North Sea Oil and Gas

E very(prenominal) business or perseverance is prone to non-homogeneous risks which include floods, earthquake, terrorists which the industry should tell mechanisms in status to parry such. Effective fortuity formulation has been of importance to most industries that apprehend the idea. northeast ocean anoint and Gas has for a long date been prone to the line of changing weather grooms which is specially experienced in the sea. The companies that exploit the join ocean fossil cover and gas have put a lot of violence on risk focus and most of the companies have set up risk management departments (Leslie and Michaels, 1997).Numerous deaths had occurred during the exploitation of North sea oil and gas in the 1970s and 1980s and this called for in effect(p) misfortune readiness to reduce the losses incurred by loosing workforce and by spillage of oil and gas due to buckles. The companies that exploit the gas and oil have invested in the accident planning as a focusing of flair of managing the risks (Leslie and Michaels, 1997).North ocean oil and gas has been a source of wealthiness to the countries that exploit the resource. North Sea oil has been utilise to refer to the oil and indispensable gas exists beneath the North Sea. The countries that exploit the North Sea oil and gas include Netherlands, Norway, Germany, United Kingdom and Denmark. Most countries and especially companies that have been given license to exploit the resource have interpreted proactive measures of risk. Mining beneath the sea has led to many deaths of the mountain involved and this has called for heavy investment in risk management travails undertaken by the companies. The pipes that transfer the oil and natural gas from underground reservoirs to processing plants which ar mainly located rough distance from the sea moldiness be strong to withstand the waves in the sea. Depending on weather changes, waves differ in their peak and this call for continge ncy planning otherwise heavy losses be incurred by the particular company (Leslie and Michaels, 1997).In the 1970s, the North Sea oil a gas companies took proactive measures to forefend heavy losses that resulted when waves exceeded the aggrandizement of 3 meters. The operators laid many pipes which assumed the shape of S to honor smoothness between the large barge and the ocean floor. The operators used radical anchors to further buckles by raising and resetting the pipes at the barges. The operators had to be keen be font amiss(p) grievous of pipes would result into a pipe buckle which presented a unsafe threat in place the pipes. The excessive height of waves which exceeded the anticipated height resulted in further risk of pipe buckles due to uncontrolled lowering of pipes.The companies then had to purchase a large number of steel pipes to avoid delays incase of any pipe buckle and this methods was non damage impressive as the company would have desired. Any proact ive measure that is taken to manage risk should be cost sound, utility effective and must therefore be maximizing benefits for the company while minimizing cost (Leslie and Michaels, 1997).An effective contingency planning in managing risks in vomit requires considerably planning and coordination of all the stakeholders in the project to ensure maximum desirable result. pretend management involves taking measures in dealing with uncertainty. The North Sea and oil contingency planning that was adopted in 19790s involves dealing with uncertainty because in favorable weather conditions, there is less cost involved in dealing with risks since pipe buckles will be few and hence very few new pipes will be ask to be laid. However, since its saturated to predict the height of the waves in the sea which can cause heavy losses if unchecked, the companies that explore the oil and gas in the areas must take precautionary measures (Leslie and Michaels, 1997).Exploration of North Sea oil any natural gas involves making wealth for the companies that are undertaking the projects. The importance of contingency planning in the exploration project is very essential in risk management because its used to assess the possibility of big(a) weather condition which is a threat to the project. The assessment is consequently used to reduce the possibility of underperformance that may be realized when no measures are undertaken to reduce or avoid the pipe buckles. The cost of replacing buckled pipes reduces the remuneration margin that is realized in the project and therefore effective contingency planning help to manage the risk.Effective contingency planning helps to capture the benefits of join weather. Uncertainty about weather conditions is a threat that faces the North Sea offshore pipe laying. If effective contingency planning is observed, long periods of spoilt weather can be sustained because the project major should be able to do it and deal with the bad condition threat which is inevitable. The project managers should ensure there is plenty supply of pipes during bad weather condition to avoid delays in replacing the buckle pipes. The project managers should observe good contingency planning by ensuring that the oil and gas pipeline are complete onwards the bad weather sets in and this will support in reducing the costs associated with contingency planning. Laying pipelines in time helps in avoiding major delays in the project which may result in heavy monetary losses.Contingency planning for reducing possible threats that are associated with North Sea and oil exploration could be a possible way of increasing income to the companies that are undertaking the project. American project management appoint (PMI) argue that there is a possible opportunity associated with the risks that threaten the project in winter, bad weather conditions has been known to lead to gas shortfall in most cities which due to law of demand, the prices increase. Th is could be an opportunity for those companies that are concerned with the project.Effective contingency planning in managing risk North Sea oil and gas has created an opportunity to the companies undertaking the project. This is attri yeted to the precautions taken by the companies in anticipation of bad weather threat. The project involves paying for delivery before the contract begins. Most companies that want to protect themselves from the deficient supply of the resources therefore buy the resources before the contract begins. The high demand has contributed to higher tax revenue derived from the project and this consequently results to higher favourableness (Leslie and Michaels, 1997).Contingency planning which is mainly associated with managing risks should not simply focus on the threats that hamper the success of the project but should also view threats as an opportunity to achieve the objectives of the project. Achievement of objectives convey the project has succeeded. Therefore effective contingency planning in addressing risks should recognize the close relationship of threats and opportunities. The actions taken by the project manager in reducing the risks should seek to create an opportunity for excellence (Leslie and Michaels, 1997).Effective contingency planning should not focus on managing threats. Instead the project should seek to position the different sources of risks and consequently how to manage the risks. Focus on risks draw emphasis on the anticipated shopure. Therefore, assessing the variant sources of uncertainty and how those uncertainties can be a threat to the project and consequently how to manage the uncertainties involves application of effective contingency planning.North Sea oil and gas exploration is associated with many uncertainties which present various threats to the project. Focus on the opportunities created by the uncertainties management can lead to profitability and success of the project. The project manage r should identify the origins of uncertainties instead of managing risk offset printing and this will assist in addressing the root of the problem. Most projects have failed to adopt the set objectives due to their failure to address the root of the problems. Superficial problem solving has led undesirable results. Therefore identification of the source of uncertainties should be considered as the beginning of the risk management process in effective contingency planning (Leslie and Michaels, 1997).Uncertainty is present in every project and in all stages of the project life cycle (PLC). The uncertainty is contributed by various reasons which are inevitable. All projects success is based on various assumptions which are the main sources of uncertainties. Differences in the performance of project concerning cost, quality and duration that is required to complete the project bring a lot of uncertainties. In laying pipes in the ocean in a way that will avoid pipe buckles involved a l ot of uncertainties. This is attributed to the changing weather conditions.Its hard to forecast the height of the waves in the ocean in a particular season and this present source of uncertainties since its hard to know with certainty the cost of dealing with the threat since its hard to tell the amount of pipes to be knocked shore and therefore requiring replacement (Leslie and Michaels, 1997).Proactive risk management in the North Sea oil and gas project should be entrenched in twain base plans and contingency plans. Its argued that if a project focuses very lots on being cost effective its bound to fail on risk management in some occasions. However, crisis management should only be used as principal management in some occasions. However, crisis management should only be used as principal management mode if the risk management fails completely (Leslie and Michaels, 1997).ReferencesLeslie, Keith, J. and Michaels, Max, P. The sure Power of Real Options. The McKinsey Quarterly 3 ( 1997)134-225.