Introduction

The oil and Gas Management industry is a worldwide dynamo enabling the employment of thousands of workers and the generation of billions of dollars every year, throughout the world. It is considered the biggest sector all over the globe. In those regions where the major National Oil Companies (NOCs) are situated the oil and gas companies are very much significant. Their significance is so vital that they often have contributed to the nation’s GDP (Papavinasam 2013). The oil and gas industry can be categorized into three primary areas which are, upstream, midstream, and downstream. The upstream section which is also known as exploration & exploration is involved in the quest for underwater and underground natural gas fields and also the drilling of oil wells and drilling of already set up wells for recovering oil and gas. The downstream section is involved in the filtration of raw materials that were collected in the upstream section. These products are marketed in the form of petrol, diesel, kerosene, gasoline, jet fuel, asphalt, Liquefied Petroleum Gas (LPG), etc. (Raufflet, Cruz & Bres 2014). However, the mid-stream section falls under the section downstream. The major part of the products of the oil and gas industry goes into fuel oil and petrol or gasoline. However, there were many disasters, such as the Deepwater Horizon Gulf of Mexico oil spill, which has led to the generating of negative opinions towards this oil and gas industry. Still, it has remained to be the biggest industry in the whole world.

 

Question 1

Role of the various organizations in the oil and gas industry

JKX oil and gas industries are a British-based company situated in London. JKX Oil and gas industries generally operate in Ukraine and Russia. It has three other branches in six different countries. JKX is specialized in managing the decommissioning of fixed productions platforms which are generally operated by smaller production companies and have no in-house decommissioning expertise (Ablo, 2015).

Decommission is the process that generally involves the safe plunging of the hole within the surface of the earth. Decommission also involves the disposal of the various equipment, which are used in the offshore production of the oil company. Decommissioning is developing rapidly within the market sector within the petroleum industries with major potential and serious risks (Tordo et al 2013).

Decommission plans set out the various measures to decommission and install the pipelines which will be described in detail and the various methods will be used to undertake the work. In most cases, the process of decommissioning can cover a wider range of various activities such as radioactive and handling of materials. The decommission also includes the removal of debris from the shore of the seabed, they also monitor the environment after the removal of the environment. The main aim and plans of the department are to be transparent during the decommissioning of programmers. However, the other government departments and non-governmental departments provided various opportunities in order to set out in a program (Ford et al 2014)

A. Decommissioning plan made by the JKX oil and gas company are:

The development plan, which needs to identify, evaluate, and integrate environment safety and health safety requirements into disposition activities. The main objectives of the Decommission plan are to use various techniques and disposal methods in order to dispose of. The roles and responsibilities of DPR, which mainly depend on the experienced and qualified team (Saad, Mohamed Udin & Hasnan 2014). The teams involved in DRP must argue with suitable subject matters experts who are selected to complement the specific technical concerns. The main roles and responsibilities for the people involved in DPR are: 

Entity	Roles and Responsibilities
Element manager	The main roles and responsibilities of the Element manager are to provide support and resources to the director of the project and review team leaders to carry out the design. The other roles of the element manager are to facilitate the conduct of the review, assign the space of the office, computer equipment, etc. The element manager also supports the team to accomplish the task in the scheduled time frame (Nolan 2014).
Federal project manager	Federal project directors identify the various needs to decommission the plans review.  Federal project directors also develop the briefing materials and schedules for the review activities. Federal directs coordinate the federal site’s staff factual accuracy review of the draft report. Federal directors track the completion of corrective actions resulting from reviews.
Team leader	The team leaders play an important role in the development and growth of the project. The role of the team leaders is to assign tasks and distribute the work among the various team members in the organization. Team leaders coordinate the development of data calls forward the data to the federal project director. The main role and responsibility of the team leaders are to ensure that the team members complete their tasks on time (Ford, Steen & Verreynne 2014). Team leaders forward the final report to the Federal project directors for consideration purposes and make various decisions to authorize approval of the critical decisions within the organization.
Review Team members	The team members refine and finalize the criteria to assign the areas of the review. The roles and responsibilities of the team members within the project are to understand the various purpose and objectives of the project. The team members maintain the correct balance between the project and non-project work. The other main role of the team members is to identify the various risks associated with the project (Alazzani & Wan-Hussin 2013). Their main role is to work as a team and ensure that their work is done properly The project team member’s responsible to contribute towards successful communication and positive communication.

 

Review scope and criteria

The DPR modules generally provide a set of review criteria that are based on the key safety and technical areas and discipline which are identified in the department of energy. The reviews areas include

• Characterization planning,
• Alternatives analysis
• Risk management, long term stewardship
• Measurement of the performance
• Waste management
• Decommissioning development plans.

Reviews and plans documentation

It is important to document the various methods, assumptions, and results of the decommissioning plans reviews. The following activities, which must be conducted as of the of which the the the the of the part of the review plan development, are:

• The team members within the organization should develop a specific line of inquiring and utilizing the topics.
• The lines of inquiry of the individual must be submitted to the manager authorizing the review.
• The review plan of the project must be compiled with consistent and uniform numbering schemes, which are provided to the unique identifier for each line of the inquiry (Yusuf, et al 2013).

 

Decommissioning after regulatory approval

During the time of the decommissioning phase, all the plants will be shut down such as water supplies, power, telecommunications, and other buried pipelines, which must be served and made safe. Abandonment will be undertaken using the best practices of the industries and approved by the regulators in advance of undertaking the work (Popoola et. al. 2013). The various requirements for plug and abandoning wells are:

• Small rig mobilization and demobilization.
• Ancillary plant and equipment.
• Cementing 

Question 2

The following questions concern petroleum economics and taxation regimes, legal arrangements, and contractual relationships. 

a) Explanation of the fiscal terms involved in the structure of a PSA and evaluation of the importance of each element to the revenue of the government.

Production Sharing Agreements (PSA) establish a relationship of contractual nature, between the International Oil Corporation and the state. These contracts authorize the IOC for performing their exploration and exploitation of hydrocarbons in a certain area and for a certain period of time. In this case, the state is the owner of the hydrocarbons and it also hires the IOC as contractors to perform the exploration as well as the product works (Tordo et. al. 2013). However, the IOC incurs all the expenses that are involved in the exploration phase and the production of hydrocarbons, in the area that was previously defined in the contract. The descriptions of various fiscal terms involved in the structure of a PSA are as follows:

• Fiscal system – the intensity of taxation is majorly decided by the terms included in the contract. If the state receives more payments of royalty and a considerably major proportion of the profit oil. As the take of the government rises, the foreign oil company’s interest in that particular project reduces accordingly (Kelland 2014).
• Tax holidays – certain PSAs offer the holidays for the initial years of the contract. They were set up as an intention for the further incentive of investments. However, the duration of these periods is very much significant. Income tax becomes payable only when the production activities begin. If the holiday begins at the time of the commencement of the contract then the effective tax holiday is reduced by one year from the duration of exploration (Alazzani and Wan-Hussin, 2013).
• Bonuses – bonuses are other sources of revenue, earned by the country. PSA generally involves relevant signatures and various bonuses related to the production activities, though there are certain situations where bonuses related to the discoveries are paid by the foreign oil companies. 
• b) Evaluating the model provided, comparison of each of the oil production operation efficiency and gas production efficiency factors through a range from 95% to 65% and identification of NPV of the investing company, associated with each of the percentage selected. 
• At 95% –

At 95% oil production operation efficiency, the IOC project NPV at 8% as of January 2017 is USD 4749.60 million. The IOC project discount payback period at 8% as of January 2017 at this level is 9.17 years. At 95%, the initial peak rate of oil production is 200 Million Barrels of Oil Per Day (Mbps), the oil production ratio is 100% and the oil production decline rate is 7.5% (Popoola et. al. 2013).

At 95% gas production efficiency factor, the IOC project NPV at 8% as of January 2017 is USD 4373.03 million and the discounted payback period at 8% as of January 2017 is 9.79 years. The gas production ratio at this level is 100% and the gas production decline rate is 2%. However, the plateau rate of gas production is 1200 million standard cubic feet per day (mmscfd) (Popoola et. al. 2013). 

At 85% – 

At 85% oil production operation efficiency, the IOC project NPV at 8% as of January 2017 is USD 4179.4 million and the discounted payback period at 8% as of January 2017 is 9.82 years. At this level of 85% the initial peak rate of oil production is the to same as before, so is the oil production ratio and the oil production decline rate (Bergh et. al. 2014).

At 85% gas production efficiency factor, the IOC project NPV at 8% as of January 2017 is USD 4051.89 million and the discounted payback period at 8% as of January 2017 is 10.05 years. The gas production ratio at this level is also 100% and the gas production decline rate is 2% which is the same as before. The plateau rate of gas production has also remained the same (Bergh et. al. 2014).

At 75% – 

At 75% oil production operation efficiency, the IOC project NPV at 8% as of January 2017 is USD 3590.76 million and the discounted payback period at 8% as of January 2017 is 10.65 years. At this level of 75% the initial peak rate of oil production is the same as before, that is, 200 Mbopd and so is the oil production ratio, which is, 100% and the oil production decline rate is 7.5% (Papavinasam 2013).

At 75% gas production efficiency factor, the IOC project NPV at 8% as of January 2017 is USD 3722.39 million and the discounted payback period at 8% as of January 2017 is 10.37 years. The gas production ratio at this level is also 100%, which is the same as the previous level, and the gas production decline rate is 2%, which is also the same as the previous level. The plateau rate of gas production is 1200 Mmscfd, which means it did not change from the previous level (Papavinasam 2013).

At 65% – 

At 65% oil production operation efficiency, the IOC project NPV at 8% as of January 2017 is USD 2975.01 million and the discounted payback period at 8% as of January 2017 is 11.74 years. At this level of 65% the initial peak rate of oil production is the same and so is the oil production ratio and the oil production decline rate (Ford, Steen & Verreynne 2014).

At 65% gas production efficiency factor, the IOC project NPV at 8% as at January 2017 is USD 3385.69 million and the discounted payback period at 8% as of January 2017 is 10.72 years. The gas production ratio at this level is also 100% and the gas production decline rate is 2%. The plateau rate of gas production is the same as before (Yusuf et. al. 2014).

Question 3

The following question concerns the risks faced by the industry and the means of identifying and managing them. 

There are various types of risks that oil and gas operating companies face, throughout their lifespan right from the time of their initial access. Those risks are illustrated below:

• Risks due to the political environment – Politics can have great impacts on oil and gas operating companies, but most of these impacts are regulatory. An oil and gas company is surrounded by numerous regulations of different ranges, which establishes restrictions regarding the extraction of oil and gas. However, the laws and regulations are not the same in every state of a country, they differ from region to region. Usually, the intensity of political risks increases when the oil and gas companies are working on different deposits, which are situated outside the country (Nolan, 2014). Due to all these reasons, the oil and gas operating companies mostly prefer countries, which possess a stable political environment and where there are fewer hindrances in the granting of long-duration leases.  However, some oil and gas companies are there, which just move to the place of oil and gas. They somehow pay less importance to the risk factors, because every oil and gas country possesses a certain level of risks, irrespective of their political environment (Popoola et al 2013).
• Risks related to the geology of the region – These types of risks involve the difficulties that may be faced by the oil and gas operating companies during the extraction phase. In addition, there are risks of the possibility that the oil and gas reserve in certain deposits could be smaller when compared to the estimated size. Geologists work with great dedication to mitigating these geological risks by performing various and frequent tests. Geologists use several terms like “proven” or “probable” which highlights their confidence level of the estimates made by them. Many oil and gas mines have been already shut down and some are already in the process of shutting down. Several explorations have led to oil and gas drilling in difficult environments, like in the middle of the ocean. However, through the introduction of various techniques and alternative methods, drilling of oil and natural gas has become possible in those types of difficult environments. Without these methods and techniques, obtaining oil and gas would have been very difficult or it might have been entirely impossible (Bergh et al 2014). 
• Risks related to price – Apart from all the risks mentioned above, the price of oil and gas is one of the primary factors that are considered while deciding the economic feasibility of the oil and gas reserves. In general, it can be said that the more the geological risks involved, the more is the price risk that a certain project will face. The reason behind this is unconventional or alternative methods usually involve more costs as compared to the method of vertical drilling in a deposit (Saad et al 2014). This does not signify that oil and gas companies will suddenly shut down a project just because the project does not involve any profitability and there has been a fall in the price level. These projects cannot be shut down and then restarted within short notice. However, the oil and gas companies make several attempts in the estimation of the prices over the entire life of the project, so that they can understand exactly the time of commencement (Yusuf et al 2014).  
• Risks of costs – All of the risks that were mentioned above, contribute to the primary and greatest risks involved, which is the risk of operational costs. The costs involved in a projected increase of when the regulation of the region is strict and rigid, and there is more difficulty in the drilling of oil and gas. When these are collaborated with the uncertainty of prices because of global production, there arises a real concern for the costs involved (Shuen, Feiler & Teece 2014). Several oil and gas companies try very hard to search for skilled and qualified workers and at the same time, they pay equal efforts in retaining them. This will aid the companies in performing their functions at peak times, however, for this, the payroll of the workers has to be increased, which further adds up the costs of the oil and gas companies. All of these costs that are involved have led the companies to become more capital intensive in nature, with fewer people working the time (Papavinasam, 2013).
• Risks regarding supply and demand: impacts of supply and demand are very much crucial and risky for the oil and gas operating companies. Operations of oil and gas companies involve huge capital and lots and lots of time. In times of crisis, those projects cannot be stopped for the time being, or in boom conditions, those operations cannot be boosted up. The prices of oil and gas are quite volatile in nature, just because of the unstable nature of production. Though there are other economic factors as well, like financial crisis and other different macroeconomic factors that can affect capital, and at the same time affect the industry (Nolan 2014). These impacts are independent of the prevailing price risks involved. 

Question 4

Future oil and gas sources, social responsibility, and climate change issues. 

The oil and gas industries cause several issues to the environment and natural habitat. Oil and gas industries are responsible for various climatic changes. The environmental impacts of the industries such as oil spills are caused due to offshore drilling into the oceans. It causes several damages to the life of aquatic animals. The harmful gases, which are extracted from the gases which cause various harmful diseases to the life of the human being. The corporate social responsibilities of the oil and gas sector have become an important approach in order to address the various social and environmental impacts of the company’s activities. However many of the industries are increasingly and are expected to go beyond it (Kelland, 2014). The industries are expecting to assist and address many of the world’s problems, which include climate change and poverty.

The government needs to have the proper planning and apply various techniques for the development and growth of the industries.  The UK government has to build various actions plans in order to build the bridge for future industries. After analyzing the entire plan it has been observed that the government needed to follow various plans and strategies in order to maintain the growth and development of the oil and gas industries in the next 10 years. The various steps, which must be taken, are:

Using of advanced technologies: The government should follow the various latest technologies in order to enhance the development and growth of the industries. The usage of the various recent technologies will help the workers to save time and reduce operational costs (Ford, Steen & Verreynne 2014). The usage of the latest technologies will lessen the impacts on the environment. Some of the new drilling technologies, which includes the following techniques such as: 

Horizontal drilling: Horizontal drilling can be used in certain situations in which conventional drilling is impossible. Horizontal drilling also reduces surface disturbance. This type of drilling can produce 15% to 20% of much oil and gas as compared to other drilling techniques (Shuen et al 2014).

Multilateral drilling: It is the kind of drilling which allows the operator to tap reserves at different depths. It helps in increasing the production from a single well and reducing the number of wells drilled on the surface. 

Complex path drilling: This drilling technique is more cost-effective and produces less waste and surface impacts.

The usage of advanced drilling techniques will improve production and increase reserves. It also helps in improving the production from thin to tight reservoirs (Javaherdashti, Nwaoha & Tan 2016).

Supply of the resources: The government should supply the best resources for the growth and development of the oil and gas industries. The supply of the resources will help them to perform their work in a better way and enhance their productivity. It will also increase the turnovers of the industries (Kelland, 2014).

Traditional methods of drilling should be banned: The various traditional methods, which were used, earlier for drilling must be banned. The government should follow the recent technologies and various advanced techniques for drilling. The techniques must be environmentally friendly so that it does not any harm the environment and it will also help the government with better future plans and developmental goals over the next 10 years (Nolan 2014). 

The government should follow the various Consolidation practices: Consolidation practices which require less road and infrastructure and it can eliminate various disturbances in particularly sensitive areas. It also helps to reduce drilling and completion time and increase the efficiency of hydrocarbon recovery from the chosen reservoir. The government must also follow:

Government investment plans: Government should make the following investment plans for the growth and development of the industries. The government should supply better resources to the industries for long-term growth. The investment plans help the government with the development and growth in the next 10 years (Raufflet et al 2014).

Government should declare the Environment regulations act: Environmental regulations act which has a positive impact on the gas and oil industries. The following measures, which will help organizations to reduce greenhouse, gas emissions, which plays a negative impact on the environment. The effects of the clean air act which have positive effects on the gas drilling industries. The act passed by the government mainly aims the reduction of greenhouse gases emission into the environment, with long-term goals. As per the US Environmental Protection Agency (EPA), which mainly suggests that there, will be cost savings of $11 million and $19 million if the rules are implemented by the industries (Papavinasam 2013). The various act declared by the government will help them with long-term growth in the next 10 years.

Industries safety act by the government: Oil and gas industries must follow the safety system. The safety measures, which help the organization to identify the various hazards, assess the various risks. The best practices must be followed by the industries in order to deal and manage with risks. The safety measures act will help the organization with long-term growth and development (Ford et al 2014).

Government budget plan: The government must come up with budget plans for the long-term development and growth of the industries. The budget plans will give the government control over the money. The budget plans made by the government will help the organization to monitor its finance. The budget plan will also help them to guard against fraud and other financial risks. Therefore, the budget plans will help the government with long-term growth (Javaherdashti et al 2016). 

Conclusion  

In this current assignment, the researcher lights shade on the management of the oil and gas industries. In the first part of the assignment, the researcher sheds light on the various roles of the different organizations involved in the oil and gas industries. In the first part of the assignment the researcher; also conclude the various roles and responsibilities of the managers within the industries decommissioning planning made by the JKX oil and gas company. In the second part of the assignment the researcher, concludes the various fiscal terms, which are involved in the structure of a PSA and evaluation of the importance of each element to the revenue of the government (Shuen, Feiler & Teece 2014). The third part of the assignment sheds light on the risks faced by the industry and various means of identifying and managing them so that it does not cause any harm to the environment. In the end part of the assignment the researcher; also conclude the various concerns of future oil and gas sources, social responsibility, and climate change issues. 

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