can be further extracted from emphasis on creating value in a harsh environment which underlines all of BPs activities.

However, there is a need for the company to make some adjustment to the statement of the directors responsibilities. It can be noted that the statements of the accounts which give an impartial view to state of affairs.

In the same light, the relevant notes on accounts, independent auditors report which provides evidence against inadequate representation of fact through fraud or any other errors, adherence to accounting policies and standards and procedures (BP 1).

References

BP. Performance For All Our Futures. BP. n.d. Web.

BP. BPs Business Strategy. BP. n.d. Web.

Dudley, B. Refining & Marketing: Delivering a world class downstream business. Web.

Executive Summary

This paper reveals the case study that focuses on the explosion which happened on the Deepwater Horizon seven years ago. It was claimed to be one of the greatest disasters that led to human deaths and oil spills that affected the ecosystem adversely. Professionals argued whether the fact that British Petroleum failed to ensure safety and appropriate crisis management was the main reason for the accident. This view is analyzed in the addressed in the paper. It is also discussed how the company could have responded to the explosion and why.

Problem Statement

One of the most critical oil spill disasters related to the petroleum industry took place in April seven years ago. It occurred on a drilling rig owned by the largest company that operates within oilfield services and deals with offshore drilling, Transocean Ltd. The explosion on the Deepwater Horizon led to eleven deaths and oil leaks, resulting in enormous damages not only to human lives but also to the environment, economy, and tourism. As a consequence, British Petroleum (BP) had to deal with the biggest oil spill and financial losses at the same time. What is more, its reputation was negatively affected. Even though the company couldnt predict the explosion and prevent it, proper behavior in the framework of crisis management could have had positive influences on the observed outcomes (Ingersoll et al. 2).

BP spends much effort trying to overcome issues related to reputation damage. Still, it is only one of the consequences of the main problem. To improve the situation, the company started up a communication machine, but experts questioned its effectiveness. Thus, professionals wondered whether BP maintained crisis management properly or failed to do it. In this way, the problem was what BP should have done to enhance its crisis management and communication. Even though the company had other issues as well, this one turned out to be the most critical because it affected almost all the companys operations directly or indirectly. It influences the companys income, the source of competitive advantage, customer satisfaction and loyalty, the morale of employees, and strategic directions. In addition to that, it is connected with the way BP could have improved its performance and repair reputation to overcome financial losses and become competitive again.

Data Analysis

BP had experienced crises before the explosion that happened in 2010. For example, Wolf and Mejri emphasize the fact that it neglected safety several times (51). For example, in the middle of the 20th century, one of the oil rigs that belonged to BP collapsed, and more than ten people died. In 2005, a similar situation repeated and fifteen employees died in the fire while more than 150 of them were injured. Back then, the organization was charged, but recent events showed that it did not start paying expected attention to safety.

The oil spill was caused by the gas explosion. The very disaster started can be traced back to April 19 when the well reached more than 12,000 ft below the seafloor. The company used 51 barrels of cement, but this number was not enough to ensure a required seal. During drilling, mud was lost to the reservoir as expected but then it was pumped into tanks. However, seawater was lighter than mud and that there was not enough cement to balance the flow of gas, so it went in the drilling fluid. There are almost no doubts that the supervisors were aware of this situation, as the photo reveals that a diverter line was affected (see Exh. 1). The volume of mud continued to increase, and the recorder failed to reveal the data appropriately. However, professionals did not stop pumping at that time. When they did, the pit volume decreased at first, but it remained the same the next time and even continued to increase. The extreme pressure led to the blowout, the gas shot the water out and exploded.

This situation reveals that BP did not make the required emphasis on the value of safety when training its personnel. It was more critical for the supervisors to fulfill the task they had instead of implementing measures needed to avoid possible danger. BPs response to the crisis is not efficient.

In this way, it is also possible to claim that the population that was greatly affected by this accident included those workers who performed their duties on the Deepwater Horizon. In addition to that, the management team was affected because it had to deal with the consequences of the explosion. It was critical to resolving problems connected with organizational performance. The families of those who died that day were also influenced by the disaster because they lost a person who supported them. The companys partners could have become less willing to cooperate with it because of the possibility to be negatively affected by BPs reputation. Even the representatives of the general public had to reconsider their attitudes and loyalty.

To improve the situation, BP followed the decision of the federal government. It got engaged in the clean-up and paid attention to those people who were affected by the disaster itself or its indirect influences. The organization focused on health, safety, and welfare. It was involved in the economic recovery of those industries that were affected by the oil spill, including tourism and seafood (Ernst and Young).

In the framework of crisis management and communication, the organization faced a range of difficulties because its personnel did not know how to cope with issues that occur while operating. The company and its management team did not provide any guidance that can be used when facing an ethical issue and trying to decide whether to continue performing to fulfill the most critical goals or to focus on how potential disaster can be avoided. What is more, BP had an opportunity to resort to its previous experiences and to develop a plan that can be used to prevent the next possible crisis. In this way, BP also had a chance to avoid additional expenses. However, being responsible for numerous issues, the company had to pay more than $5 billion in 2010 and provide more than $50 million to health organizations (Wolf and Mejri 80).

There were different ways in which the problem could have been addressed. The company could have reacted to the disaster, and its consequences ignored it, or claim it to be not a BPs mistake. Still, it would have been advantageous if the organization developed a crisis management plan for its employees to follow in any situation that might affect safety anyway.

Key Decision Criteria

Trying to identify which alternative to following, BP should have thought of the way each of them dealt with the issues observed by the organization. Thus, attention should have been paid to the possibility to restore the reputation and enhance financial performance. All in all, it can be presupposed that it would have been better for the company to respond to the disaster immediately because in this way it could have improved the situation better than other options.

Alternatives Analysis

BP could have reacted to the oil blowout, claiming that it was an accident. The organization could have tried to make its stakeholders believe that there had been no sights of an issue that might have led to the explosion. In this way, BP could have made others believe in its innocence and ensured that it had done its best while operating. As a result, the company would have lost a relatively small part of its clients. However, some partners and customers might start thinking that BP is not experienced enough and that its performance is poor so that it is better not to cooperate with it. Still, proving gross negligence, the organization had an opportunity to avoid expenditures connected with the necessity to support the ecosystem.

BP might have tried to claim that the disaster happened because of other parties. If it had conducted some research to collect information that can prove at least some errors made by other organizations, BP would have been able to make them compensate the affected people. In this way, the company would not only save its money but also improve its reputation, attracting clients back. Still, this option would have entailed a range of ethical issues.

Finally, BP could have resorted to the third alternative. It could have reacted to the explosion immediately, accepting its fault for the inability to ensure safety. The company should have interacted with other professionals to develop a range of initiatives that were likely to reduce negative influences provided on the ecosystem. They should have maintained research and developed a long-term plan to enhance the environment and provide full payment for those people who were affected. In addition to that, BP should have focused on the possibility to advertise seafood and tourism industries that were negatively affected by the explosion. All in all, this initiative could have been the most appropriate one because it addressed all critical issues and avoided ethical dilemmas.

Recommendations

To respond to disasters appropriately, BP needs to develop a working crisis management plan that can be resorted to by the staff members who face critical situations. Considering the discussed case, the organization should create an infrastructure that can be utilized to deal with possible leaks. It should be based on deep-sea oil wells that are used by BP. With the help of the absorbent wall, the company is likely to prevent further issues of this kind.

It will be a great advantage for BP to gather an emergency response team. This group of professionals should patrol that wall and ensure its efficiency. Needless to say, that such a team is to contain well-experienced professionals who have all required theoretical knowledge and skills that can be used in practice.

In the framework of crisis communication, the company should pay much attention to its stakeholders. Transparency should be discussed as a tool to attract clients and restore their loyalty. BP should take responsibility for all those issues that occurred due to the mistakes it made and the inability to ensure safety. Even sincere apologies may be enough to improve the situation greatly. In this way, the company should hire a spokesperson who can easily get in touch with numerous clients.

The company should also reconsider the use of social media because it has already proved to be a great type of communication that can be approached without any significant issues. Unlike a personal website, social media allows the company to avoid constant reconsideration of the discussed disaster, and negative feedback regarding it is also likely to be reduced in this way.

Finally, the organization may consider the possibility to develop some kind of disaster website so that if some crisis occurs, professionals have an opportunity to reach it and inform the population regarding the possibility of crises (McMasters).

Action and Implementation Plan

• To implement changes, following the results of data analysis, it can be claimed that BP should have done the following:
• Collect the oil that was spilled during the disaster;
• Address experts in the sphere to develop the most advantageous solution initiatives;
• Point out the way BP would respond to the consequences;
• Establish trust-based relations with stakeholders, sharing information about the accident;
• Cooperate with the government to minimalize negative influences on other industries;
• Provide compensations to families of those employees who died;
• Gather a group of professionals to focus on such issues;
• Improve safety standards;
• Provide training;
• Enhance security system;
• Promote tourism;
• Develop initiatives to improve the ecosystem.

Exhibits

Exh. 1: A Gas Flare Coming from a Diverter Line (Aeberman)

Works Cited

Aeberman. What Caused the Deepwater Horizon Disaster? The Oil Drum, 2010, Web.

Ernst and Young. Deepwater Horizon Accident and Response. BP, 2014, Web.

Ingersoll, Christina, et al. BP and the Deepwater Horizon Disaster of 2010, 2012, Web.

McMasters, Michael. Analysis of Situation/Background. LinkedIn, 2015, Web.

Mejri, Mohamed, and Mohamed Mejri. Crisis Management: Lessons Learnt from the BP Deepwater Horizon Spill Oil. Business Management and Strategy, vol. 4, no. 2, pp. 67-90.

Wolf, Daniel, and Mohamed Mejri. Crisis Communication Failures: The BP Case Study. Management Journal, vol. 2, no. 2, pp. 48-56.

The Upstream Petroleum Exploration Project

This project focuses on the CovOil multinational Oil and Gas Company.

The company is in need to recover from the past financial losses.

The disaster claimed the lives of 8 personnel with other damages being incurred by the companys extensive offshore platforms.

As a result, the company had to cover for the disaster damages and still be able to carry out normal business operations.

Some of the measures the company undertook after the damage involved the acquiring of additional oil reserves (Kerzner 2013).

Acceptance criteria for the project

There is need to have Seismic survey for reserve identification, 3 deviated well and vertical poles that can act as petroleum reservoir (Hillson 2003).

Block stations that incorporate the procurement, delivery and installation fields.

3 Storage terminals and access roads. Other project requirements include field camps and meeting with the stakeholders.

Project milestones

The license of the presidents approval has mandated project execution without any delay, current favourable oil price and the organization CEO; Mark Jason has showed a positive response to the project materialization.

To avoid any social dispute that may arise in the future, specifically once the project has been practically and fully initiated (Meredith & Mantel 2006).

The vertical wells are important for POD calculation, which is the point of deviation.

The storage terminal serves as crude oil storage facilities. The access roads to allow for easy site accessibility and products transportation.

Projects Assumptions and constraints

The disasters impact that occurred has greatly affected the financial status and limits the projects investment capabilities on the companys side.

The government is likely to be involved in additional cost sharing to actualize the project. Large lucrative projects that entail financial gain require the full participation and inclusion of the involved counties (Aven & Vinnem 2005).

The net cost of the project has affected both time and material price fluctuations. The cost calculations of majority of the materials have been calculated for one year duration and are approximately 90 million dollars.

Reference List

Aven, T & Vinnem, JE 2005, On the use of risk acceptance criteria in the offshore oil and gas industry, Reliability Engineering & System Safety, vol.90, no.1, pp.15-24.

Hillson, D 2003, Using a risk breakdown structure in project management, Journal of Facilities Management, vol.2, no.1, pp.85-97.

Kerzner, HR 2013, Project management: A systems approach to planning, scheduling, and controlling, John Wiley & Sons, New York.

Meredith, JR & Mantel, SJ 2006, Project Management: A Managerial Approach, 6th edn, John Wiley & Sons, New York, NY.

This essay is about the continued reliance on Petroleum by the United States and its effects on the US economy between now and 2025. The geo-politics of oil as well as the options before the US in terms of energy transition are discussed here. The base report for this paper is the Global Trends 2025 report published by the National Intelligence Council.

At the outset, I would like to state a Safe Harbor statement. Predicting the future is a hazardous venture and one can be certain of it only on the basis of extrapolation of current trends into the future. However, I wish to point out that we can make safe bets about the future with the data that is available with us.

The first point to be noted is that the world would be fundamentally different in 2025. The necessity of energy transition would dawn on all the major countries of the world and it is high time that the United States government take steps to ensure that this happens. We would be witnessing the transition from a Hydrocarbon Economy to that of say, a Hydrogen Economy. For this to happen, there are several steps that the policy makers have to undertake.

These include support for alternative technologies in the form of increased federal budgetary allocation for research and development of these technologies. However, the report is not too optimistic on this as it states, Long-lasting hydrogen fuel cells have potential, but they remain in their infancy and are at least a decade away from commercial production. Enormous infrastructure investment might be required to support a hydrogen economy. An Argonne National Laboratory study found that hydrogen, from well to tank, is likely to be at least twice as costly as gasoline.

This leaves us with a scenario where the United States has to continue to rely on the traditional energy source i.e., Oil. This would be accompanied by the geo-politics of Oil that includes having uninterrupted access to a steady reserve of oil and control over the major sources of production, at the extreme. Both these would involve the US militarys presence in safeguarding the interests of the American Economy. As such, we have seen instability in the Middle East threatening the world price of Crude Oil every now and then. Such disruptions to the supply of crude must be kept at a minimum and this would involve diplomatic and political maneuvering by the US.

The world may have to live with higher petrol prices and the American consumer may well be advised not to panic when he or she sees the pump price of Gasoline rise beyond a certain level. Some amount of austerity and frugal living are called for on the part of the average American. Gas guzzling SUVs and similar types of vehicles must be phased out and energy efficiency should be the norm.

With the rise in Oil prices and reduced production, players like Russia and Iran, countries that are ambivalent in their stance towards the US, would gain prominence. The US would have to countenance the presence of these and other countries like Venezuela having disproportionate power on the world stage.

In conclusion, it is apparent that we prepare for a world where the phenomenon of Peak Oil cannot be ignored and we have to come to terms with it. The measures outlined above and the steps that we discussed about alternatives are some projections we can make based on the data that is available with us. It is the hope of this author that the world in 2025 is more stable and peaceful than it is now.

Introduction

The purpose of this paper is to regard the history of OPEC as the organization of petroleum suppliers, represent this alliance as the political power and provide the models of its further development from the context of its necessity and usefulness for the development of the world economy.

To begin with, it is necessary to mention that the OPEC (Organization of Petroleum Exporting Countries) was created at the conference in Baghdad in September 1960. It is stated that the founding members of the organization were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Later, the other States joined the organization: Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), and Gabon (1975) (Araim, 2002)

The main purpose of the organization was to restrict the amounts of the oil export for keeping the prices on the high levels. The fact is that this period was featured with the increased industries and the production booms. Thus, the falling prices of the oil exports could cause essential losses for the exporters. The members of OPEC agreed to meet on a regular basis for setting the production levels for keeping the prices. It should be emphasized that the nature of oil as the exported unit (crude oil is meant) joined with the restricted amount of exporters is the perfect product for the cartelization, and helps to keep the prices on the high levels and regulate the volumes of oil supply, making it more or less available, depending on the current situation in the world.

History of OPEC

Firstly, it should be stated that soon after the foundation of the organization, it experienced the rise. Originally, this rise is attributed to the shifting balance of power from multinational oil corporations and the countries  the producers and exporters of oil. The fact is that it was too difficult (almost impossible) to challenge the dominance of the oil exporters even in spite of the essential lack of the exploration and extraction skills, the imperfectness of the production technologies and the shortage of the distribution networks.

Therefore, the history of oil production and export system is rather confused and multi-angled. Thus there were several exceptions from the mentioned above rule. Mexico gained control over the oil extraction and petroleum production industries in 1938 (foreign companies owned all the companies before this time), and quickly abandoned the profitable international market because of the lack of investment resources.

Nevertheless, the World War II changed thethe situation essentially. Petroleum was in the greatest ever necessity, and the oil exporters started seeking for more favorable contracts. Shojai and Bernard (2001) stated the following: In 1943 Venezuela signed the first fifty-fifty principle agreement which provided oil producers with a lump sum royalty plus a fifty-fifty split of profits (i.e., selling price minus production cost). In the late 1940s Venezuela revised their tax system to capture a greater share of the oil profits. The oil companies responded to this move by shifting oil purchases to countries with cheaper contracts. In response, Venezuela contacted Arab producers and encouraged them to demand similar fifty-fifty deals and reform their tax systems. Saudi Arabia, seeing the value of the fifty-fifty contract and understanding the power of acting collectively, quickly demanded and received a similar contract from Aramco

Some researchers emphasize that the very creation of OPEC was just the formalization of oil exporters relations, as lots of countries started adjusting specific rules much before the 1960s. Thus, in 1947 the parliament of Iran adopted the law, which claimed for the termination of previous treaty with Anglo-Iranian company British Petroleum.

Shojai (2006) emphasizes that when the negotiations failed to lead to a compromise, Iranian Prime Minister Mossadegh nationalized oil operations by the in May 1951. The collapse of the oil industry pushed the economy into chaos. Domestic opponents, aided by the American Central Intelligence Agency, were able to topple Mossadegh in 1953. A new British-Iranian agreement was signed the following year. The newly restored Shah of Iran became a pillar of American middle east policy until the Iranian Revolution in 1979.

Moreover, this period was featured with the increased oil demand, and the growth of production. The allover problem was reinforced by the fact that all the Fifty-Fifty contracts were concluded on the basis of the fixed (posted) prices but not on the basis of market prices. The posted prices were fixed only with the aim of increased profits for the oil exporters, thus, they had an incentive to grant additional concessions to expand oil revenue. All the increases of the supply levels caused an essential fall of the market prices, which lowered the profits of the multinational oil corporations.

After the creation of OPEC, and the foundation of nominal oil relations, the situation was not subjected to only marketing factors, as the political and ethnic conflicts were the main factors information of the prices. Thus, the outbreak of the Arab-Israeli conflict not only caused the increased the export prices for oil and oil-based fuels, but also transformed OPEC into a solid political power, which could influence the political issues.

Clark (2003) states the following: After the Six-Day War of 1967, all the Arab members of OPEC decided to create a separate group, the Organization of Arab Petroleum Exporting Countries. The main purpose of this organization was to form a separate group of Arab oil suppliers for imposing pressure on Western countries for their support of Israel. Egypt and Syria, the countries which could not be regarded as the major oil-exporters, joined this grouping to help articulate its objectives. Furious at the emergency re-supply effort that had enabled Israel to withstand Egyptian and Syrian forces, the Arab world imposed the 1973 oil embargo against the United States and Western Europe.

The further history of OPEC was not featured with extensive changes in pricing, however, these occasions had fixed the position of OPEC, and all the oil exporters as the powerful political force, able to manipulate the rest of the world which requires oil for the industrial, and not only, needs.

The dynamics of the prices is shown on the graph. Originally, these fluctuations can not be regarded as essential, as the peaks were caused by the Arab Israeli conflict and the Iraq war, when the Arab exporters restricted the amounts of oil exports to the western countries.

Future of the Organization

Firstly, taking into account the politicization of the oil supplying international organization, it should be stated that the world politics and the essence of the international relations can not be controlled by those who simply has this resource. It is often emphasized that the time of the OPEC as it is represented in the world arena has already expired, and principally new organization should be created. The confirmation of these words is stated in numerous researches.

One of them states the following: Without OPECs control of oil export and supply there could be essential changes in oil price volatility with serious effects on increase of the oil industry and on the world economy at large. In the past, when the major oil companies used to control the industry, their highly efficient supply regulations fostered greater price stability in the oil market. Nevertheless, OPEC supply regulations, although less efficient, stay necessary as a mechanism of oil supply control, for relative price stability. (Cuervo, 2008)

Originally, it is considered paradoxical that during the era of oil supply regulation bay the oil companies, but not by the rules and conditions of the market economy, the oil industry of OPEC countries, especially the States of the Arab world, benefited from the essential growth of the incomes and the industry in general. However, when the countries of OPEC took the control over the whole industry, and adopted the regulation policy presupposing the high price levels, the center of oil industry growth moved to the other areas: the North Sea, West Africa, the Caspian region, Russia and other non-OPEC supply reserves.

Taking this fact into account, it is necessary to give the conclusion made by Dorraj (2001): The increase of new high-cost oil will go on being dependent on OPECs maintaining the principles of being the last-resort supplier and promoter of high prices, and thus losing its market share to the benefit of the non-OPEC suppliers. OPEC production control through its quota system, devised to defend high price levels, has secured very high profit margins for the oil companies, aiding their investments in high cost areas.

This fact only emphasizes the notion that the time of OPEC has already expired, nevertheless, the dependence on the oil supply is rather high, consequently, the countries will go on buying Arabian oil, as the reserved of the North shelves and reservoirs are not unlimited, thus, the OPEC countries will have their consumers. However, if the mentioned non-OPEC countries will increase the volumes of oil extraction, it will automatically cause the lowering of OPEC exports, and they will have to adopt a principally new structure and price regulation system for staying competitive.

Therefore, the fact is that the quota system of the OPEC countries had been based on the principle of Swing Producer (Dorraj, 2001) for the last 20 years. The main idea of this principle is that the countries got used to purchase almost all the required oil from non-OPEC countries, and the gap of the demand was compensated by purchasing the rest of the required oil from OPEC suppliers. Taking into account the differences in the growth of the world demand and non-OPEC extraction, OPEC countries experienced the increased demand for their oil.

Thus, it should be emphasized that OPEC had been supported their competitors indirectly. Nevertheless, the OPEC production was about 32mn b/d 25 years ago, when the principle of Swing Producer became the prevailing on the oil market. Currently, the OPEC extraction has essentially lowered (27mn b/d), while the world demand has grown by 14mn b/d.

From the point of view of these numbers, Ghosh (2004) emphasized the following: Since the slow re-nationalization of Russias oil and gas sector, other producers have shown a willingness to confront operators with new financial facts. Chads confrontation with international operators Chevron, Exxon Mobil, and Petronas has shown the willingness to increase overall revenue share in general. Thus, the future of the OPEC countries is regarded to be not very profitable. Thus, the further decrease of extraction is forecasted; nevertheless, the rapid growth of the prices for oil will cease essential lowering of the profits.

Another variant of the future for OPEC as the organization is regarded to be purely economic. If the demand for the OPEC oil essentially falls, all the explorations and production ventures may be sold. At the same time, a windfall tax of between 5%-50% will be put on revenues if crude oil (Brent) will be above $50. The analysts emphasize that numerous oil extracting countries will have to nationalize their resources, especially, if Chad and Algeria decrease the volumes of extraction. Great Britain, Bolivia, Argentina, and some other states have already started the nationalization process, nevertheless it is rather slow.

Conclusion

The history of OPEC and the countries participating in this organization has shown that this world is highly dependent on the oil and oil based fuels. Consequently, the organization was condemned to success and growth. Originally, the prices were controlled artificially, and they were not subjected to market rules. Thus, when the non-OPEC countries started appearing on the oil market and could provide serious competency to OPEC, they became rather popular among industrialized countries.

The future of the organization will not be the same as the past, as the situation has changes essentially, and the countries wish to buy oil cheaper, so, non-OPEC countries are going to become the leaders on the oil market.

References

Araim, Amer Salih. Intergovernmental Commodity Organizations and the New International Economic Order. New York: Praeger Publishers, 2002.

Clark, John G. The Political Economy of World Energy: A Twentieth-Century Perspective. Chapel Hill, NC: University of North Carolina Press, 2003.

Cuervo, Luis E. OPEC from Myth to Reality. Houston Journal of International Law 30.2 (2008): 433.

Dorraj, Manochehr. Will OPEC Survive?. Arab Studies Quarterly (ASQ) 15.4 (2001): 19.

Ghosh, Arabinda. OPEC, the Petroleum Industry, and United States Energy Policy. Westport, CT: Quorum Books, 2004.

Shojai, Siamack, and Bernard S. Katz, eds. The Oil Market in the 1980s: A Decade of Decline. New York: Praeger Publishers, 2001.

Shojai, Siamack, ed. The New Global Oil Market: Understanding Energy Issues in the World Economy. Westport, CT: Praeger Publishers, 2006.

A simulation is any model or context which attempts to assume an appearance of an object or event without it occurring in reality. Simulations for wells and reservoirs are a common practice in modern petroleum engineering and development. Using a computer model, the simulation attempts to mimic the appearance and behavior of the well through mathematical and physical computations in the attempt to describe the active geological processes ongoing in the reservoir. The primary purpose of such simulations is to estimate and predict mineral recovery in field settings, hypothesizing both the output and potential problems through the use of various methods such as drilling and fracking. Simulations can be complex but are inherently invaluable since they provide engineers with the ability to make educated predictions about physical wells which are costly, both financially and environmentally. Through the observation of the model and simulation of various production tools and conditions, engineers can consider a wide range of factors ranging from composition and thermal conditions to IMPES and porosity factors (“Reservoir Simulation”). In turn, optimal solutions can be found for the most efficient reservoir exploration.

The Computer Modeling Group (CMG) is the primary corporation that produces reservoir simulation software for major oil and natural gas producers. It offers several modeling techniques through its programs which can be utilized by the industry for various purposes. Its three most well-known software programs are IMEX, GEM, and STARS. IMEX is a staple of the industry, used as a black oil reservoir simulator, and considered one of the best and fastest to model recovery processes. GEM software is focused on unconventional production through equation-of-state analysis and compositional modeling. Finally, STARS is a more complex model of thermal, chemical, and other sophisticated processing meant to simulate fluid behavior and injections (“Software”). CMGs software is renowned for its accuracy, advancement, and efficiency, serving the largest companies in the industry as well as continuing to invest heavily in further research and development. Such well-designed computer software simulations are vital to the oil and gas industry as it helps to greatly improve quality, safety, and efficiency while minimizing the impact on local populations and environments, an important factor in the development of extensive wells.

The Rogersville Shale is located in North East United States including the states of Ohio and West Virginia and includes numerous wells such as the Roane and Calhoun County wells. It is part of a deep sub-basin known as the Rome Trough which began to be surveyed in the early 2000s and began drilling tests in 2015. Although organically rich, it is difficult in developing due to its depth, complex structure, and stratigraphy, particularly of the deep, fault-segmented areas. However, the mineralogy of the shale suggests it could offer significant potential to produce gas and oil because of its organic content and thermal maturity, albeit it needs to be “fractured to improve permeability” (“Information on The Rogersville Shale”).

There is a significant concentration of wells located in the Roane and Calhoun counties of West Virginia, developing the Rogersville Shale. Roane County has approximately 18.7 thousand barrels of total production (“Oil & Gas Activity in Roane County, WV”). Meanwhile, Calhoun County stands at about 20.4 thousand barrels (Oil & Gas Activity in Calhoun County, WV”). Calhoun Country has not yet undergone shale drilling, and recently, the ground was broken on an interstate pipeline stretching through both counties, suggesting that more heavy development will be underway (Mancini). Attached below are charts and statistics to better understand the state of the oil and gas drilling industry in these counties.

Works Cited

1. “Information on the Rogersville Shale.” NGI, n.d., Web.
2. Mancini, Jess. “Calhoun County officials, TransCanada Reps Break Ground for Compressor Station.” The Parkersburg News and Sentinel, 2018, Web.
3. “Oil & Gas Activity in Calhoun County, WV.” ShaleXP, 2017, Web.
4. “Oil & Gas Activity in Roane County, WV.” ShaleXP, 2017, Web.
5. “Reservoir Simulation.” Oil&Gas Portal, n.d., Web.
6. “Software.” CMG, n.d., Web.

Abstract

Fossil fuels have been the primary source of energy for humankind for at least 200 years. They amount to over 40% of the world’s energy consumption. Since the events of Deepwater Horizon in 2010, the industry was forced to adopt new policies of safety, quality control, and professional ethics. Sustainability, environmental friendliness, efficiency, and innovation are paramount to the oil-drilling industry in the 21st century. Continued utilization of new technologies, such as BOP, ROV, satellite oil spill detection, IT, AI, and more efficient drilling techniques will ensure the industry’s value in the global market for the future.

Introduction

Ever since the second half of the 19th century, fossil fuels have become the primary source of energy for humankind. According to Doric and Dimovski, oil accounts for roughly 40% of the entire energy mix, while gas amounts only for 15% in that regard. With the modern global economy expanding exponentially, the demands for oil are on the rise. It is unlikely for oil to be replaced by other, renewable sources of energy in any foreseeable future.

Petroleum engineering remains one of the most lucrative industries across the globe. Activities related to it include extraction, transportation, production, and recycling of hydrocarbons as well as the construction of various utilities necessary for the facilitation of the process. These processes are very complex and revolve around careful planning as well as diligent labor and maintenance. However, hydrocarbons as a resource are finite. At the world’s current rate of consumption, some researchers estimate the world’s oil resources to last for 53 years. Therefore, it is necessary for the fuel industry to obtain a measure of sustainability until reasonable alternatives can be found.

Oil drilling is a complicated, expensive, and environmentally unfriendly process, which further affects its sustainability and eco-friendliness. The goals of the industry for the next 50 years should be the promotion of energy efficiency through the use of advanced and innovative technologies combined with efforts to reduce negative environmental impact in order to protect our fragile ecosystem.

Environmental Impact of Oil Drilling

The expansion of oil excavation efforts is associated with negative environmental impact coming from trying to access the oil deposits found in locations difficult to access. As it stands, the majority of fuel deposits located on the surface have already been explored. However, the deep sea remains a largely uncharted vault of hydrocarbons for humanity to utilize. Both deep-sea and surface operations present an inherent danger to the surrounding environment.

urface excavation is associated with pollution and unsafe alterations to the geological stratum. Oil extraction leaves empty vacuums underneath the surface, which cause cave-ins and disruptions on the surface, as demonstrated in Figure 1.

Deep-sea drilling is even more dangerous to the local ecosystems than surface drilling, due to multiple variables introduced to the equation. Some of the greatest concerns regarding underwater oil and gas exploration revolve around the lack of information and complexity of the local ecosystems, which creates challenges to safe drilling and ecological management.

In some cases, improper management of oil drilling platforms can cause planet-scale disasters. One of the most known incidents revolving around deep-sea drilling is the Deepwater Horizon Oil Spill of 2010, which is considered the largest oil spill in the world’s history. Over 4.9 million barrels were released into the sea, and the spill itself was enough to facilitate worldwide climate change due to alterations to the flow of the Gulf Stream.

Figure 2 shows the scope of the massive oil spill caused by the accident on a British Petroleum drilling platform. The creation of infrastructure for deep-sea oil drills always poses a significant environmental risk. Some of the inescapable effects include re-suspension and seafloor digging for pipelines, which have the potential to cause a 2-kilometer oil discharge. According to Cordes et al., these spills have the potential to affect not only the ecosystem in the immediate vicinity of the spill but also the environment outside of it.

The massive public backlash in the aftermath of the Deepwater Horizon Oil Spill significantly increased the rigidity of international environmental guidelines and regulations. These changes lead to the improvement of oil-drilling practices and greater concerns for the environment in an effort to mitigate the negative impacts of deep=sea drilling. Some of the effective mechanisms to reduce the chances of chemical pollution and controlling the aftermaths of oil spills include blowout preventers (BOP), the use of remotely operated vehicles (ROV), and satellite detection systems.

The blowout preventer is a mechanism that helps minimize the amount of oil discharged into the sea. Deep-sea drill operations require various fluids and chemicals in order to run the machinery, such as hydrostatic liquids, lubrication oils, and coolants. When the pipe is inserted into the oil well, it causes a spread of contaminated drill cuttings to spread around the seafloor. BOP operates similarly to a gate valve, using a pair of opposing steel plungers in order to confine well fluids to the wellbore. The valves controlling the well enable drill fragments and fluids to be directed to the surface through a pipeline, where they are recycled.

Remotely operated vehicles (ROV) are some of the primary tools used by deep-sea oil-drillers in order to explore, inspect, and perform underwater activities necessary for conducting the extraction of hydrocarbons from underneath the ocean floor. These machines can go far deeper than any divers or human-operated vehicles. They are equipped with manipulators and use an automatic slave system in order to allow the operators to perform routine operations under extreme pressures. The lack of use of ROVs was one of the systemic failures that led to the Deepwater Horizon Oil Spill. These machines were also utilized to manually activate failsafe switches on the BOP in an attempt to curb the oil flow.

Finally, one of the advanced methods of oil spill detection involves satellite detection, tracking, and remote sensing. They implement an array of sensors in order to detect oil spills from space. Conventional sensors include infrared cameras, optical detectors, and microwave radiometers. Active detection systems include laser fluorosensors and radar systems.

One of the most reliable and efficient ways of detecting oil spills using satellites is the use of synthetic aperture radars (SAR). Some of its advantages include a wide area of coverage and all-weather capabilities. Due to the number of satellites orbiting the planet, it is possible to cross-reference satellite reports in order to ensure the accuracy of the results. Satellite surveillance allows for rapid and accurate responses to oil spill incidents around the world.

Due to public attention surrounding deep-sea oil drilling, the industry needs to adapt high ecological standards of labor in order to protect the planet and be able to compete with environmentally friendly alternatives to fossil fuels. In addition, these measures are necessary for accordance with government regulations for oil drilling. Mitigating public scrutiny and restoring the trustworthiness of the industry in the eyes of the general public is paramount to the economic success of any deep-sea drilling venture.

Improving Drilling Efficiency

Because hydrocarbons are a finite and increasingly rare natural resource, drilling efficiency plays a key role in improving the quality and production volumes of deep-sea oil. Historically, the industry measured petroleum products based on the number of operational oil rigs. However, this approach is inaccurate, as oilrigs do not accurately represent the measure of productivity, which is calculated based on petroleum production rates and volumes.

Drilling efficiency is influenced by several variables, which include the amount of extracted oil, the quality of the extracted oil, the expenses associated with oil extraction and transportation, and the volume of oil accessed through a single drilling action. The amount of the extracted oil correlates with the volume accessed through a single drilling action. Typically, a single sea-based oilrig can extract oil from a single basin. When that basin becomes shallow, the oilrig is forced to dig deeper or change location, which is associated with additional expenses. Modern technologies enable drills to dig deeper and change direction during drilling, enabling access to the farthest reaches of the basin.

The quality of the oil is a very important aspect of hydrocarbon extraction. There are many ways to potentially ruin a prospective oil well either by contaminating it with water or remains of drilling activities, which lowers the quality of the oil and forces to use costly refining techniques. The drilling and entry point stages define the quality of the extracted oil. Some of the advanced techniques aimed at improving the quality of drilling are steerable liner drilling, one-trip SDL drilling, and perf-wash-cement techniques.

Drilling efficiency is connected to energy efficiency and environmental security. As it stands, there are many policies and regulations that affect the productivity of the petroleum industry. Refineries and wells differ one from another based on their technological processes, locations, and hydrocarbons they extract. Crude and heavy products are unprofitable and strongly associated with increased greenhouse gas emissions. Thus, the primary objectives for the petroleum industry are efficiency optimization and emission reduction, both of which are economically viable and ecologically friendly.¹¹

Digital Computing in Drilling Operations

Drilling operations are technologically intensive processes. They require extensive design, control, and maintenance in order to resume petroleum refining. The logistical components include supply chain management, distribution, and transportation of products. Managing this extensive net of responsibilities is impossible without sophisticated planning and engineering software. Digital technology has the potential to improve the efficiency of the petroleum industry in a highly competitive global business environment. Computers have many potential applications in oil drilling and excavation. Some of them include operational management, capacity efficiency improvement, capital expenditure reductions, seismic projections, refinery design, and construction as well as advanced process controls.

Information technology can be used to acquire, transfer, analyze, and synthesize important data pertaining to the petroleum production processes. Big data and artificial intelligence can be used in order to improve drilling operations and make accurate market predictions. The speed of information flow in addition to advanced analytical tools would enable determining the expected demand for petroleum and modify output accordingly. Advances in robotics and the development of AI would help eliminate the factor of human error during exploration, design, drilling, and excavation processes.

The three primary trends for digital computing in petroleum engineering include future operations through predictive maintenance and transformative functions. Reservoir design and construction requires advanced calculations as well as seismic imaging technology. Finally, digital marketing would enable producers to track and manage consumer habits.

Conclusions

This report outlines the ongoing trends in petroleum engineering. Since the incident of the Deepwater Horizon Oil Spill of 2010, the industry has made an effort to optimize its production by making it safer, more efficient, and ecologically friendly. These changes were enforced by close government scrutiny and public opinion. Using advanced technologies has proven to be a profitable venture from technical and economic perspectives, as they help protect the surrounding environment while simultaneously improving drilling efficiency and the quality of the extracted oil. Ecological sustainability is necessary for fossil fuels to be able to compete with other prospective sources of energy in the next 50 years.

The end goal for the evolution of the petroleum industry is to become a self-sufficient, sustainable, and fully automated venture that promotes environmental safety and ensures that the disruptions caused to the surrounding environment are minimal. Humanity cannot afford another tragedy like Deepwater Horizon, which means that the oil industry should always hold itself to the highest standards of scrutiny.

References

Doric, Barbara, and Vlado Dimovski. “Managing Petroleum Sector Performance – A Sustainable Administrative Design.” Economic Research – Ekonomska Istrazivanja, vol. 31, no. 1, 2018, pp. 119-139.

Niblock, Tim, and Richard Lawless. Prospects for the World Oil Industry. Taylor &Francis, 2016.

Beyer, Jonny, et al. “Environmental Effects of Deepwater Horizon Oil Spill: A Review.” Marina Pollution Bulletin, vol. 110, no. 1, 2016, pp. 28-51.

Cordes, Erik E., et al. “Environmental Impacts of the Deep-Water Oil and Gas Industry: A Review to Guide Management Strategies.” Frontiers in Environmental Science, vol. 4, 2016, pp. 1-26. Web.

Shukla, Amit, and Hamad Karki. “Application of Robotics in Offshore Oil and Gas Industry – A Review Part II.” Robotics and Autonomous Systems, vol. 75, 2016, pp. 508-524.

Fingas, Merv, editor. Handbook of Oil Spill Science and Technology. John Wiley & Sons, 2014.

Lieskovsky, Jozef, and Sam Gorgen. “Drilling Efficiency Is a Key Driver of Oil and Natural Gas Production.” U.S. Energy Information Administration. 2013. Web.

OG21. Technologies to Improve Drilling Efficiency and Reduce Costs. 2014. Web.

Han, Jeong-woo, et al. “A Comparative Assessment of Resource Efficiency in Petroleum Refining.” Fuel, vol. 157, no. 1, 2016, pp. 292-298. Web.

Choudhry, Harsh, et al. “The Next Frontier for Digital Technologies in Oil and Gas.” McKinsey & Company. 2016. Web.

The scale and scope of the project

With regard to project management, the scale and scope of a project involve all the information that is required to initiate a project and all other features that could be in line with requirements of stakeholders (Kerzner 2013, Lewis 2005). The project manager and other team members met stakeholders to brief them about the project.

A seismic survey was conducted in order to accurately identify the location of oil reserves. Afterwards, personnel were involved in drilling wells that were characterised by certain measurements. It was important for the team to establish flow lines that could link wells to block stations, which were connected to a storage terminal. In order to ensure effective transportation of oil, the lead manager was keen on the construction of roads that were built at a cost of 0.15 million USD per kilometre. The whole project was estimated to cost over 270 million USD.

Important systems

Project managers are required to adopt systems that are aimed at increasing the chances of success of a project (Meredith & Mantel Jr 2011). Project systems could be either cheap or expensive to execute, depending on various factors. An organisational system was crucial in putting in place the right workforce that could help to achieve the desired outcomes. The transportation system was aimed at achieving an effective movement of oil products from wells to the storage terminal. In addition, a system of wells was essential in locating the petroleum reservoir.

Importance of collaboration

Different studies have identified the roles that are played by collaboration among team members in a project (Dvir, Raz & Shenhar 2003). Although different departments in a big project of an organisation conduct different activities, they are all aimed at achieving a common goal (Al-Harbi 2001). In the context of the completed oil project, the collaboration resulted in coherence because all departmental heads worked together to identify issues and propose ways of addressing them. Furthermore, collaboration was important in ensuring that project resources were shared among different business functional areas.

The emergency plan

When project managers are implementing a project, they are aware of various natural and technological disasters that could arise (Eisenman, Cordasco, Asch, Golden & Glik 2007). With regard to oil exploration, life-threatening disasters could negatively impact families and performance outcomes of oil drilling companies. Thus, it is important for management teams to adopt emergency plans that are geared towards achieving the following:

1. Preventing fatalities and work-related injuries
2. Reducing damage to equipment
3. Protecting the surroundings and the community
4. Accelerating the performance of normal operations

Technological disasters include the following: fire, loss of electrical power, release of toxic chemicals, explosions, and loss of water supply (Watkins & Bazerman 2003). On the other hand, natural disasters include floods, severe storms, earthquakes, and severe extremes in temperature (Blaikie, Cannon, Davis & Wisner 2004; Van Aalst 2006). It is important to note that some events might cause other events to occur. For example, an exploding chemical might cause a fire that might lead to structural failure. In addition, an earthquake could be the cause of many technological disasters (Fox, White, Rooney & Rowland 2007).

The emergency plan adopted by the project management team involved four parts. First, possible emergencies, appropriate actions, procedures, and resources to address disasters were identified. Second, the plan contained a detailed list of personnel that was characterised by contact information, duties and responsibilities of all workers.

Third, structural plans of the plants were made available to managers and personnel in all departments. Fourth, large-scale maps were adopted to show evacuation routes that could be used during disasters. Thus, it is apparent that the project was conducted using the standards of emergency preparedness that could be used to respond to natural and technological disasters.

References

Al-Harbi, KM, 2001, ‘Application of the AHP in project management’, International journal of project management, vol. 19, no. 1, pp. 19-27.

Blaikie, P, Cannon, T, Davis, I, & Wisner, B, 2004, At risk: natural hazards, people’s vulnerability and disasters, Routledge, London, United Kingdom.

Dvir, D, Raz, T, & Shenhar, AJ, 2003, ‘An empirical analysis of the relationship between project planning and project success’, International Journal of Project Management, vol. 21, no. 2, pp. 89-95.

Eisenman, DP, Cordasco, KM, Asch, S, Golden, JF, & Glik, D, 2007, ‘Disaster planning and risk communication with vulnerable communities: lessons from Hurricane Katrina’, American Journal of Public Health, vol. 97, no. 1, pp. 109-115.

Fox, MH, White, GW, Rooney, C, & Rowland, JL, 2007, ‘Disaster Preparedness and Response for Persons With Mobility Impairments Results From the University of Kansas Nobody Left Behind Study’, Journal of Disability Policy Studies, vol. 17, no. 4, pp. 196-205.

Kerzner, HR, 2013, Project management: a systems approach to planning, scheduling, and controlling, John Wiley & Sons, Hoboken, NJ.

Lewis, JP, 2005, Project Planning, Scheduling & Control, 4E. McGraw-Hill Pub. Co., New York, NY.

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Introduction

The development of the biofuel industry is becoming more urgent. The depletion of traditional energy sources and the growing demand and prices of hydrocarbon types of fuel are of concern to the entire world community. In order to ensure global energy and environmental security, some petroleum companies are actively trying to reduce the dependence of energy on fossil fuels. One of the directions of modern engineering is the use of biofuel. Biomass can be used for a variety of purposes – from heating homes to generating electricity and motor petrol. The use of such a resource is a modern trend in the industry under consideration, and its application in practice can be valuable from the point of view of the economy. Modern bioenergy is based on highly efficient technologies for converting biomass beyond bioethanol into convenient energy sources (electricity, liquid, and gaseous petrol, and prepared solid fuel).

The Trend’s Genesis

Currently, modern and efficient conversion technologies allow producing biofuel in solid, liquid, and gaseous forms from such materials as wood, crops, and waste, that is, without bioethanol. According to Cheon et al., this type of resource is an energy carrier that stores power derived from biomass (10). For the production of bioenergy in a variety of forms, a wide range of biomass sources can be used. For example, to produce electricity, heat, and other forms of power, it is possible to use food, fiber, and woodworking waste that the industrial sector provides. Also, as Hu et al. note, energy crops, and agricultural waste that this sector supplies can be applied (58). Biofuel can be called a renewable source because it is the form of converted solar energy.

The basic distinction is made between the primary (untreated) and secondary (processed) biofuel. According to Cheon et al., the first type is the fuel, where organic material is used mainly in its natural form (11). It is burned directly to meet the needs of fuel for cooking, heating, or power generation in small and large industrial facilities. Secondary biofuel in solid, liquid, or gaseous form can be used for a wide range of applications, including transport and high-temperature industrial processes.

There are many sources of biomass for power purposes, which are dispersed across vast and diverse geographic regions. Even today, most of the energy derived from biomass, which is used as fuel, is produced from by-products or wastes from food, feed, and fiber. The primary by-products of the forest industry are used for the production of fuelwood and charcoal. For instance, black lye that is the by-product of cellulose plants, is the basic fuel for bioelectricity generation in Brazil (Papoutsakis 10170). Therefore, the variety of ways to extract and process this type of energy makes it a trend in the modern petrol industry and motivates many industrial companies to use such a technology in their practice.

Consequences, Longevity, and Specific Long-Term Effects of the Trend

If the trend of using biofuel produced from non-industrial materials is borrowed by many world companies, it can have certain positive consequences. For example, an ecological situation can significantly improve. The abandonment of unsafe raw materials can help to establish a favorable climate in industrial areas where a large accumulation of harmful emissions occurs constantly. Moreover, despite the fact that liquid biofuel provides a small fraction of the world’s energy needs, it can potentially have a significant impact on global agriculture and markets (Hu et al. 62). Because of the volume of produced raw materials and the use of corresponding land areas necessary for this source’s production, the trend can be adopted by many petrol enterprises.

The longevity of this practice can be quite large since various wastes are inexhaustible resources, which allows the processing of necessary raw materials in biofuel. From a long-term perspective, this trend can become global and may be used not only in countries with a developed processing industry but also in many other regions. Agriculture is an area that is constantly developing, and new ways of recycling waste and other raw materials are regularly invented. Provided that oil companies work to introduce biofuel into the production process, it could be a new turn in the industry. The rejection of chemically created combustion products can help to save costs significantly and achieve effective product performance. Leading global companies may focus on other areas of work, and additional innovations can be presented. Therefore, the trend of using biofuel in petrol engineering is potentially successful and useful from different points of view.

Conclusion

A highly efficient energy resource in the form of biofuel produced on the basis of non-chemical materials’ processing can be used to provide energy for different industries. The prospects of this practice allow industrial companies to avoid significant losses and to use natural components for fuel production. A positive impact is on the environment due to a reduction in the number of harmful emissions. In the future, this method can become a common working strategy of oil engineering and help companies to improve their efficiency while reducing costs.

Works Cited

Cheon, Seungwoo, et al. “Recent Trends in Metabolic Engineering of Microorganisms for the Production of Advanced Biofuels.” Current Opinion in Chemical Biology, vol. 35, 2016, pp. 10-21.

Hu, Wenhao, et al. “Comparative Techno-Economic Analysis of Advanced Biofuels, Biochemicals, and Hydrocarbon Chemicals via the Fast Pyrolysis Platform.” Biofuels, vol. 7, no. 1, 2016, pp. 57-67.

Papoutsakis, Eleftherios T. “Reassessing the Progress in the Production of Advanced Biofuels in the Current Competitive Environment and Beyond: What Are the Successes and Where Progress Eludes Us and Why.” Industrial & Engineering Chemistry Research, vol. 54, no. 42, 2015, pp. 10170-10182.