Challenges and Operations in the Oil and Gas Industry

This document discusses the challenges faced by the Royal Dutch Shell in the oil and gas industry, particularly in the upstream and midstream sectors. It explores the coordination activities, transportation modes, and the role of ERP systems in ensuring efficient operations. The document also compares and contrasts the logistics and operations management implications of delivering oil and gas products in Southeast Asian and West African markets. Additionally, it highlights the human behavioral challenges faced by the staff and provides mitigation strategies. Overall, it provides insights into the operations and challenges in the oil and gas industry.

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Name of the student
Name of the institution
Date

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Executive summary
The oil and gas industry is among few known global industries which provide large quantities of
energy consumed in the whole world (Nader, 2010, p. 22). The main aim of this paper is to give
ways which the company follows to carry out its activities thus giving it leading position in oil
industry. In modern world, the material wealth accumulation is fuelled with abundant energy in a
cheap manner. So as to gain understanding in oil and gas industry, one has to look on decisions
and challenges the companies under that sector come across along the supply chain which they
follow. In the supply chain, the upstream is the great potential in supply chain as it is
characterized by many projects in large scale (Raji, 2013, p. 404). It also has technological
inventions which require few processes and standardization.

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Table of Contents
Executive summary 2
Introduction……………………………………………………………………………………..…4
Organization upstream and midstream 4
Coordination activities …………………………………………………………….......................7
Transportation…………………………………………………………………………….. ……...9
Comparing and contrasting………………………………………………………………………..9
Human behavioral ……………………………………………………………………………….10
Conclusion……………………………………………………………………………………….12
Recommendations………………………………………………………………………………..12
References………………………………………………………………………………………..14

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Introduction
The oil and gas industry is among few known global industries which provide large quantities of
energy consumed in the whole world (Shuen, 2014, p. 231). The Royal Dutch shell is the third
largest company in the whole world in market capitalization as it has $176 roughly. From its
supply chain, the upstream and midstream has given the company a great potential thus making
the supply chain management to carry out large scale projects with very few processes. Shell
manages its challenges successfully.
This paper explains some of the challenges the Royal Dutch shell come across in midstream and
upstream, supply of the products in Southeast Asian, participants, makeup, mapping suppliers,
modes of transport among others. Also to discuss the operations that make the industry to run
smoothly, behavioral challenges that staffs face on daily basis, comparing and contrasting
different operations and logistics in both West Africa and south East Asia among many other
things.
1.0 Main body
1.1 Carry out a brief analysis of your organization’s upstream and midstream Oil and Gas market
(s) to identify the logistics and operations activities being undertaken in those markets
Royal Dutch shell is an organization dealing with oil and gas. Like any other organization it has
upstream and midstream while dealing with oil and gas (Laksmono, 2013, p. 441). In the
upstream, the shell explores and recovers natural gas, crude oil and also natural liquid gases, and
then it transports gas and oil where in midstream infrastructure it’s necessary to deliver the

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products to the market. Upstream its international as it manages both GTL and LNG businesses
which are outside America, markets and also trends with other countries outside America. Royal
Dutch shell also supports development of new businesses and also exploration.
1.2 Four main challenges facing Royal Dutch shell Oil and Gas industry
In gas and oil industry it’s hard to get the point that the industry has great complexity. The
dwindling reserves force the companies to work in hostile environments and remote areas. The
operations require huge capital investment. The companies which work always report, many
problems which they come across during their work hence hindering them from doing the best.
Also the sector has many challenges and the prices of oil and gas tend to be always very low.
Health and safety or quality management
Oil and gas areas are very dangerous places to work on and the workers find it difficult to adapt
to such areas as they are very harmful. Although ways to regulate health problems in such areas
are put in place, still there are no enough safety measures to safe those workers from health
problems. Also the surrounding areas are affected with pollution from the site which can lead to
health problems to the people around the area. When drilling for the product is occurring there
are some hydrocarbons which escape from the place and they can lead to health problems to the
person carrying the operation and also there are other behaviors which occur in new reservoirs
which are unpredictable. The company should fight to offer maximum protection to the
employees.
Dealing with the 3D effect

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The wells of the oil and gases are drying up rapidly hence becoming the biggest challenge facing
the gas and oil corporations. Although the companies are finding very new sources for extraction
but they find it extremely hard to get. Also it’s difficult to drill deep underground and also distant
from the location of the countries. This is called 3D effect as there are three challenges in one.
Extraction in new areas needs cutting edge high technology and engineers which are highly
skilled. As the oil and gas demand is high, the resources are exhausted hence pressure on that
business is high. Most companies are trying to solve this challenge by joining joint ventures so as
to share some technology and expertise. The joint ventures also have big problems as the
expertise from different areas of the world is unable to co-exist.
Handling pressure of the government
In the whole world, government has been introducing targets for carbon reduction which is
ambitious as it is making the businesses to fall under pressure growth hence slashing their
emissions. The gas and oil industry is scrutinized hence the firms are expected to find new ways
of extracting natural resources so as to minimize pollution. As this issue is evidenced in Canada,
the gas and oil has overtaken transportation and it has become greenhouse gases leading
producer.
Life cycle management of oil companies resources
In resource management sector, the companies carrying out the extraction are supposed to
manage the waste products which are hazardous to the environment. This is the biggest
challenge to the companies carrying out the extraction process as it is very expensive to keep the
environment unpolluted. To avoid pollution, the waste products can only pass the process of

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recycling the by-products, decommissioning, soil remediation and industrial services to avoid
environment pollution.
2.1 Taking into account one of the products supplied by your organization to its Southeast Asian
and West African B2B customers, you are required to critically discuss the configuration and
coordination of the selected product Supply Chain (Oil or Gas) including its overall economic
and environmental performance
In Southeast Asia, shell has been taken as local as if offers brilliant services in the area. The shell
company has come up with ground-stone implementation and it has also introduced late
Pleistocene from land of Southeast Asia. Using X-ray diffraction, radiocarbon dating,
stratigraphic and some chronological placement in record of archaeological, the owners removed
old shell and introduced shell technology as local innovations. Thus the Royal Dutch shell.
2.2 Discussing its make-up, its participants, facilities locations, role of the facilities among
Mapping up the first-tier clients and suppliers as well as needed services and equipment
As the oil and gas are needed every minute, the Royal Dutch shell is able to tell its first-tier
clients. These first clients include countries like Australia, Indonesia and Malaysia (Dmitriev,
2015, p. 61). These countries have the highest number of suppliers as the level of consumption of
these gases is very high. The services needed and equipment’s required in the industry include
the company for extracting the products underground, man personnel, drills and also vehicles for
transportation. In major industry, they prefer use of contract services which work under
agreements like hydraulic services, seismic surveys and also geological analysis.

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2.3 Outline the transportation modes and lanes currently used by the identified competitor to
move its goods and briefly explain the rationale behind the choice of their current Supply Chain
Design.
In gas and oil transportation, pipelines are used mostly followed by road transport. Pipelines are
routes which are unlimited as they can be laid under water or on land. The pipelines are built
according to what thy will transport. They also correspond to harbors and refineries. In road
transportation, as average operation as vehicles serve many purposes. Although the maintenance
cost is very high, they are suitable for gas and oil transportation. Although the competitors are
many, shell ensures that it offers suitable and comfortable costs, comfortable and safety services,
they are easily accessible and they work frequently when asked to. By providing excellent
services they keep off excess competition.
2.4 Briefly discuss coordination activities and tools needed to ensure efficient operations in terms
of cost, flexibility, timely delivery, in gas and oil industry
For every activity to be done in right way, the company coordinates its activities in the right
manner. They ensure that workers and those are given the contract are well organized to avoid
delay and collisions. Also the personnel is well trained and they and has well experience to carry
its activities in the right and faster way. They also ensure that transport means are in right place
to avoid delays. Workers are also flexible to their work. This helps in cost reduction and also the
products are delivered in the right time.
2.5 The role of ERP systems in coordinating activities, exchanging information across within the
organization and between various suppliers and clients

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ERP system is software that automates resources and the processes of a company. This software
has a real potential to offer coordination services which are detected for R/3 system (Alverz &
Maider, 2014, p. 999). This software also helps to exchange information when needed between
the suppliers and the clients with the organization. Also the software helps in tracking the role
materials in the organization and also the financial usage to hinder the clients from using the
materials and resources in wrong way.
3.1 Compare and contrast the gas and oil service by shell related logistics and operations
management implications of delivering the oil and gas products to its customers in both South
East Asian and African markets
Gas and oil production by shell has some similarities and differences between Africa and south
East Asia (Liu, 2013, p. 632). In both Asia and south east Asia regions use the products.in both
areas, they are working on improving the technology concerning gas and oil so as to provide the
services in the correct way it is supposed to be (Hu, 2013, p. 366). In both Africa and Southeast
Asia they are working on researching new places where they can exploit to get the raw materials
to avoid shortages.
In Southeast Asia they consume around 80% compared with Africa meaning that they use gas
and oil more. The technology used in Asia for service provision is based on modern technology
compared to that in Africa. In Asia there are skilled personnel and companies which are well
educated in the oil and gas industry compared to that in Africa. The services concerning oil and
Gas reached to Africa recently compared to Southeast Asia where the services arrived earlier
(Mitchell, 2014, p. 98).

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3.2 Compare and contrast the service-related logistics and operations management implications
of delivering the selected product to its customers in both South East Asian and African markets.
As usual the products have to be delivered to the customers as per their demand. In both south
East Asian and Africa, they are benefiting from tax differences. They also employ intermodal
transportation where they employ more than one transport mode so that they can satisfy
customers fully. In land they use transport mode like, use of truck, railroad, air shipping and
pipelines (Murray & Hansen, 2013, p. 635).
The two areas have some differences when it comes to delivering products. In Africa there are
many cases of fire as the fuel and gases explored easily as compared to South East Asia. In South
East Asia the costs of delivering the products to the customers are very high compared to the
costs the Africans pay after delivery (Ravan & Brewer, 2015, p. 665). In South East Asia there is
a lot of environmental pollution which occurs when the products are in process of getting
delivered as compared to pollution in Africa.
4.1 The human behavioral challenges facing their staffs and elaborate on the subsequent
implications for their operations.
In oil and gas industry, there are many challenges which human face while working (Liu, 2013,
p. 986). Some of the challenges include that coping with the jobs is very difficult. The areas
which they work from are very dangerous and they can result to health problems to the workers.
Another challenge is where the wages paid to workers are very low as compared to the kind of
work they do, the environment and conditions they work with (Ivshina, 2013, p. 626) this makes
the people to leave the work and decide to quit for better paying job. Also in the industry there is
lack of qualified personnel to the jobs. This is because the wages they pay workers are very low

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making them to quit the task hence they start finding the other people who do not qualify. Also
change of technology is challenging some workers as the find it difficult to use new machines for
the work given when they are not taught well.
4.2 lessons organization learn out of your investigation? How should they respond to those
issues? Consider items such as job design, job agronomy, rotation, enrichment and enlargement
among others as mitigation strategies)
As Royal Dutch Shell Company we have learnt that the work regarding oil and gas making it to
final product is very difficult, there are many risks associated with the same and also the workers
need some salary increment. Concerning the issues, the Shell Company have decided to offer
high salaries to well trained personnel (Devold, 2016, p. 955), also to provide health assistance
concerning the workers to avoid losing trained workers (Zhang, 2013, p. 98). The company also
decided to improve the design of job, enlargement of working sites and enriching company with
a lot of resources for workers satisfaction.
4.3 Consider how technology such as could help smooth the Human- Machine interactions and
mitigate possible negative impacts resulting from those interactions
Technology has helped a lot in activities concerning human-machine technology (Ravan &
Brewer, 2015, p. 985). These types of technology include ERP, internet of things, drones and
digital technology. Drones are aircraft which are equipped with different state technology
differently such as GPS, cameras and laser. They are used for emergency response, humanity aid
and disaster and conservations. Drones have some negative effects as they cannot enter some
areas which are restricted. Internet of things is another technology that allows the industry to
manage their elements in manufacturing conditions (Lindoe, 2013, p. 29). Thy help to access

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information and data in an easy way as it is very cheap. The negative thing about internet of
things is that there is a huge leakage risk when it comes to confidential data thus there is some
information you find it is missing. Digital information also helps in divide digital increased
opportunism in the market. Its disadvantage is that it widens the gap thus the success is
determined by goodwill and recipients from advanced set.
Conclusion
In conclusion, Royal Dutch Shell Company has done a lot in Asia and Africa. It has passed
many challenges and learned through them (Popoola & Latinwo, 2013, p. 226). It has employed
a lot of technology like internet of things and digital technology to the sector for better work and
increasing the profit margins. The workers at some point pass through tough environment with
low wages which is not right thing to the company to do that because many of them leave the
work for better jobs with better payments.
Recommendations
In the gas and oil industry, the Royal Dutch shell company has tried to conduct it well, the
mechanisms for coordination’s are in place but, the company is supposed to improve supply
chain links in that industry. The company is supposed to find new ways to reduce total costs in
operation thus improving the efficiency and profits. Shell Company is also supposed to view
coordination and configuration systems of supply-chain. Making improvements allows Company
to gain competitive advantage in the market place. Improvement of technology and having
trained personnel can lead to success of the company. The workers to have high salaries in
proportion to the work they are working. Also the waste products to be kept in the right way to

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avoid pollution of the environment thus provide the excellent working condition for the workers.
The means of transport to kept in right condition for excellent delivery of the products.
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