Gullfaks Oil and Gas Field - Business Plan Example

Market research and business plan: GULLFAKS OIL AND GAS FIELD Place Table of contents Introduction 3 Analysis of existing offerings and evidence 3 An opportunity specification 5 Staffing arrangements 7 Future planning 9 References 11 Introduction With the increase level of petroleum consumption in the world, the current status of oil and gas industry in political, social and technological spheres has also enhanced. In the latest decades this figure is likely to grow, and the demand for oil and gas extraction worldwide continues to rise over the coming years. However, with many oil and gas fields in shallow waters, a wide range of corporations should penetrate greater depths to obtain access to these energy carriers. Oil is currently the most important fossil energy source, followed by coal and natural gas (Figure 1). (Oil and gas from the sea, n.d.). Figure 1. A display of two most important fossil fuels of oil and coal. The following paper, based on the discoveries of the Statoil Company, and the particular its Gullfaks oil and gas field will conduct the analysis of existing offerings, evidence and a feature and parametric data. An opportunity specification including costs, payback and timing will be presented. Staffing arrangements and the future planning of the company will be displayed and illustrated. Analysis of existing offerings and evidence Norway is the second largest exporter of natural gas and the fifth biggest exporter of oil in the world. Therefore, the petroleum industry is the most important industry in this country. At present, the industry is a complete cluster of  numerous corporations with their field where oil and gas are extracted. Thus, Gullfaks, an oil and gas field in the Norwegian sector of the North Sea and operated by Statoil company, lies in block 34/10 in the northern part of the Norwegian North Sea.  It has been developed with three large concrete production platforms- Gullfaks A, Gullfaks B and Gullfaks C. The Greater Gullfaks area consists of numerous fields in the Norwegian North Sea. The first discovered in 1978, the field development was amended to include satellite fields throughout the Greater Gullfaks area. As the first operator on the Norwegian shelf, Gullfaks’ operator Statoil has conducted an underbalanced drilling operation with the utilization of existing drilling technologies. The Petroleum Safety Authority Norway (PSA) sees an enormous potential if this type of technology in terms of safety and increased value creation (Valuable breakthrough for new drilling method on Gullfaks, n.d.). The Norwegian petroleum accumulation is developing into global markets with its cost effective and advanced technologies, beinging reservoir and seismic technologies, floating production and multiphase flow solutions for cleaner production and oil recovery. Thus, apart the Gullfaks field of oil and gas, its operator Statoil has many rivals in the activities of such corporations as French Total S.A., Canadian Talisman and many others. Gullfaks is the first Norwegian oil field developed and operated by Norwegian companies (Nordas, n.d.). The total value of contracts awarded for the Gullfaks field is forty millions of Norwegian Krones, twenty-eight of which is spent on the development phase, sixty billion on the operational phase and other hundred and sixty-eight millions of Norwegian Krones on exploration of oil and gas. Figure 2. The composition of inputs during the Gullfaks’ phases. As it is displayed in the figure 2, each phase has its distinct composition of expenditure. Production of oil and gas goods estimates almost 80 percent of total expenditure during the development phase. Services account for eighty percent of total expenditure during the exploration phase and more than eighty percent during the production phase. The largest contractors for the Gullfaks platforms are the Norwegian Contractors, Aker Stord for the Ga Gullfaks lfaks A; Moss Rosenberg Verft, Norwegian Petroleum Consultants etc. for Gullfaks B; Aker Contracting and Norwegian Petroleum Consultants with the Head consultant project assistance (PSC) item for Gullfaks C. The Norwegian market share is relatively high at 78 percent on average for the project. However, there are other big players in the oil and gas industry in this region. Thus, Talisman Company, which operates the Blane, Gyda, Yme and Varg fields has its interest rate from eighteen to sixty five percent and holds interests to thirty- four percent in a number of non-operated fields. The company has achieved a success by signing an agreement with the Yme platform contractor to terminate the Yme project. The agreement includes an upfront payment of four hundred and seventy million dollars by the platform contractor to the Yme license partners (Norway, n.d.). The plan of development for the Brynhild field was approved by the Norwegian government and will be supported by Maersk Drilling, Aker Solutions and Technip have been hired to support the development. An opportunity specification With the great opportunities that oil and gas industry expected in the previous years, there were discoveries of four to six hundred millions of barrels of oil. That is why it is the most favorable time for the companies to implement new projects on the Norwegian continental shelf and in Norwegian waters. Such projects will require new technology and risk taking. Therefore, authorities are assisting in the enlargement of oil and gas activities in Northern Norway and the oil companies and the supplier industry are therefore moving more to northern directions. The challenge in this area now is that demanding Arctic conditions need to obtain and use new knowledge and technological solutions in order to meet requirements relating to operations in oil and gas fields, cost-efficient development and production. Thus, the innovative uses of seabed seismic technology can provide the oil and gas operators to obtain a considerably higher return in their fields. These high returns with low risk and lower lifetime cost of ownership become attractive more and more. The enlargement of hydrocarbon recovery factors from a producing reservoir give companies ability to make an essential economic contribution. If to take Norway as an example, it is accounted that one percent of increase in the recovery rate for fields will also enhance oil production by more than five hundred million barrels of oil. If the oil price of Norwegian Krones is approximately five hundred and seventy per barrel, then the gross sales income from such an oil volume will be three hundred and twenty-five billion of Norwegian Krones. The use of 4D seismic on the Gullfaks field provides value creation that equals to six billion of Norwegian Krones (Bett, 2013). Permanent reservoir monitoring systems influence the improved oil recovery programs so great that stationary arrays of sensors offer geoscientists a new definition resolution of dimension to time-lapse seismic. By ensuring no sensor movement to take place between subsequent surveys and the data, then the data resolution and accuracy will be improved greatly. Such improvement decreases processing time and costs and enables the informed reservoir management to decide what impacts significant drivers of improved recovery. These drivers are the better in-field exploration, improved well placement, optimization of completions, fracture monitoring from active and passive micro-seismic and the flood front monitoring. Geoscientists and engineers manage fields with permanent reservoir monitoring systems, experiencing these benefits on limitation of the compressional data. Gullfaks competes with a wide range of well integrated oil and gas companies and with the independent and state-owned businesses. It also strives for the acquisition of assets and licenses for the exploration of the resources, development and production of oil and gas and also for refining, marketing and trading of crude oil, natural gas and related to them products. The main factors that influence opportunities for Gullfaks are oil and gas supply and demand, exploration and production costs, global production levels, alternative fuels, and environmental and governmental regulations. Here technology, projects and drilling business area provide global support on standards and procurement of the oil and gas industry. Thus, in 2013, technology, projects and drilling had over seven thousand employees of both internal and external with their location in twenty- eight countries that supported Statoil operations. The company’s total deliveries related to drilling and well activities and projects were estimated to hundred and twenty billion of Norwegian Krones. One of the key events in 2013 for Gullfaks is to reduce the drilling costs and improve Norwegian continental shelf recovery rates. Internal transactions in oil and gas volumes appear between the company’s reporting segments before they are sold in the market. The pricing policy for internal transfers is based on market prices. Thus, in 2013, the average transfer price for natural gas was one and ninety-two Norwegian Krones per scm (The annual report, 2013). Staffing arrangements According to the research, conducted by the PricewaterhouseCoopers Company, the oil and gas sector needs more than hundred thousand of new employees worldwide for successful accomplishment of tasks in this industry. Otherwise, it simply risks lacking skills. In 2013, the budget on UK introduced tax breaks, especially what comes to the investment in the exploration of North Sea (Tovey, 2013). On the other hand, oil companies and service providers are cutting staff and the investment in order to save money, as it is stated by Mr. Allan, the chairman of the independent explorers (King, 2014).With such low prices on oil, it is almost impossible to make money without proper adaptation to the existing situation. Thus, such adaptation is one of slashing people, projects for reduction of costs. Notwithstanding this fact, companies, like Statoil, it is important to enable its staff to meet challenges and deliver on its promises in such a dynamic and demanding business environment. Thus, with the learning culture, the Gullfaks commits its positive attitude toward learning, earning by this a good reputation and a great place to develop one’s career. The opportunities it provides are supportive for the development of staff that is expected to contribute to growing the company. By exposing new challenges and learning experiences, the company is committed through stretching assignments, working in the new roles and other experiences that staff is able to achieve being a part of Gullfaks team (Development opportunities, n.d.). For managing staff, it is possible also to conduct skills and knowledge assessment sessions, which would allow the company to identify strengths that personnel possess and also evaluate the areas that should be improved. It is also up to the company’s responsibility to keep people safe in all aspects of the oil and gas activities performed offshore. The companies should also make sure that employees are well trained for work in the risky sphere. For that reason, the safety trainings are required as mandatory. These are the basic survival trainings that provide staff with the knowledge and skills necessary to react accordingly in case of emergency and also take care of others in a survival situation. Thus, Statoil and Gullfaks field in particular, cooperate closely with its suppliers in order to ensure safety policies are communicated and well understood and complied with by all the stakeholders of the company. With the Statoil goal of zero harm to people, the company builds the world- class corporation with the target to be the absolute winner in all safety aspects. Creating safe workplace for its employees and contract staff, it strives to avoid accidents and occupational illnesses. Beside the constant attention to the safety awareness, the company also wants to ensure high technical standards and inherent safety in the operation of its workspace. Here the risk management is used for project development and operations, which give the company opportunity to achieve the lowest level of risk (Safety, n.d.). Future planning As the first operator in the Norway that conducts the underbalanced drilling operation, the company can earn a good portion of popularity and its place among the main competitors. There are essential safety benefits in good planning of underbalanced drilling operations. Such planning requires understading and conducting of necessary risk analysis, the identifying the expertise of contractors and suppliers, training staff and its involvement to such technology. Indeed there are very few serious safety problems in wells drilled using underbalanced/managed pressure drilling. If understand everything clear, there is a great potential for increasing value creation by enhancing production and making less reservoir damage. With the use of underbalanced drilling operation that uses existing drilling equipment on Gullfaks C, it brought good results to the company and showed great potential for such a new technology (Valuable breakthrough for new drilling method on Gullfaks, n.d.). While the level of production of gas in Norway continental shelf is high, the amount of oil produced is decreasing, Gullfaks subsea compression is the technology that will move the project forward and will improve the milestones for recovery from other gas fields. The plateau production guarantees Gullfaks for the constant investment and longer period of production. Moreover, the technology will assist Statoil in such areas as structural verification and the evaluation for the subsea cooler unit. Along with it, it will allow the company to follow up the fabrication and trouble shooting. Statoil management considers that the most challenging part of the technology is the evaluation for the subsea cooler unit (Offshore update, 2012). The Gullfaks field development is certain the test case for Norwegian oil industry and the culmination for Norwegian petroleum policy regarding the offshore industry. As a first field for Norwegian operator, Gullfaks has the responsibility for exploration, development and operation of the oil and gas. With the high level of Norwegian market share in service of supply for engineering services, Gullfaks has all chances to pay attention to the largest and most protected market. Technology diffusion from the Gullfaks field development to other sectors of the economy is more difficult to identify (Nordas, H. n.d). References Bett, M. 2013, The Value Of PRM In Enabling High Payback IOR, PESA News Resources, Available from http://www.tgs.com/uploadedFiles/CorporateWebsite/Modules/Articles_and_Papers/Articles/1212-pesa-resources-the-value-of-prm-in-enabling-high-paybackior-tgs-seismic-technology-final.PDF [Assessed on 13 January, 2015]. Development opportunities, n.d., The Statoil official web site, Available from http://www.statoil.com/en/Careers/YourDevelopment/Pages/DevelopmentOpportunities.aspx [Assessed on 13 January, 2015]. Greater Gullfaks Area, n.d., Offshore field development projects, Available from http://www.subseaiq.com/data/Project.aspx?project_id=198&AspxAutoDetectCookieSupport=1 [Assessed on 13 January, 2015]. King, B. 2014, North Sea oil industry close to collapse, The BBC, Available from http://www.bbc.com/news/business-30525539 [Assessed on 13 January, 2015]. Nordas, H. n.d., Gullfaks - the first Norwegian oil field developed and operated by Norwegian companies, Chr. Michelsen Institute Development Studies and Human Rights Norway, n.d., The official web site of Talisman Energy Company, Available from http://www.talisman-energy.com/operations/other_areas/north-sea/norway.html [Assessed on 13 January, 2015]. Offshore update, 2012, Norwegian oil and gas, Available from http://www.dnv.com/binaries/offshoreupdate2_2012_tcm4-525562.pdf Oil and gas from the sea, World ocean review, Available from http://worldoceanreview.com/wp-content/downloads/wor3/WOR3_chapter_1.pdf [Assessed on 13 January, 2015]. Safety, n.d., Statoil official web site, Available form http://www.statoil.com/en/EnvironmentSociety/security/Pages/Safety.aspx [Assessed on 13 January, 2015]. The annual report, 2014, Statoil official web site, Available form http://www.statoil.com/no/InvestorCentre/AnnualReport/AnnualReport2013/Documents/DownloadCentreFiles/01_KeyDownloads/AnnualReport20-F.pdf [Assessed on 13 January, 2015]. Tovey, A. 2013, Oil and gas sector needs 120,000 new employees, The Telegraph, Available from http://www.telegraph.co.uk/finance/jobs/10286787/Oil-and-gas-sector-needs-120000-new-employees.html [Assessed on 13 January, 2015]. Valuable breakthrough for new drilling method on Gullfaks, n.d., The Petroleum Safety Authority Norway, Available from http://www.psa.no/news/valuable-breakthrough-for-new-drilling-method-on-gullfaks-article1626-878.html [Assessed on 13 January, 2015]. Read More