Environmental Impact of Oil & Gas Extraction

The assignment delves into the environmental consequences of oil and gas production. It examines how environmental regulations influence innovation within the industry and investigates the adoption of sustainable practices by companies. The analysis considers various aspects, including fracking regulations, corporate social responsibility initiatives, and the role of strategic environmental assessment in land-use planning.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MACRO AND COMPETITIVE ANALYSIS OF CUADRILLA..................................................1
STRATEGIC OPTIONS AVAILABLE FOR CUADRILLA.........................................................3
STRATEGIC IMPLEMENTATION PROCESS............................................................................4
CONCLUSION AND RECOMMENDATIONS............................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
In such a competitive era, it is essential for each and every business enterprise to develop
effectual strategy so that the best results can be attained. Here, Fracking industry has been
undertaken which involves the procedure of creating fractures in rocks or deep into the earth
with the help of injecting fluid into cracks so that they can open their pores. Through such
process, large number of oil and gas will flow out of the earth surface (Cahoy, 2013). Fracking
process has been adopted by various zoology departments in order to gain more oil and gas,
achieve a high state of economic viability, reach a high level of extraction etc. Fracking is also
known as hydraulic fracturing that helps in designing a technique in order to recover gas and oil
from shale rock so that large number of oil and gas can be recovered from wells.
MACRO AND COMPETITIVE ANALYSIS OF CUADRILLA
Fracking is a process of drilling down into the earth by involving a high pressure of water
mixture directed into the earth surface where extraction needs to be done on a given surface of
land. Water, sand and chemicals are injected into the rock with a high pressure that allows gas to
flow out and helps in obtaining huge amount of oil and gas. Drilling companies like Cuadrilla
can drill horizontally with the layer of rock and thus, create a new pathway in order to release
gas or can be used to extend existing channels (Drnevich and Croson, 2013). Following is the
macro and competitive environmental analysis of Cuadrilla-
PESTEL analysis
 Political- It involves different policies formulated by the UK government such as
taxation policy, government policy, labour law etc. It has been assessed that more than
100 licenses have been provided by the UK government to different firms in order to
allow them to carry out fracking process and extract oil and gas exploration activities in
certain areas of land. But, government intervenes in between and thus it states that firm is
required to obtain planning permission from the relevant local council before beginning
fracking process (Davis and Hoffer, 2012). Main disadvantage for Cuadrilla is that it is
essential for the firm to take permission from government so that they can extract oil and
gas from earth as they are not allowed for extracting natural resources without taking
prior permission from the government.
1

 Economic- Here, it assesses that economic factors have significant impact upon how the
organization carries out the business does and how much they attain profits. It involves
different factors such as interest rate, exchange rate, inflation rate etc. However, through
carrying out Fracking process it helps in lowering down the gas prices. However, such
impact helps in creating larger market share and creates jobs for individuals (Rinfret,
Cook and Pautz, 2014). Advantage of economic factor is that it helps in enhancing the
market share and also increases job opportunities for individuals. While, the disadvantage
is that due to prevailing recession in country, business faces economic issues in order to
provide job opportunities as well as selling oil at higher prices.
 Social- It involves shared belief and attitudes of population. However, labour of the
country has called for a hold on fracking till the time that need be ensured regarding the
safety of the process. They state that it should not harm the environment badly. Through
stopping the fracking process, main advantage is that environmental safety can be
attained. Also, it is essential for companies to provide safety and security to workers.
 Technological- Here, changes in the technological factors impact the market and
company's products. However, Cuadrilla is required to undertake innovative machines
for drilling into the earth otherwise extraction cannot be done effectively. It helps in
getting more oil and gas (Willow, 2015). Main disadvantage of this factor is that firm
does not have innovative machines therefore, it is essential for it to own effective
machinery so that drilling can be carried out effectively and efficiently.
 Environmental- Such factors are required to be viewed in order to protect the
environment from extraction. However, fracking process uses huge amount of water that
needs to be transported to the particular place where fracking is required to be done and
thus it causes significant environmental cost. Furthermore, such process also causes small
earth tremors. One of the disadvantages of this factor is that fracking process uses huge
amount of water that needs to be transported to a particular place where fracking is
required to be done and thus, it causes significant environmental cost.
 Legal- It is essential for the organization to undertake different legal factors such as
health and safety, equal opportunities and consumer rights. Thus, it is essential for
Cuadrilla to carry out effective employment laws in order to provide the best
opportunities to individuals and also render them proper health and safety regulations so
2

that they can be protected while carrying out fracking process (Cahoy, 2013). Main
advantage of legal factor is that it helps in providing equal opportunities, employment
laws and policies so that best health and safety services can be provided to individuals
while carrying out the fracking process.
Advantages and Disadvantages of PESTEL-
Advantages
 It helps in providing a simple and easy framework to use.
 Individuals are required to possess cross functional skills and expertise.
 Helps in encouraging the development of strategic thinking within firm.
 It also enables in identifying the threats and opportunities in order to act upon them.
 It also helps in changing the environment at the same time so that challenges can be
predicted regarding the future of firm.
Disadvantages
 In order to carry out PEST analysis, it requires a proper format of presentation.
 Also, lack of availability of information affects the analysis.
 Such analysis is insufficient for the purpose of carrying out strategic planning.
PORTER’s FIVE FORCES analysis
Porter’s Five Force analysis helps in examining the competitive intensity and
attractiveness of the marketplace. It also shows current competitive position and strength of the
desired position so that strategic results can be attained.
 Threat of new entrants- It can be stated that it has low entry in such market as it
requires huge investment. However, business is required to create an anti-fracking
campaign and thus, involves all the competitors. It is essential for firm to introduce a
unique strategy against the issue of fracking (Drnevich and Croson, 2013). Advantage of
threat of new entrant is high because entry in fracking industry requires high investment
and thus, it possesses minimum competitors.
 Bargaining power of buyers- Here, customers do not possess enough knowledge
regarding the prevailing fracking issue. Therefore, it increases the demand and needs of
oil and gas in the market. It is essential for customers to raise their voice against fracking
on social media and to support the campaign. Major advantage for customers is that if
fracking process increases, it ultimately reduces the prices of oil and gas.
3

 Bargaining power of suppliers- It is high as there are varied players that have been
involved in Anti-Fracking issue and thus, it indicates that campaign needs to be promoted
in order to develop knowledge regarding the same (Rinfret, Cook and Pautz, 2014). Main
disadvantage is that supplier’s bargaining power is high and thus, they provide raw
material at high prices that affects the profitability of firm.
 Threat of substitute products or services- There are certain indirect competitors such
as Greenpeace, Amnesty etc that develop campaigns and provide knowledge to the target
audience in order to minimize the use of natural resources and protect them from
diminishing. Cuadrilla possesses high threat and thus, it is the disadvantage of firm as it
affects the sales and profitability because there are many competitors available in the
market such as iGas, Centrica, etc.
 Rivalry among existing competitors- Stated promotional campaign launched i.e. Anti-
Fracking helps in communicating to different target market and thus, helps in creating
competitive position (Devold, 2006). Here, the disadvantage is that there are different
competitors who are creating a bad market image of Cudarilla and thus, affects its
business operations.
STRATEGIC OPTIONS AVAILABLE FOR CUADRILLA
Strategic options can be considered as the way that has been adopted by business in order
to develop different strategies so that business can attain desired results. However, in order to
attain success within firm it is essential for business to adopt effective strategic choices so that
clear direction can be made to attain the purpose. It is significant for firm to direct their efforts so
that wide range of competitors can be identified by Cuadrilla and thus provide best results in
order to overcome the results (Michelon, Boesso and Kumar, 2013). There are varied
competitors such as IGas, Centrica etc. provides tough competition to Cuadrilla so that best
results can be attained. Strategic options are a process that helps in carrying out a range of
strategic options available for Cuadrilla to invest. However, there are different solutions that
arise directly from a set of agreed issues and or benefits are rarely defensible. Main challenges
faced by business in order to undertake strategic options analysis is that it forces business to
expand their operations and develop different solutions so that best results can be attained. Thus,
4

firm is required to use effective strategic options analysis that helps in creating strategic response
to develop effective investment (Ford, Steen and Verreynne, 2014).
It is essential for management of Cuadrilla to determine different companies operating its
business in fracking industry so that best strategic options can be implemented in order to
achieve desired results. Business is required to identify the current strategies remained heavily
weighted so that management can overcome the deficiencies. However, as compared to IGas and
Centrica, Cuadrilla is carrying out best practice of strategic options so that fracking can be
carried out effectively. There are varied benefits of strategic options available with firm such as
providing clarity and common understanding of the range of options so that best results can be
attained (Short and et.al., 2013). It also helps in providing transparency and accountability for
Cuadrilla to develop heavy investment decisions in order to overcome the solutions. It is also
essential for firm to develop confidence so that better recommended strategic response will help
in deliver the expected benefits. Moreover, with the help of effective strategic options firm is
required to reduce the effort required in order to create the subsequent business cases (Sovacool
and Saunders, 2014).
Thus, it helps Cuadrilla to implement effectual strategic options and attain desired
targets. Further, it is significant for firm to invest huge amount of capital in order to enhance the
opportunity for Cuadrilla and thus overcome the competitors so that best performance can be
carried out effectively and efficiently. Implementing effectual strategic option is best suitable for
fracking industry to achieve desired targets (Schlichting, 2013).
STRATEGIC IMPLEMENTATION PROCESS
Here, is effective implementation of strategic options so that best results can be obtained
within fracking industry. Cuadrilla is required to provide effective strategic implementation
process that helps them to develop UK's biggest energy supplier and parent of British Gas so that
high amount of oil and gas can be extracted. Also, government is required to involve effective
investment efforts so that environment could not be affected and thus attain desired results. It is
essential for fracking industry to develop an effective expertise in the energy sector as an
operator and developer so that best results can be attained (Savitz, 2012). Centrica which is a
competitor of Cuadrilla is required adopt effective strategic option that helps business to attain
5

desired results. Company is required to integrate with government in order to implement
effective strategies as compared to competitors so that best results can be achieved.
Fracking industry involves a wide range of investment so that huge machinery and
equipment can be purchased in order to implement it in business and thus become more
dependent upon the imported gas. Cuadrilla helps in delivering effectual oil and gas services to
its customers by carrying out fracking process. It states that going deep into the earth by doing
crack in the earth and using water to attain oil and gas. For this, business required huge
investment and thus it also affects natural resources. Competitors such as Centrica are enough to
raise the profile of UK shale gas sector that increases the price of oil and gas in marketplace
(Hall and Wagner, 2012). There is a conceptual gap in the strategic options so that company's
intervention can be avoided in order to attain desired results. For instance minimizing transport
congestion by sharing public transport helps in lowering down the environmental impact.
However, US discovers a huge amount of shale as a result of using new techniques such
as horizontal drilling and fracking the rock using different chemicals has led to a huge new shale
industry that sent prices of natural gas above $10 million. IGas was also found a competitor of
Cuadrilla that had previously stated that firm is developing new shale gas reserves so that
deliberate actions can be attained (Rudnick, 2013). But Centrica is required to develop new ways
so that they can change the fracking method in order to overcome the natural resources from
diminishing. With the help of effective strategic options analysis business is required to
develop proposed investment and prepare effective strategic options so that best results can be
attained. Therefore, it is essential for business to develop careful, planning and appropriate
facilitation so that best investment can be carried out in order to achieve desired targets (Belu
and Manescu, 2013).
CONCLUSION AND RECOMMENDATIONS
From the above study it can be concluded that business strategy can be stated as the best
way through which effective strategic options can be developed. It is essential for company to
develop effectual investment in order to extract more oil and gas from earth. Cuadrilla is a
fracking company in which oil and gas is extracted from inside the earth and which requires
huge amount of water. Therefore, it affects the environmental aspect as water is transported from
long distances and thus it causes environmental cost. At the end, it is essential for firm to
6

develop effective strategic choices so that best options can be implemented in order to attain
desired targets.
However, it can be assessed that it is essential for Cuadrilla to overcome competitors and
invest huge amount of capital so that more oil and gas can be produced. It helps in defeating the
rivals such as IGas and Centrica so that best results can be attained. Thus, it can be suggested
that business is required to identify best strategic option so that required amount of resources can
be invested within it and attain desired targets.
7

REFERENCES
Books and Journals
Belu, C. and Manescu, C., 2013. Strategic corporate social responsibility and economic
performance. Applied Economics. 45(19). pp.2751-2764.
Cahoy, D. R., 2013. The Changing Face of US Patent Law and Its Impact on Business Strategy.
Edward Elgar Publishing.
Davis, C. and Hoffer, K., 2012. Federalizing energy? Agenda change and the politics of fracking.
Policy Sciences. 45(3). pp.221-241.
Drnevich, P. L. and Croson, D. C., 2013. Information Technology and Business-Level Strategy:
Toward an Integrated Theoretical Perspective. Mis Quarterly. 37(2). pp.483-509.
Ford, J. A., Steen, J. and Verreynne, M. L., 2014. How environmental regulations affect
innovation in the Australian oil and gas industry: going beyond the Porter Hypothesis.
Journal of Cleaner Production. 84. pp.204-213.
Hall, J. and Wagner, M., 2012. Integrating sustainability into firms' processes: Performance
effects and the moderating role of business models and innovation. Business Strategy and
the Environment. 21(3). pp.183-196.
Michelon, G., Boesso, G. and Kumar, K., 2013. Examining the link between strategic corporate
social responsibility and company performance: An analysis of the best corporate
citizens. Corporate Social Responsibility and Environmental Management. 20(2). pp.81-
94.
Rinfret, S., Cook, J. J. and Pautz, M. C., 2014. Understanding state rulemaking processes:
Developing fracking rules in Colorado, New York, and Ohio. Review of Policy Research.
31(2). pp.88-104.
Rudnick, L. R. ed., 2013. Synthetics, mineral oils, and bio-based lubricants: chemistry and
technology. CRC press.
Savitz, A., 2012. The triple bottom line: How today's best-run companies are achieving
economic, social and environmental success--and how you can too. John Wiley & Sons.
Schlichting, I., 2013. Strategic framing of climate change by industry actors: A meta-analysis.
Environmental Communication: A Journal of Nature and Culture. 7(4). pp.493-511.
Short, M. and et. al., 2013. Strategic environmental assessment and land use planning: an
international evaluation. Routledge.
Sovacool, B. K. and Saunders, H., 2014. Competing policy packages and the complexity of
energy security. Energy. 67. pp.641-651.
8

Willow, A. J., 2015. Wells and well-being: neoliberalism and holistic sustainability in the shale
energy debate. Local Environment. pp.1-21.
Online
Devold, H., 2006. Oil and Gas Production Handbook. [Online]. Available through:
<http://folk.ntnu.no/onshus/Oil%20and%20gas%20production%20handbook
%20ed1x3a5%20comp.pdf>. [Accessed on 1st March 2016].
9