Petroleum Companies Through Agility Measurement the Purpose

¶ … Petroleum Companies through Agility Measurement

The purpose of this paper is to evaluate petroleum firms and focus on their agility factors, after that a conclusion can be achieved that specifies which one of the firms are more agile as compared to the rest. In this paper, a questionnaire will be built which will help in analyzing the petroleum companies. The measurement of agility here will be dependent on four main points, these are the Production strategy, the technology, the human resource and the organization structure. Each section will start with brief introduction which will describe the importance as well as the relation of that factor to the agility measurement. It will also seek to describe on how the agility can be derived from the requested information in the questionnaire.

Firstly, there has been some analysis of the oil companies in detail, many factors will be assessed regarding the oil companies such as their revenues, their origins, locations in which they currently conduct their operations and those in which they have extreme interest in, their current strategies and their future prospect. A look at the subsidiaries of these companies will also be covered, this will show that the firms are actively engaged in many different activities besides the regular business such as the heavy investment of many of the petroleum companies in renewable energy sources.

There is a huge effect on global political events by the petroleum companies, since energy requirement of the developed as well as developing economies grow more and more each day, the oil firms have more shares on many of the key political decisions being taken by industrial powers. Here the agility factor of the major oil companies plays a vital role in assuring their survival in an ever tough competitive environment.

Overview and Facts

In this section, there will be an overview of the three oil companies namely Petroleum Development Oman (PDO), Occidental Petroleum and Daleel, spotlight will be put on some of the major facts which surround this industry. The petroleum industry has many different subsidiaries besides the production of main fuel oil and petrol such as the production of various kinds of petroleum related and chemical products like pharmaceuticals, plastics and so on.

The total consumption of oil in the world is about thirty billion barrels in a single year. Here, the U.S. consumed more than twenty percent of the total which was produced in the year 2010. It is the biggest industry in the world taking account of all of its measures such as production, distribution and so on. Venezuela is estimated to have the biggest oil reserves in the world, after that Saudi Arabia has the second biggest reserves.

Now, let's have an overview of PDO. Petroleum Development Oman (PDO) is the biggest oil company in Oman, it is responsible for about ninety percent of Oman's oil production as well as almost all of the country's gas supply. PDO is owned by the Federal Government there who has more than fifty percent stake in it. Other big firms such as Royal Dutch Shell has some one third stake, Total (which is a French Oil firm) has four percent interest. In Oman, the first oil find was done in the 1960's.

The firm PDO searches for oil fields, it then develops these fields into more useful assets by doing many operations such as hydrocarbon treatment. The final product i.e. The crude oil which is made from oil wells is then stored rather than sell out by the firm.

From here on, it is then uploaded to the seagoing tankers which then functions on the commands of the firm's many different shareholders. Therefore, the firm's earnings do not come from the direct sale of oil. The main shareholders then take care of the budgeted operating as well as the capital expenditure. The overall revenues of PDO are increasing on a yearly basis which highly based on the rising oil prices at the market. It has more than ninety percent of Oman's oil fields which enables it to export more than seven hundred thousand barrels per day. Here Oman uses some sixty nine thousand barrels each single day which is considered to be some one third of the country's total energy needs, the rest is fulfilled through natural gas.

PDO is also greatly involved in the development and operations of natural gas fields as well as related production systems with the firm assistance from the Omani government. Here, the PDO gives gas to national gas system that is responsible for much of Oman's power generation plants as well as many of its industries. Some major things which are included in its gas production operations includes the supply of liquid hydrocarbons with more than fifty thousand barrels per day, this is condensed from the natural gas.

PDO is also responsible for many social welfare projects in Oman, it invests heavily in many projects such as in education as well as the development of talented individuals by the means of education and also assists many different sorts of training programs. It has investment in many different business as well as different communities by the source of its very own Business Development Centre.

The Daleel Petroleum Company started off from a combine venture in Oman. This company was created in the later half of 2002. Its main activities include exploration, the development of hydrocarbon reserves and so on. Its main values and principles includes the conduction of its operations in a cost effective as well as responsible manner which allows the usage of oil fields to be more socially and economically beneficial to everyone including the employees, the surrounding inhabitants and the shareholders.

It has done many selective investments from its existence and has shown to be a great emerging technological force regarding oil exploration. It also labels itself very efficient in the management of costs as well as the management of operating procedures, here it tends to maximize its complete economic performance. It also prides itself on providing some of the highest safety and medical standards in the world to its employees.

Daleel Petroleum Company also invests heavily on social projects, it defines itself as a huge contributor towards many projects which aim in serving many different communities wherever it operates especially in Oman. It does so by many financial and other forms of donation towards educational institutes, donation towards different charities which help people in many different ways, donation towards many municipalities and so on. It moves on with the principle that in order to be great, it has to be great with every neighbor, therefore it invests heavily in community infrastructure, the municipal activities, the donation towards children who are suffering from diseases such as Cancer and so on.

Since its start, it has come a long way in a very short span of time, it also has many great ambitions to further increase its operations with the corporation of its major stakeholders.

The firm Occidental Petroleum (Oxy) is an American oil and gas firm which performs its duties mostly in mainland U.S.A, much of the Middle East, Northern Africa region and Southern American region. It is the biggest petroleum producer in the state of Texas as well as the biggest gas producer there. It has many different operations currently in locations such as Kansas, New Mexico and others. It has its main headquarters in California. In the United States, it is among the top five biggest oil companies, this estimation is based on its market capitalization. According to recent estimates, it employed some thirty thousand personnel throughout the globe.

There have been many criticisms on Oxy's overall methods for management in dealing with its oil and gas exploration processes, here they have responded by pledging on their complete commitment towards their responsibilities. They have issued a statement in this regard which says that they are firmly committed in protecting the eco system, keeping safety and having the best standards of corporate and social responsibility in their operations present worldwide. The critics are concerned here on Oxy's past operations in many of its global areas. Oxy has many different subsidiaries like its own chemical manufacturing operation named OxyChem, OxyVinyls and many others. There are many joint ventures between subsidiaries of Oxy and other leading companies like that of OxyChem with UNIPAIR.

By the end of the year 2009, Oxy was measured to be the fourth biggest American oil and gas firm depending on its market capitalization, its total capitalization is measured to be of sixty six billion dollars. This is more than ten times the increment in its net worth since after 1990, at that time it as close to worth five billion dollars.

The main growth plan of Oxy in its oil and gas operations depends on three main operations, the enhanced oil recovery (EOR), the process of exploration and the process of acquisitions. The company's main oil and gas processes are focused at three main places, the Northern American region (U.S.), the Middle East as well as North African region and the Southern American region. Oxy's production comes up to more than three billion barrels of crude oil. The Northern American region is responsible for some two thirds of its total oil and gas reserves as well as some half of its total production.

It is also known to be a big provider of natural gas, also it is the second biggest provider of oil in the state of California and here it is known to have made the biggest petrochemical discovery for the last thirty five years. It has many key holdings of petrochemical resources at Permian Basin which is present in the regions of Texas and New Mexico, here it is the biggest oil producer and accounts to more than two hundred thousand barrels of oil each single day as well as having more than one billion barrels of oil reserves.

In the Arab world (Middle East and the Northern African region), it is responsible for some one third of its overall production, here it produces more than two hundred and fifty thousand barrels of oil. This area also has some thirty percent of Oxy's reserves. The main operations of Oxy are present in countries such as Oman, Iraq, Libya, Yemen and others. It is also credited to be the second biggest producer of oil in Oman. In the Northern African region, Libya is the only country where its operations are present.

Research Methodologies

Here analysis of the agility factor will be done of the mentioned oil companies, this will be done with respect to the following four main points, the production strategy, the technology, the human resources and the organization structure.

1) Production Strategy

"The purpose of production strategy is to measure the decisions or the actions which are taken by any organization in order to produce its services" (Milgate, 2004), here the services are petrochemicals. It shows which direction the enterprise is taking. The agility factor here is derived from oil firm's production strategy and is often described by the measures that the firm takes in order to improve on its customer care as well as properly using the resources of the firm in an efficient manner. In the cases of oil firms, these parameters of agility are associated with its procedure of many different operations such as oil production, exploration, drilling, plant commissioning and other related factors.

Exploration

Exploration is a process which involves the search of hydrocarbons like oil and gas beneath the earth's surface. It is an expensive as well as risky procedure especially when the exploration is done under sea. In all of the above mentioned petroleum companies, this is the starting phase in the overall petroleum processes which has many other fields. The development of the natural resources follows afterwards the success in the exploration from the initial phases and is also heavily relied on it. In the overview of the three oil companies, their exploration regions have been mentioned as well as their stake in the region such as Oxy which has huge exploration projects currently ongoing in Oman and other Middle Eastern nations, Daleel and PDO who also invests heavily on exploration especially in Oman. Also, at this stage many oil wells can be drilled which determines the capacity of these fields and how to make use of them according to the most effective manner, this is assisted by the complete field development study which will help in full scale production later on. The main agility parameters here are assessed from job quality which the mentioned oil firms always have during the explorations of wells and the complete data about it in order to go to the next phases of the process.

Questionnaire for assessment of exploration

1= Least, 5= Most

Are the objectives of exploration phase achieved and up to what extent? [1-2 3-4-5]

How much risk lies in the exploration phase, i.e. risk of failure?

[1-2 3-4-5]

Is the data collected about the site for exploration enough?

[1-2 3-4-5]

Are the current plans sufficient enough for further assessment?

[1-2 3-4-5]

How do you rate the agility factor here which involves the transition from this phase to the next?

[1-2 3-4-5]

Drilling

It is the phase in which the oil well is created through boring the surface of earth, the boring should be done in a specific manner in order to acquire the required petrochemicals like oil which lies beneath many crusts of the earth's surface. Other methods for drilling exist for different products such as gas which require its own specifications. The usual oil well is made by drilling a huge hole in the ground which may size from five to fifty inches in diameter, this is done by a drilling rig which rotates a fast moving drill.

After drilling the hole, many different sections of steel piping which in many cases are very thin as well as very strong and just a bit smaller than the borehole's overall diameter is placed within it. Here some cementing can be done between the piping and the borehole to keep it attached to each other, this way the flow of hydrocarbons is well managed. The main high pressure zones are isolated from each other as well as from surface. After the isolation of these zones and the complete process of casting is done, the borehole is dug further deep within the earth's crust, here the casting is done with much smaller sized materials. Many new types of boreholes have more than one set of small holes which are drilled in each other, everyone is casted properly with cements.

The main agility factor here involves the adaptation of the drilling method according to the surface in which it drills without invoking any sort of dangerous outcomes. This also involves the security parameters taken before the process has started.

Questionnaire on Drilling

1= Least, 5= Most

How do you rate your drilling contractor?

[1-2 3-4-5]

How is the success rate vs. The total # of wells?

[1-2 3-4-5]

How much effect does current optimization measures have made regarding drilling?

[1-2 3-4-5]

How much effective are the current logistics regarding drilling?

[1-2 3-4-5]

How well is the communication process within each sequence of chain of commands in each rig?

[1-2 3-4-5]

How effective is the well design used by the oil firm?

[1-2 3-4-5]

How effective are the safety measures introduced by the oil firm?

[1-2 3-4-5]

How do you rate the agility factor here which involves the drilling process and its adaptation according to the surfaces?

[1-2 3-4-5]

Plant commissioning

The process of commissioning involves the inspection of any sort of equipment or plant in order to be confident the owner got what it paid for, in other words making sure that the vendor has built the right thing which is required by the user. "Here the safety is also a major concern for the buyer and a huge portion of this process depends on the safe start up of the equipment." (Gupta, 2004)

In terms of oil and gas exploration projects, the related equipments such as drilling machines are checked and properly assured to deliver. The production plants are analyzed thoroughly and kept well according to the wishes of the owner and its operational requirements, operational requirements varies according to different companies such as Oxy, PDO, Daleel and others. This process of commissioning can be useful with not just the new equipments or newly created fields but to many of the running plants as well as their equipments. This greatly helps in the oil firm's aim in expanding, renovating and revamping itself.

In this field, the process of commissioning is done through a set of many integrated processes as well as different sorts of engineering techniques and procedures which checks and looks after each operational part of the processes. This ranges from individual processes like equipments to more complicated processes like different modules, set of systems and so on. "Commissioning can be applied to many different parts of the firm's projects." (Alexander, 2004).

Questionnaire on commissioning

1= Least, 5= Most

How effective do you think are the logistics used in commissioning?

[1-2 3-4-5]

How effective are the current methods of time prior drilling?

[1-2 3-4-5]

How much improvement on project engineering occurs due to commissioning? [1-2 3-4-5]

How much improvement on design and process engineering occurs due to commissioning?

[1-2 3-4-5]

How much effective benchmarking becomes after commissioning?

[1-2 3-4-5]

How do you rate the overall agility factor here which involves the commissioning of new and old equipments?

[1-2 3-4-5]

Production (WRM)

"The production strategy defines the decisions being made or the actions being taken by any firm in order to produce its services." (London, 2003) This strategy defines the aims and operational functionalities which any firm takes. "The following objectives are covered under the production function, the quality management, the speed of delivery, the dependability of the product, the flexibility and the cost of the product." (Neely, 2002).

In our case, the management of the oil firms uses different elements such as that of geology, petroleum engineering and others in predicting and managing the smooth flow of hydrocarbons within wells. This reservoir management is applicable in the complete life cycle of oil and gas fields. It is applicable in finding out the most efficient and prospective ways in developing new fields or bringing more efficiency in the existing fields, lets say many advanced oil capture methodologies like steam injection can bring more effectiveness in the process of extraction of hydrocarbons.

Questionnaire on Production

1= Least, 5= Most

How many wells have artificial lift?

[1-2 3-4-5]

How many wells have natural flow?

[1-2 3-4-5]

How many wells have gone through optimization procedures?

[1-2 3-4-5]

How many wells are in testing phases for further procedures?

[1-2 3-4-5]

How many wells have a proper reporting system in their design?

[1-2 3-4-5]

How do you rate the overall agility factor here which involves the oil firm's production factors as well as its effectiveness?

[1-2 3-4-5]

2) Technology

The field of petroleum engineering deals with the procedures which relates to production of petrochemicals, it involves the usage of some of the most advanced technologies in the world today. There are many types of petroleum engineers such as reservoir engineers, drilling engineers, production engineers, subsurface engineers and mud engineers. Each performs duties related to its specific field in the field of petroleum engineering and its related technologies which relates to processes such as upstreaming, downstreaming, exploration and so on.

The agility factor here involves the adaptation of different and often new technological methods of operations by the firm. Here, the firm seeks to go on an improved technological path for processes which brings more efficiency as well as more profitable returns.

Questionnaire on technologies

1= Least, 5= Most

How much field testing occurs for the assessment of current technological standards?

[1-2 3-4-5]

How much implementation is done in production strategies?

[1-2 3-4-5]

How much modification is required for the current equipments to modernize? [1-2 3-4-5]

How much experimentation is done of the equipments to asses its technology? [1-2 3-4-5]

How much staff training is done to get familiarized with latest equipments? [1-2 3-4-5]

How do you rate the overall agility factor here which involves the oil firm's adaptation according to the latest technological improvements?

[1-2 3-4-5]

3) Human Resources

"Human resources describe the personnel which make up entire workforce of a company." (McKenzie, 2001) It has many key functions such as recruitment, selection, keeping records of employed personnel, design and development of organizational structures, management of employee relations, management of training and development for the employees and so on. The human resources departments in any oil firm are very similar to that of any other major firm.