Internal and External Environments For the oil and Gas Industries

Question: Describe about the Internal and External Environments For the oil and Gas Industries? Answer: In the last few years, the oil and gas industries have gone through certain circumstances. The main key areas of oil and gas industries in the world are unexpected alterations in alliances and political views and familial changes in the countries that are producing the unconventional hydrocarbons resources. The share holders of the companies who are producing the unconventional resources are in sturdy panic. This is because the lack of electricity supply in the industries producing the unconventional resources. If the production in the gas and oil industry failed to produce the resources then the share price of the industry will fall down in the stock market. The production of unconventional resources in the United States of America is much cheaper and the industries situated in the United States of America make much more profit margin by producing and selling the shale gas. This type of industry emits CO2 which makes the environment polluted. The industry producing the shale gas is not at all eco friendly company as they use the non renewable energy which emits CO2. The Government of those countries are trying to use renewable energy for the production of shale gas to reduce the emissions of CO2. To make the industry eco friendly, it gives rise to the term Revolution in the United States of America. According to IFPEN, it is very difficult to extract the unconventional hydrocarbons because the unconventional hydrocarbons are generally located in the lower bed of the soil which is very difficult to extract. The unconventional hydrocarbons are not refined oil or very good quality oil, but the method of extraction of hydrocarbons is very difficult and these resources are very difficult to accessible (Wilber, 2012). In the year 1947, the shale gas was first extracted in the United States of America. The two extraction method is used in extracting the shale gas. They are given as follows: a) Hydraulic Fracturing b) Horizontal Drilling. The formation of shale gas is mainly composed of methane enclosed in the rock better known as argillaceous rock with a high ease of organic matter. The argillaceous rocks spellbound in the soil as the stable gas is very much air tight. The extraction of shale gas is very much complicated. The two methods used in extracting the shale gas is hydraulic fracturing and horizontal drilling. While producing the unconventional hydrocarbons, the industry emits CO2 which is very poisonous gas and is not eco friendly. These emissions of CO2 cause to have revolution in the United States of America. In the year 1821, William Hart was the first person to produce shale gas in the New York City. Since the year 1821, the production of unconventional hydrocarbons is done by the small drivers for their industry purposes (Spellman, 2013). The gain percentage is very small in the production process and that is why the big industries in the United States of America do not show any interest in the unconventional hydrocarbons. As the profit margin is very much less in extracting the shale gas, and the extraction of shale gas is very difficult, the unconventional hydrocarbons are unchallenging and cushy in the market. Now days, the boom market situation of unconventional hydrocarbons forces the industry to find out the easiest method of extracting the shale gas and to extract the shale gas (Shah, 2009). The extraction method of shale gas is the combination of two methods like hydraulic fracturing method and horizontal drilling method to extract the unconventional hydrocarbons. These two methods are invented later in the year 1947. The extraction process of unconventional hydrocarbons is firstly a mixture of water and chemicals and sand is injected in the soil at very high pressure in terms to break or fracture the argillaceous rock and to unshackle the gas. This process is known as the hydraulic fracturing process. After the hydraulic fracture process comes the horizontal drilling. In horizontal drilling process, the unshackle gas is collected from the lower bed of the soil. Later in the year 1982, the market condition of unconventional hydrocarbons is transformed into the boom market. As the industry of the shale gas earns a huge profit margin from the unconventional hydrocarbons. The demand of the unconditional hydrocarbons was increasing vigorously. The United States of American Government raises their funds for extracting the unconventional hydrocarbons which helps the industries to get incentives to extract the unconventional hydrocarbons (Santos, 2012). Another major factor of extracting the shale gas is the rights of the land in the United States of America. The land owner gets some incentives from the Government of United States of America so that the land owner of the land gives the land in lease to the Government of US. After getting the land in lease, the Government of US exploits the minerals from the land and use the shale gas in trading purposes. This makes the industry earn more profit as the cost of extracting the shale gas and the produc tion of shale gas gets minimized. But in the beginning of the 20th century, the high demand and the high cost of shale gas increases the production level of unconventional gas. This makes the industry to increase their profit margin. As the profit margin increased in the industries producing the shale gas, it provokes the Government of the country and the industry to invest more money in extracting the shale gas (Sakmar, 2013). The revolutions made by the industry are as follows: increases the infrastructure of the industry to extract the shale gas by increasing the pipelines for the shale gas, the supply chain of the industry was developed, comparatively beam ecological conventions, the policies of the Government, the structure of the market has changed, the availability of water has increased by the industries, technologies with high efficiencies has been used. In the middle of 19th century, the production of shale gas has started. But it seems to be very costly for the industry to produce shale gas. At that time the demand of the shale gas was not so high. The extraction process to extract the shale gas was very difficult. It requires very powerful energy to extract the shale gas. But in the year 1970, the demand of shale gas increases rapidly. The cost of the unconventional hydrocarbons also increases. The increase in the cost price of unconventional hydrocarbons provoked the industry to produce the shale gas (Ruwanpura et al. 2010). After the production level increases, the trading rate of the shale gas also increases. The production level of shale gas takes the GDP of the country in higher level. As the production level of shale gas increased in the United States of America, the Government of United States of America has decreases the rate of import on the natural gas. The import of natural gas has decreased from 60 % to almost 42 % in the year 2012. Dreyer and Stang shows that the in the year 2007 to 2008, the shale gas produced in the United States of America is almost 23 %. In the year 2013, the production level of shale gas increased to almost 44 % among the production of natural gas (Rao, 2012). All the countries of the world noticed that the production level of shale gas is almost doubled in the current year than the production level of shale gas in the year 2008. In addition, during the year 2007 to 2010, the production level of shale gas has decreased almost 5.5 % in the account of importing the minerals in the United States of America. It shows that the production of shale gas decreased from 16.5 % to 11 % (Plunkett, 2014). The decrease in production of shale gas occ urs in the United States of America because Canada has entered into the booming market of shale gas. Canada also entered in the production of shale gas. Furthermore, the shale gas rebellion has appreciably pretentious the prices of the natural gas in United States of America. As the waves surplus has obsessed to a extraordinary drop in the United States mineral prices. For precedent, 4 years back the cost of the domestic natural gas at Henry Hub was almost less than $ 5 (Asia Dept, 2012). That year the utilization of natural gas was high in the United States of America. In the year 2011, the mean price of wellspring was very low. The price was almost $ 3.95 per thousand cubic feet. In the second month of the same year, the price was even falls down to $ 2.46 per thousand cubic feet (Pilisi, 2010). After analysing the current situation, the future aspects of the price of the mineral gas are under vigorous doubtful and may be ebb and flow in the price of the natural gas of United States of America. But later on during the year 2005, the import of oil in United States of America has fallen down to almost 36 % that is 4.5 million barrels per day. The Bank of America Corporation shows that the United States of America has became the largest producer of oil in the global market. The GDP of United States of America has also increases in huge aspects. Apart from this, the United States of America has decreased the import of natural resources from the other country. There is close competition between the United States of America and Saudi Arabia with the production of oil. Saudi Arabia is getting behind the United States of America in the production shale gas (Bern, 2011). The export of shale gas is decreased in Saudi Arabia in respect to United States of America. The GDP rate of Saudi Arabia is going down due to decrease in exporting the shale gas in the global market. But still Saudi Arabia is one of the largest oil production countries. It esteems many countries in the world with the production of oil. But many of the countries in the Asia and many other European countries still import oil from Saudi Arabia. Long time before mi llions of money was invested in the United States of America by Saudi Arabia. Now Saudi Arabia is withdrawing their money from United States of America which may affect the economic conditions of United States of America (Patterson et al. 2010). Both the countries like United States of America and Saudi Arabia showed the interest to fight against the terrorism and hinder Iran from flattering a nuclear authority in the global market. This creates war in between the United States of America and Iran. The United States of Amer.ica took all the power from Iran for their natural resources like shale gas and natural mineral resources (Demirbas, 2010). United States of America got the tastes of producing the oil and trading it in the global market. It provokes the GDP growth of United States of America and makes a better condition of the economic condition of United States of America. In the beginning of the 19th century, United States of America do not have any natural resources with them which makes them a huge suffer in their economic growth. But after they started producing the unconventional hydrocarbons and exporting it in the global market, there is a growth in the economic condition of United States of America. The rate of import of natural gases in United States of America decreases. This causes an increase in the GDP growth of United States of America. Now United States of America has became one of the largest oil producing country in the global market (Olah et al. 2006). In order to imitate the United States of America achievement in conditions of shale gas, countries require to congregate conditions such as a constructive subsurface geology, right to use to proprietors natural resources privileges, available and ground-breaking skill and knowledge, luminosity sympathetic legislation structure and huge speculation and investigation. On the other hand, the issues have turn out to be very complicated to impersonate for the widely held of countries with elevated latent of unconventional hydrocarbons and natural resources. Even though, the present skills and knowledge are greatly superior to the urbanized decades back in the United States of America. Much more innovations are needed in command to become accustomed present skills and knowledge and to develop current skills and knowledge to fabricate unconventional hydrocarbons gainful in the global market where water possessions which are significantly discrete from United States of America (Levant, 2014). For example: China is one of the developed countries in the world and the technology used in China is most modern and advanced technology. The cost of drilling method is much higher in the Saudi Arabia and United States of America. So, the technology used by China in the method of drilling while extracting the shale gas is less advanced and the cost incurred in the drilling method is costly than the method used for drilling purposes in Saudi Arabia and United States of America. The time taken in drilling method by United States of America is almost one month to complete one drill whereas, the time taken by China is almost four months to complete one drill to extract the shale gas (Muehlenbachs et al. 2012). So, to lower the cost of shale gas in the global market, China needs to get more advanced and modern technology to extract the shale gas and to trade the shale gas in the global market in much cheaper price. The European countries have obtainable obstacles which makes it complicated to carry on with the investigation and feasible searching of shale gas. The countries in the Europe have reflected that the ecological concerns concerning the technique of hydraulic fracture for extracting the shale gas. On the other hand many countries like France, Bulgaria have expelled the method of hydraulic fracturing to extract and to produce the shale gas in their country, as the technique consumes lots of amount of water and the techniques is not at all an eco friendly practice. This practice of method also causes earthquake in the area where the extracting of shale gas takes place (Kuehn, 2011). This is because the method used in extracting the shale gas is very much hampering the soil. The unconventional hydrocarbon production is an important and imposing technological and manufacturing accomplishment. The skills and knowledge uses a huge quantity of stream and has been liable of incriminated the water for drinking purpose and also causes natural calamity like earth quakes near active drilling sites (Eckhardt and Sloto, 2012). It is rich in activity which has a large amount of energetic rigs, convey, distribution which involved in distressing the societies. The eccentric wealth growth in the United States of America has transcendental worldwide blow on the natural resources sector (Klett, 2012). It has distorted the speculation of views for vigour projects, distorted natural resources oil and gas chorography, customized the flow of natural resources trading and rearranged the environment revolutionize dispute to hub unswervingly on the position of natural resources and to convene squat carbon aims. In accumulation, it has provided to swap the natural resources phase of United States of America by developing the trade in reliance which is considerably trading in less shale gas and has improved its industry competitiveness in all over the world. Even though, the present skills and knowledge are a good deal of superior than those urbanized decennium back in United States of America (Jowell, 2012). More modernism is needed to regulate present skills and knowledge to progress new skills and knowledge to fabricate unconventional hydrocarbons gain in the countries where resources of water and chorography can be significantly separate from United States of America. Russia and China signed the new natural resources agreement which will almost certainly carry inconveniences for the industries looking for trading out from United States of America raising the unconventional hydrocarbons provisions to Asian countries. This is because the natural resources from Russia will hypothetical traded out to China from the year 2018 (Eckhart, 2009). The analyst analyses that in the year 2018, United States of America will become one of the largest exporter of natural resources all over the world. If United States of America becomes the largest exporter of natural resources then United States of America will have the rights to decide when and how and where to sell more natural resources in the worldwide market and how to persuade the cost of the natural resources in the world wide market. The Government of United States of America will act as monopoly firm in the field of natural resources and will decide how much amount of money will be increase in the market of natural oil. The revolution on shale gas exhibits because extracting the shale gas is the rights of the land in the United States of America. The land owner gets some incentives from the Government of United States of America so that the land owner of the land gives the land in lease to the Government of US. After getting the land in lease, the Government of US exploits the minerals from the land and uses the shale gas in trading purposes (Hilyard, 2009). This makes the industry earn more profit as the cost of extracting the shale gas and the production of shale gas gets minimized. But the European countries do not practiced the methods of extracting the shale gas due to bad conditions creates by the extraction method. European Union is keen to limit the emissions of CO2 as it hampers the environmental conditions. The European Union wants to decrease the use of renewable energy by increasing the cost of the renewable energy in the market place (Grobe et al. 2009). That is why, the European Union wants to deal with the natural gas to avoid producing coal to burn the energies. The countries using the extraction method to produce shale gas because the countries want to develop their economic conditions of their country by producing their own shale gas. This will catch the fancy of the foreign investors to invest in their country. By producing the shale gas, the government of their country can export the shale gas in the other countries which will increase their GDP growth (Freeland, 2011). References: Asia Dept, I. (2012). Regional Economic Outlook, November 2012. Washington: International Monetary Fund. Bern, G. (2011). Investing in Energy. Hoboken: John Wiley Sons. Demirbas, A. (2010). Methane Gas Hydrate. Dordrecht: Springer. Eckhardt, D. and Sloto, R. (2012). Baseline groundwater quality in national park units within the Marcellus and Utica Shale gas plays, New York, Pennsylvania, and West Virginia, 2011. Reston, Va.: U.S. Dept. of the Interior, U.S. Geological Survey. Eckhart, J. (2009.). Water use by the oil and gas industry. Freeland, N. (2011). The strategic importance of shale gas. Carlisle, PA: Center for Strategic Leadership, U.S. Army War College. Grobe, M., Pashin, J. and Dodge, R. (2009). Carbon dioxide sequestration in geological media. Tulsa, OK: American Association of Petroleum Geologists. Hilyard, J. (2009). 2010 International Petroleum Encyclopedia. Tulsa: PennWell Corporation. Jowell, T. (2012). Geo-spatial modeling of potential oil and gas structures in mineral leases within the Attoyac Watershed of East Texas and their impact on landscape fragmentation. Klett, T. (2012). Assessment of potential shale gas resources of the Bombay, Cauvery, and Krishna-Godavari Provinces, India, 2011. [Reston, Va.]: U.S. Dept. of the Interior, U.S. Geological Survey. Kuehn, S. (2011). Landscape practices on gas well sites in North Texas. Levant, E. (2014). Groundswell. Toronto: Signal. Muehlenbachs, L., Spiller, E. and Timmins, C. (2012). Shale gas development and property values. Cambridge, Mass.: National Bureau of Economic Research. Olah, G., Goeppert, A. and Prakash, G. (2006). Beyond oil and gas. Weinheim [an der Bergstrasse, Germany]: Wiley-VCH. Patterson, C., Struck, S. and Murray, D. (2010.). World Environmental and Water Resources Congress 2013. Pilisi, N. (2010). An advisory system for selecting drilling technologies and methods in tight gas reservoirs. [College Station, Tex.: Texas AM University. Plunkett, J. (2014). Plunkett''s Chemicals, Coatings Plastics Industry Almanac 2015. Houston: Plunkett Research, Ltd. Rao, V. (2012). Shale gas. Research Triangle Park, NC: RTI Press. Ruwanpura, J., Mohamed, Y. and Lee, S. (2010). Construction Research Congress 2010. Reston: American Society of Civil Engineers. Sakmar, S. (2013.). Energy for the 21st Century. Santos, F. (2012). Humans on earth. Heidelberg: Springer. Shah, Y. (2009.). Water for energy and fuel production. Spellman, F. (2013). Environmental impacts of hydraulic fracturing. Boca Raton, FL: CRC Press. Wilber, T. (2012). Under the surface. Ithaca: Cornell University Press.