The oil & gas industry keeps on changing dramatically. Increasing consumption of oil and gas in developing countries such as Brazil, India and China are posing an uncertainty in future trends.
Oil is obtained from the earth's crust. Crude oil can be collected from under the sea from sea creatures that died and got buried billions of years ago. It was formed when animals and plants got decomposed under mud and silt deposits. The process involved in the oil and gas industry follows this order:
Exploring > extracting > refining > transporting > marketing
Exploring involves finding the new locations for oil, which leads to the extraction and refining. Refining converts the oil into a usable form (like gas or diesel) which we use in our daily lives.
Transporting involves pipelines through which the oil is transported to oil tankers that take it to different places. Exploration might seem simple but it is rather complicated. It is not easy to explore new areas in a short duration.
There is a great demand for oil in the world market to carry out industrial, commercial and domestic tasks. This demand is more than the actual production of the oil. This is why the countries that have a lot of oil are among the richest countries.
The oil & gas industry is very important for smooth functionality of modern society. Whenever there is an increase in the prices of oil, the prices of various other products also get affected. The price of oil can be controlled if production cost of oil gets lower.
If an oil company spends too much on oil drilling, it is going to charge too much. To reduce oil costs, there is a need to develop technologies that are better and more advanced. Major challenges faced by oil & gas industry are given below:
- It is necessary to ensure that newly discovered resources are produced keeping the environment in mind. This must be done in an economic way so that the increasing demand can be fulfilled without the prices becoming higher.
- Exploring new areas such as Alaska is already restricted because of environmental issues. Demand for control over oil & gas greed is high, because fracking creates changes in climate. A lot of areas are marked as restricted and oil companies cannot operate there.
- New areas are located far away from consuming markets. So transportation costs are high.
- It is necessary to lower the operational costs and increase the operational efficiency to control oil prices.