Challenges Faced By Oil And Gas Companies: Emerging Themes And Impact (essay).

At the end of a module students will be expected to be able to:

1. Demonstrate a critical understanding of emerging themes as informed by research and the marketplace.
2. Critically analyse evolving trends in business management in order to provide robust strategic solutions to organisations.
3. Proactively source and apply research to inform operational and strategic decisions in different organisational contexts.
4. Critically evaluate a range of alternative courses of action in order to solve problems and implement decisions which result in achievable and appropriately viable outcomes for specific organisations.

This assignment requires students to research into the emerging themes within the business sector related to their programme of study and use the evidence gathered to inform operational and strategic decisions. Students should apply their critical understanding of relevant emergingthemes to formulate alternative courses of action necessary.

The following case studies provide the necessary background required for you to complete this assessment task.

Read ONE case study that is relevant to your specialism of study (as provided below): Case study 1:

For students undertaking the programmes:

• BSc (Hons) Business Management
• BSc (Hons) Professional Management
• BSc (Hons) Enterprise and Small Business Development
• BSc (Hons) Business Management with E-Commerce

The oil and gas companies are facing major challenges in the recent years as identified by Primeast. The purpose of the report is to evaluate the challenges faced by the oil and gas companies and to relate it to the four pillars of emerging themes which are society, work environment, technology and industry and market. For this assignment, a case study by Primeast has been chosen that provides the necessary details about the top five challenges faced by oil and gas companies. The top five challenges that the oil and gas sector is currently facing includes the problem of 3D effect, handling the government pressure of introducing carbon reduction targets, attracting investments, improving the safety standards and adapting to change (Primeast 2018). In this report, the emerging themes associated with the chosen case study will be evaluated in order to identify the ways in which the identified themes can affect the existing organizational policies (Marcel 2016).  The futuristic impacts of emerging theme are discussed in the following paragraphs.

Findings and Analysis 

The aim of this report is to analyse and outline the different ways through which certain emerging themes might impact the current business strategies in the oil and gas sector. In this section of the report, critical evaluation of the case study is undertaken in order examine the appropriateness of the existing organizational policies and procedures. In order to evaluate the impact of emerging themes in oil and gas companies, the case study is analysed on basis of four pillars of emerging themes are focused on, which are society, work environment, technology, industry and market.

One of the main pillars of emerging theme is Society. The society involves the people and the current trends affecting the people. Thus, society is one of the major pillars of emerging theme.  “Society” deals with demographic changes and social trend shifts. The articles analyses the demographic changes and the social trends. The demographic trend that is identified from is a direct effect of the emerging theme.  Demographic trend can be defined as the statistics of human population. The article by Primeast identifies the demographic trends affecting the oil and gas industry leading to the emerging theme of use of modern technology. The high demand of oil due to increase in population worldwide considerably affects the process of oil production. The existing oil sources tend to dry up leading to the search for new sources (Shuen, Feiler and Teece 2014). The search and new sources and extraction of crude oil from those sources need the involvement of technology. The industry need to redesign their business strategies extraction of oil from those sources is possible. In this context, industrial revolution can be discussed which includes use of modern tools and automation. Industrial revolution furthermore, has resulted in systematisation of different processes that seeks to improve the efficiency and performance (El-Diasty and Ragab 2013).

In this context, the changes in social trends are needed to be analysed as well. From the article, it is identified that there have been a shift in management of the organizational policies and procedures associated with the social trends (Howard and Probert 2014). The social trend that is identified from the case study includes increase in the number of consumers of oil and goods over the years. In order to deal with the social trend, it is needed to bring about technological innovation for better management of the organizational policies and procedures as the existing organizational policies and procedures need a shift. This can be achieved by automation of core organizational processes associated with the process of energy production. The companies in oil and gas sector that are facing similar problems should ensure accurate computerisation mainly in the working environment in order to mitigate the problems (Smith and Richards 2015). Thus industrial revolution is essential in order to promote this type of effectiveness in the energy sectors so that the energy products and services can be delivered at an affordable rate (Williams, Kilanski and Muller 2014). Demographic changes can impact the current business strategies of oil and gas sector. As identified by Primeast, it can be concluded that the increase in demand for oils, it is essential to discover and utilize the new sources. However, the 3D effect makes it difficult for the business organizations to extract oils from new sources (Phillips, Hailwood and Brooks 2016). In order to deal with this problems, many oil and gas corporation are attempting to resolve the issue by joint ventures. Thus, these changes can considerably affect the existing organisational policies and practises. The change in the existing policies and practises is related to the government pressure of improving safety standards in oil and gas sector. One major change in current business strategy of oil and gas sector is to set ambitious carbon reduction targets (Yusuf et al. 2014). As per the change in the business strategies followed, the oil and gas industry is being scrutinised closely to device newer ways for extracting the natural resources thus minimising the pollution.  

Impact of the emerging themes

Work environment is used to describe the surrounding conditions in which an organization or a company operates. The work environment of oil and gas industry is near to the site of oil extraction. However, with the drying up of the existing oil wells, the work environment of oil and gas industry needs a modification (Rehm et al. 2013). This has a significant effect on the existing organizational policies and procedure which includes modification in the process of oil extraction.

Political Environment and Legal transformation is related to the work environment. From the analysis by Primeast, it is identified that the oil and gas sector is currently facing problems with their existing policies and procedures. This is mainly because of the increasing government pressure for management of carbon reduction (Kumar and Rabinovitch 2013). Government has slashed the carbon reduction target in order to reduce emissions associated with oil and gas. Failing of adhering to the carbon reduction targets, the oil and gas companies can experience legal issues. The oil and gas industries have observed legal transformation on basis of the carbon reduction targets.

Thus, it can be said that political environment and legal themes have a large impact on the existing policies and procedures in oil and gas industry. Thus, the existing business policies and procedures are needed to be updated according to the shift in organizational policies and procedures, which includes a shift in the work environment. Since the existing oil wells are drying up, it is essential to search for newer sources which will indicate a shift in the work environment.

There has been a considerable shift in the use of technology related to oil and gas industries.   The pillar “technology” relates to the application of scientific knowledge that is used for practical purposes. The technological advancements that has been identified from the case study indicates the major emerging themes associated with technology. The article discusses the technological advancements that are seen in the oil and gas sector. The technological advancements in oil and gas sector are a direct effect of the 3D effects along with other significant problems such as drying up of the existing wells. Digital revolution is one of the key emerging themes in oil and gas industry. This is mainly because technological developments and their applications help in providing digital transformative opportunities that in turn help in easier management of operations (Perrons and Hems 2013). The opportunities provided by the technological advancements provide paramount efficiency in working environment and in industry at a large scale (Guliev, Kerimov and Mustaev 2016). This is possible since the automated applications in the contemporary digital environment have the capability to substantially enhance the energy consumption efficiency, which is one of the major aspects of decreasing natural resources of oil and gas and in escalating the energy demand (Coons et al. 2014). This can be achieved by the energy sector by employing different platforms of social media and similar other digital or social media channels for educating the society regarding the need of energy conservation (Finšgar and Jackson 2014). The digital strategies can allow the oil and gas sector to understand the social behaviours and attitudes that can help in accomplishing energy security as well as sustainability (Savitz 2013). Thus, this digital revolution relates to the emerging theme of technological advancements that can considerably impact the business strategies including the appropriateness of the existing organisational policies and practices.  One major problem that oil and gas sectors are currently facing includes dealing with the 3D effect (Badiru and Osisanya 2016). It is considerably difficult to find new sources of oils and therefore, the use of modern technology is needed. The technological advancements can help in mitigation of these problems and can further help in enhancing the business processes of oil and gas sector. As a direct effect of lack of technological innovation in oil and gas sector, the current business strategy that needs to be changed is related to the investments (Ford, Steen and Verreynne 2014). Adapting to change is therefore considered to be major change in the business strategy of the project. The changes include the need of making use of modern technology and digital revolution in the operations of oil and gas industry (Lake et al. 2014). In order to mitigate the problems faced as a result of the emerging themes, there is a need for the organization to adapt to the required changes (Yusuf et al. 2014). For instance, social media platforms can be used to educate the society about the conservation of energy. The industrial revolution seeks to improve human performances, efficiency and production. Thus, computerisation in energy sectors allows a particular organization to achieve a maximum energy production, and reduction in the cost (Badiru and Osisanya 2016). This industrial revolution although might add to the complexity of the existing business strategies, the automaton of core organizational processes can help in upturning the effectiveness of oil and gas operations (Ford, Steen and Verreynne 2014). The use of advanced technology furthermore, enables the energy sector to make use of different strategies in reduction of high risk.

Society

The industry and market details the industrial environment in which the industry is based on. In this context, the industry globalization and global economic issues can be discussed. Globalization can be considered as a key trend in business world, and is a result of the environmental factors that are driving the companies towards operating in a homogenous worldwide market (Williams, Kilanski and Muller 2014). From the article, the global economic issues and trends of industry globalization can be identified. With the increase in global oil demands, managing the increasing oil demand becomes essential. The case study by Primeast identifies the difficulties that are currently faced by the oil and gas sector in attracting investments. The emerging theme of making use of advanced technology has an effect on attracting investments adding to the global economic issues. In industry and market refers to the trends that are currently in practise in the oil and sector that affect the market position of the industry. The use of modern technology can help in dealing with a number of problems that are faced by the sector. Thus, the merging theme that is identified in the article has a profound effect on the business of oil and gas sector.

The emerging themes identified in the previous section have a large affect on the operational and strategic decision making of oil and gas industries. In this context, the shift in the decision making strategies associated with the operations in oil and gas industry can be discussed. As identified by Primeast, the need for dealing with the 3D effect and excessive demand for the oil due to demographic changes has revolutionized the way of extracting oil in the last few years. High risk production strategies are designed in this sector to improve the effectiveness of distribution activities and energy production (Klass and Meinhardt 2014). The identified issues have a considerable affect on the strategic decision-making process oil and gas companies in next five years.  These issues if not addressed can have a large impact on the organisational objectives, operations and relevant stakeholders associated with the project.

With the change in the operational processes and process of oil extraction, decision making strategies related to production of refined oils are bound to change as well, which in turn will affect the stakeholders associated with the industry. As an effect of the emerging themes and its impact on technological advancements and demographic changes, legal issues, economic environment, the strategic decision making process in oil and gas sector can change in next five years. Researches prove that the oil and gas industry is expected to have greatest difficulty in developing world (Ford, Steen and Verreynne 2014). This is because one significant challenge that is observed by the oil and gas industry is production of refined industrial products and crude oil at a lower cost. Production of the crude oil and refined products in lower prices is necessary in order to stay competitive in the market (Popoola et al. 2013). One of the major challenges faced by this industry is to reduce the cost of production by reducing the cost of extraction and refining. Thus, in order to increase the sustainability and the competitive advantage in the market in the next five years, it is quite significant to reduce the cost of production (Daofu et al. 2013). The reduction in the cost of production in order to remain competitive is one of the main problems faced by the oil and gas industry (Yusuf et al. 2014).  These are certain major decisions associated with the operation of oil and gas sector. The decision making process is expected to change drastically in next five years. The most prominent issues associated with this sector such as drying up of the existing oil wells have already started to address the decision making ability in this business sector.

Work Environment

The emerging theme associated with demographic changes has a profound effect on oil and gas industry and its decision making process. With the increase in population, the oil and gas industry is forced to redesign many of their operational processes that has a large impact on the decision making strategies.  It is seen that the oil and gas industry has been a large consumer of water and energy resources. Thus, it is necessary for the oil and gas industry to rethink abstraction to reduce pollution (Klass and Meinhardt 2014). In order to manage and control the pollution and reduce the environmental damage, the oil and gas industry needs to follow certain rules as dictated by the government, this adds to the difficulties that are observed by oil and gas industry. This can considerably affect the stakeholders associated with this industry thereby affecting the decision-making ability.  Thus, the emerging themes have already started to affect the decision making process of this sector over the next five years as certain crucial decisions regarding the changes in oil and gas sector is needed to be taken.

As a result of the redesigning the methods and operational strategies of oil and gas industry, the decision making strategies of oil and gas industry will see a reform (Badiru and Osisanya 2016). However, in order to manage the issues associated with the oil and gas industry, the organisational objectives, operations and practises are needed to be revised. Currently the oil and gas industry is gradually undergoing changes in their operations and practises by adapting to newer methods of extraction of oils.

In order to deal with the changes and the emerging themes, the oil and gas sector needs to redesign their business strategies according to the changes, requirements and the need for the business sector. The recommendations will help the managers to mitigate the issues identified in the oil and gas sector.  Certain recommendations for redesigning the course of action within the broad sector for managing the effects and impact of the identified emerging themes are discussed in the following paragraphs-

Redesigning the business Models: The energy Companies need to adjust their business models, for dealing with the operational inefficiencies associated with the oil and gas industry. The oil and gas industry has survived a tough phase as it was difficult to plan for future and make strategic decisions accordingly. This include, embracing newer technologies as identified by Primeast, one of which is cutting edge technology. For that, it is essential to hire highly skilled engineers.

Use of Modernised Equipments:  the use of modernised equipments and tools for dealing the 3D effect is another recommendation in this field.  This is essential since the oil and gas businesses are finding new sources that are extremely hard to access. The use of modernised tools is necessary in order to extract oils from deep oils that are difficult to drill. Extraction of oils from new sources requires cutting edge technology and skilled engineers. Therefore, adoption of modernised tools and equipments are necessary in order to extract oil from new sources.

Technology

Improvement in Safety Standards: Primeast has identified another need in oil and gas sector that was introduced in the year 2013. This need is improving the safety standards associated with the industry. Improvement in the safety standards is another effect of the demographic changes. Therefore, it is recommended that the reduction in environmental pollution during oil extraction should be focused on. Government has been increasingly strict over the past few years in order to reduce the environmental pollution during oil extraction. Handling of this increasing government pressure can be hard to deal with as governments across the globe are introducing ambitious carbon reduction targets to slash the emissions. In order to ensure, that the oil and gas industry adhere to the strict guideline, the industry is closely scrutinised. Thus, the use of newer ways for extraction of oils is necessary to be considered.

Appropriate Identification of the Challenges: It is further recommended that it is necessary to identify the major challenges that the oil and gas sector is currently facing so accurate business strategies can be identified. Skilled individuals and proper understanding of the technological requirements is necessary in order to make use of the latest technology. The case study organization Primeast have worked closely with the largest oil and Gas Corporation and thus issues identified by Primeast can be considered as the most significant one.

Adapting to change : adapting to the changes is another recommendation in the field of the oil and gas. Although there is a broad challenge in adapting to change, it will be absolute necessary for the oil the gas industry in future. This is particularly because adapting to change can help in mitigation of major issues associated with the extraction of crude oil in production of petroleum.

Conclusion 

The report discusses the four pillars of emerging themes which are society, work environment, technology, industry and market. The report identifies the emerging themes in oil and gas sector and its effect in the operational and business strategies of oil and gas sector. The report discusses the top five issues faced by the oil and gas industry in recent years. The report identifies the need of making use of latest technology so that the issues like 3D effect can be addressed. One of the most significant need for managing these issues include the need for adapting to the changes. Thus, Primeast has identified the importance of knowledge management in dealing with the major identified issues associated with the oil and gas industry

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