LOOG5026 Logistic And Operations For Oil And Gas

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LOOG5026 Logistic And Operations For Oil And Gas

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LOOG5026 Logistic And Operations For Oil And Gas

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Course Code: LOOG5026
University: American Public University System

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Country: United States

Question:
Describe and discuss the Configuration of one of your organisation’s product Supply Chain. This includes: – Discussing its make-up, its participants, facilities locations, role of the facilities among, etc. (See lecture notes)Which activities do your business intent to carry on itself, and which one will be outsourced?Map the first tier clients and suppliers as well as needed services and equipment and explain the rationale behind your choice of designOutline the transportation modes and lanes currently used to move its goods while briefly explaining the rationale behind the choice of the current Supply Chain Design.Check the lecture notes for other items, which might be worth consideringDiscuss the economic and environmental performance of your chosen organisation’s supply chain.
Answer:
Introduction.

Oil and gas form the cornerstone of the world economy. My organization is a TOTAL Company in Mauritius which in the last 10 years has been selected as the third largest company in supplying oil and gas products.
The vision of the company is to supply oil to the customers at the affordable prices while the company’s mission is to meet the needs of the market (Halkiaset al, 2011 p.69).
Company’s goals include supplying enough oil to customers, reaching the entire world, maximizing profits and then competing with the other oil manufacturing companies in the market (Halkiaset al, 2011 p.69).
Therefore, oil is used in different fields. It is highly used in industries and in other commercial fields. It’s also used for the domestic purposes, driving machines, production of products such as plastics, agricultural products such as the fertilizers (Mellahi et al, 2011 p.34-35). The content will discuss different sections starting with the first part which is challenges facing the company and the supply chain for oil production, second part discussing logistic and operational challenges facing product design in the company, third part discussing the chain and supply management in the company and the fourth part addressing the health risks and safety measures for the workers while working in the company.
The upstream sector of the oil production in the TOTAL Company.
(Ackah, 2012 p.78) argues that upstream sector involves the whole procedure of searching for the crude oil and also the process incurred during the production. Here the discovery of the crude is the major process and in most cases, it includes the extensive efforts that involve finding those places with the remains for the crude supply.
Challenges experienced in the upstream level by the TOTAL Company.
Sources of the crude oil.
 In most cases, if we try to think on the sources of the oil it is found that those areas tend to be non-renewable. This means that oil deposit sites exhaust with time. The increased market for the oil products subjects the company to exploit large sites meaning that the company in the coming years will lack adequate areas to extract the oil (Pinks & Kolk, 2010 p.82).
Operational challenges.
Exploiting the crude oil requires the use of technical tools. The TOTAL Company lacks the adequate tools, therefore, subjecting the company to hire tools from the other big companies. The lack of adequate personnel to operate the drilling machines in the company also is a challenge for the company. 
The increased demand and supply for the oil.
There is an increased population all over the world. The oil supply is low as compared to the demand. The problem affects the upstream level so much and therefore creating tensions for the decrease in the supply of oil in the future (Lim & Teong, 2010 p.92)..
The downstream or the midstream level.
The process includes the oil supply to the market, the trade process, the distribution chain and the retailing process.
The challenges faced in the downstream process in TOTAL Company.
The pricing challenges in TOTAL Company.
  In most cases, the price of the oil is affected by the accessibility to some areas (Lim & Teong,2010 p.213).In remote areas, the company utilizes a lot of capital and therefore subjecting it to raise the price. In this situations, the available market may not purchase and therefore the company faces losses as compared to those areas which are easily accessed.
The increased cost of the services of the TOTAL Company.
 The increased cost in all the services incurred in the production and the processing level challenges the company so much (Lim & Teong, 2010 p.267). The increased transportation cost and operational cost subject the company to incur huge losses. 

The supply chain for oil production in Total Company in Mauritius.
Supply chain operations include the following operations;
The first stage in the oil supply chain is production. Total crude oil is produced on both Mauritius land and sea areas. This involves drilling, extraction process and the overall recovery of oil from an underground level (Christopher, 2016 p.25).
At several steps in the oil supply chain process, oil is strategically and safely transported to storage facilities, the required refineries, multiple terminals, and the sales stage. The existing basic modes of transport used by Total in the transportation of the product from production to retail selling are the use of tankers, train, cruise ships, and pipelines.
Once the product has been produced, it takes to medium storage for a short period. Short term storage acts as the point interval for oil product distribution in the entire supply chain (Christopher, 2016 p.55).These short-term storage facilities and equipment make it possible to ensure effective adjustments in the supply and demand performance throughout the whole supply chain. Mauritius Total Oil Company utilize the Strategic petroleum reserve as an emergency oil storage in order to mitigate continued product supply disruptions.
Refining stage allows key transformation for oil into several consumer products (Jacobs et al, 2014 p.19).The refinery process incorporates chemical process during a full reaction and separating the components in order to transform the produced oil into more useful consumer products such as fuel, diesel, and various significant manufacturing feedstock’s. After the refinery process, the available feedstock products are taken into manufacturing chambers where they play a huge crucial role in multiple manufacturing supply chains. These include lubricants, organics, and manufacturing of both plastics materials and medical instruments. The refined oil which is entirely ready for consumption is taken to several terminals,
Retail. After Total fuel leaves the terminal stage, it is taken to the point of sale. Shipping and trucking enable efficient delivery lines to the retail areas such as stations in order to sell the product (Jacobs et al, 2014 p.49).
Over the past 24 months, Total oil company and oil supply chain have reduced from boom to bust. The operators get low crude prices which have decreased sharply on the supply chain spending. In pursuit of sustainable cost decrease and profitability, the company has integrated to cost cut improve service models, pieces of equipment and overall consolidation. Many services and product services are outsourced to several suppliers create a complex supplier base. It utilizes Petrol software platform technology to develop oil potential in reservoirs. It is also engaging in mergers and partnerships to provide more services efficiently (Johnson, 2014 p.75). Sustained investment in advanced services and trending technologies such as Logging while drilling enhances efficiencies to increase revenue.
The supply chain of Total Oil Company encompasses proper planning and managing operations in procurement, logistic activities and coordination of chain partners, suppliers, service providers and prospective customers. It has integrated crucial supply and demand factors. It has incorporated models such as Supply chain operations reference to distribute, ensure flexible production, inventory, customer satisfaction in order to increase the performance of the oil supply chain. These original suppliers offer oil products and services that add value for customers and Total stakeholders. This fulfils potential customer demand through high distribution capacity, inventory thus matching demand factors with supply, therefore, it optimizes the oil supply chain for example by liaising with existing suppliers to prevent bottlenecks(Johnson, 2014 p.105)..
Logistics and the operational challenges facing the supply of the products designed by the company.
The Total Company deals with the variety of the oil products. They include those products manufactured directly from the oil such as; gasoline, jet fuels, heating oil and the diesel oil. (Ciarreta & Nasirov, 2012 p.97).
The transportation cost.
  Oil is used in different areas within the whole world. Costs are incurred in distributing oil. Reaching remote areas incurs huge costs (Wu, 2014 p.31). The TOTAL Company spends huge capital in order to reach these areas which are far from the oil deposits.
Competition from the other companies.
  TOTAL is not the only company which supplies the oil products and services. There are other companies which pose a big challenge for the oil and other related oil products. Also, the company is facing challenges from other renewable sources of the energy (Sioshansi, 2013 p.143). It also facing the challenges from the other alternative sources of the energy such as biofuels.
Increased demand for the oil products.
The high dependence of the oil products affects the supply chain and the whole operation of the TOTAL Company. The demand is high than the supply (McManus & Taylor, 2015 p.89).This leads to shortages in oil-related products in the economy. 
The labour shortage.
  This forms the major operational challenge. That is lack of adequate personnel needed in the designing of the oil products. The company in most cases even lack individuals who are capable to provide the labour needed in operating the tools needed in oil processing (McManus & Taylor, 2015 p.89).
Insulating the supply chain against volatility
During planning strategies, Total Company can design and break vulnerabilities involving the unpredictable price fluctuations in the demand for oil (Christopher, 2016 p.85).
Optimize against limitations or constraints for healthier margins
 The integrated supply chain planning software for the Total oil company is mainly configured in order to respect all the company’s business rules. These include production capacity, the existing inventories, logistic constraints and the available contractual needs (Christopher, 2016 p.185).
Scenario planning. This practically assesses the profitability of exploration wells by critical comparison of distinct demand and supply chain scenarios. The company’s plant activities and capabilities are also evaluated (Cohen & Roussel, 2013 p.79).
Multi-resource optimization. Maximizing the scheduling of the products field services equipment and contractors located at the site of exploration in order to control the overall incurred costs. This should be done to configure and compare the level of profitability of the various product site so as to ascertain the future of the oil company.
Evidently, as the main oil product fields are depleted, the companies have no choice but to invest highly in the exploration of the complex products (Cohen & Roussel, 2013 p.79). Optimizing these resources will make Total to coordinate the sales of their product worldwide and cope up with the fluctuating prices or turbulent target markets.
Through inventory optimization, TOTAL Oil Company is able to detect the maximum total amount of inventory to be stored in each geographic location considering the forecasted current demand and cost of monitoring activities such as managing pipelines (Jacobs et al, 2014 p.89).
The current supply chain design is efficient for the company’s optimum utilization of their production resources and required workforce (Jacobs et al, 2014 p.123). They are able to make informed decisions that are right for proper operation of the product in the current market.
Economic and environment performances
 The environmental management systems on the oil company several sites are ISO certified. The environmental risks that might result from disposal or acquisition are usually assessed, approved and decisions made periodically to improve the performance (Monczka et al, 2015 p.90).
Through utilization of the industry’s best practices, Total Oil Company also coordinates and monitors accidental oil spills of several barrels. Corrective action done on the detected liquid hydrocarbon is aimed at returning the environment to its initial normal state (Monczka et al, 2015 p.145).
The company usually enact a policy of decreasing, management and monitoring the existing footprint of its operations. It has an ecological framework that includes the following laid out principles;

Deploying the mitigation hierarchy to reduce the effects of its operations on biodiversity
Take in to account the ecological diversity and sensitivity issues of the ecosystem.
Manage biodiversity to incorporate the impact and risk
Reporting to its main stakeholders on the environmental performance in terms of biodiversity management.
Improve knowledge of the environment, biodiversity, and ecosystems

 Economic. The company generates revenue from profits gained through selling of oil. This improves both living standards and the economy (Johnson, 2014 p.145). Total stations have created multiple job opportunities for workers. It also agrees with other corporations such as the World Bank, ICF to increase its economic performance standards and reduce economic dominance.
Health and safety risks
 Staff in the oil company face the risk of fire and explosion brought about by ignition of flammable oil. Oil released from wells, tankers, production equipment’s such as pipes and tanks is highly flammable and can cause burns when ignited (Kristiansen,2013 p.89). These spillage hazards can cause death and burns.
Ergonomic risk
Oil employees are usually exposed to ergonomic-related injury hazards, for example, lifting of heavy stuff, when bending, handling heavy items, working in weird postures and doing similar work repetitively (Skogdalen et al,2011 p.78). This can make the employee to suffer from sprains and musculoskeletal disorders
High-pressure lines and equipment
 Staff may be highly exposed to risks resulting from compressed and high-pressure oil lines. Internal erosion of the oil lines leads to leaks or burns, exposing employees to high-pressure hazards in case of line connection failure.
Electrical and other hazardous energy
Total staff might be affected by unmanageable electrical, mechanical and potential sources if the existing equipment is not properly designed and installed (Skogdalen et al, 2011 p.106). Consequently, they are exposed to shock from such electrical appliances
Machine hazards
 Oil employees are affected by a wide range of rotating wellhead machinery and equipment for example pumps, conveyors, drives, and compressors. The staff might, therefore, be injured if they are hit badly or struck in between the unguarded hazardous equipment’s.
The company should apply internet technology to communicate the hazards, create awareness, offer training and give information and skills regarding protection from the risks (Skogdalen et al, 2011 p.178). It should have a clear contractor plan when enlarging the company and increasing workers for their safety and training.
Recommendation.
Total Company need to understand that oil is an important product with many uses over the Mauritius (Skogdalen &Vinnem, 2012 p.89). The solution to the oil challenges has to be formulated in order to ensure smooth running of the company. Coming up with adequate technological tools will help the company to exploit crude oil in an effective manner. Also identifying policies for challenges facing the product design and coming up with critical criteria to control the supply chain management in the company will help the company. Considering the safety and risk measures the company need to uphold business ethics which will encourage human dignity (Hallowell, 2010 p.84). These safety and health challenges discourage the staff thus Total needs to design and adopt technological strategies to respond to these issues and motivate the workers. Interventions such as pre-task planning, correct utilization of the right work tools, correct material placement should be done
Conclusion.
 In conclusion, the upstream and the downstream levels face a lot of challenges which have been clearly stated and described. The company also faces a lot of challenges in the supply of other related oil products as discussed in detail above. The aspect of the chain supply in the company should be handled appropriately (Antonsen, 2017 p.141 
Reference.
Ackah-Baidoo, A., 2012. Enclave development and ‘offshore corporate social responsibility’: implications for oil-rich sub-Saharan Africa. Resources Policy, 37(2), pp.152-159.
Antonsen, S., 2017. Safety culture: theory, method, and improvement. CRC Press.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Ciarreta, A. and Nasirov, S., 2012. Development trends in the Azerbaijan oil and gas sector: Achievements and challenges. Energy Policy, 40, pp.282-292.
Cohen, S. and Roussel, J., 2013. Strategic Supply Chain Management: The Five Core Disciplines for Top Performance, Second Editon. McGraw-Hill.
Du, S., & Vieira, E. T. (2012). Striving for legitimacy through corporate social responsibility: Insights from oil companies. Journal of Business Ethics, 110(4), 413-427.
Halkias, D., Nwajiuba, C., Harkiolakis, N. and Caracatsanis, S.M., 2011. Challenges facing women entrepreneurs in Nigeria. Management Research Review, 34(2), pp.221-235.
Hallowell, M., 2010. Safety risk perception in construction companies in the Pacific Northwest of the USA. Construction management and economics, 28(4), pp.403-413.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Johnson, P.F., 2014. Purchasing and supply management. McGraw-Hill Higher Education.
Kristiansen, S., 2013. Maritime transportation: safety management and risk analysis. Routledge.
Lim, S. and Teong, L.K., 2010. Recent trends, opportunities, and challenges of biodiesel in Malaysia: an overview. Renewable and Sustainable Energy Reviews, 14(3), pp.938-954.
McManus, M.C. and Taylor, C.M., 2015. The changing nature of life cycle assessment. Biomass and Bioenergy, 82, pp.13-26.
Mellahi, K., Demirbag, M. and Riddle, L., 2011. Multinationals in the Middle East: Challenges and opportunities. Journal of World Business, 46(4), pp.406-410.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.
Pinkse, J. and Kolk, A., 2010. Challenges and trade?offs in corporate innovation for climate change. Business Strategy and the Environment, 19(4), pp.261-272.
Sioshansi, F.P., 2013. Evolution of Global Electricity Markets: New paradigms, new challenges, new approaches. Academic Press.
Skogdalen, J.E. and Vinnem, J.E., 2012. Quantitative risk analysis of oil and gas drilling, using Deepwater Horizon as the case study. Reliability Engineering & System Safety, 100, pp.58-66.
Skogdalen, J.E., Utne, I.B., and Vinnem, J.E., 2011. Developing safety indicators for preventing offshore oil and gas deepwater drilling blowouts. Safety science, 49(8-9), pp.1187-1199.
Wu, K., 2014. China? s energy security: Oil and gas. Energy Policy, 73, pp.4-11.

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