How Gas & Oil Companies Make Profits

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Have you ever wondered how gas and oil companies function and make their money? Well, now you can find out, so read on.

Locating the Gas & Oil

The geologists are the people responsible for locating oil. This process means monitoring the Earth and shifts that happen underneath its surface. These processes can be incredibly complicated. Sometimes they produce satellite images and use sensitive magnetometers to monitor the ground and find where oil or gas is located. This is a key part of the process because every company wants to find where the best place to drill is and where the most amounts of oil and gas can be found.

Oil Drilling
Oil Drilling

Drilling Preparation

When a site has been selected, the preparation process has to begin. Scientists then come in to check that the area is safe to explore and drill in. This means determining the boundaries and conducting an environmental impact study. Legal permission to drill will have to be sought if the checks are all successful. If the right lease agreements and legal green lights are not obtained, a company could land itself in deep trouble if it starts drilling. It could cost them a lot of money which would eat into profits.

Rigging Systems

The rig is the system that carries out the drilling process for the company. They use a power system, a mechanical system, rotary equipment and a circulation system. All these different parts do their job, but the overall purpose is to drill holes into the Earth that are then used to extract the oil or gas. There are many differing methods, but the most important thing is that the maximum amount of oil or gas is extracted without much being wasted. Wastage causes loss of profits as well as damage to the environment.

Gas and Oil Company
Gas and Oil Company

Safety

Safety has to be the biggest focus for all the major oil and gas companies. If their operations aren’t safe, they won’t last for very long in the industry. Different precautions and technologies, such as the metering station, are used to keep things as safe as possible. If things aren’t safe, it doesn’t just put people at risk, but it also affects profits. Being unsafe will damage the reputation of the company, and that will seriously damage the chances of making money for the company. So it makes a lot of sense for companies to priorities safety.

Selling

Gas and oil companies obviously make their money by selling their gas and oil. But this is not something that they have much control over. Prices of natural resources like gas and oil go up and down all the time, and there’s nothing they can do to change this. For example, many companies are doing poorly at the moment because prices are so low. They are at the whim of the global markets when it comes to making sales.

So, that’s how gas and oil companies try to maximise the profits they make. It’s not as straightforward or profitable as you might have assumed before.

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