Company Overview
Halliburton is one of the major players in the energy industry. The company was founded in 1919. Since then, it has provided various services such as working with geological data, drilling, or well construction (“Corporate Profile”). Halliburton has fourteen product service lines. There are two main divisions: “Drilling and Evaluation, and Completion and Production” (“Corporate Profile”). Also, the company offers consulting services.
There are multiple problems associated with this business. However, some of them deserve particular attention. The main goal of this paper is to discuss three issues that are relevant to the company.
Significant Company Issues
The first significant issue is environmental impact and waste management costs. These two problems are closely interrelated. That is why they are united as a single issue. One of the main company’s functions is establishing in-situ heavy oil assets (“Lowering Environmental Impact and Waste Management Costs”). However, this process results in a dangerous concentration of wells in areas that require particular attention to their environment. Also, it is necessary to reduce waste costs. Therefore, drilling and production operations should be improved to address both issues simultaneously.
An environmental impact from such operations consists of several elements. First, drilling is a source of noise that negatively affects fauna in a particular area (“Laws and Regulations Applicable to Oil and Gas Production”). Bulldozers, drill rigs, and other equipment produce a very harmful acoustic effect. Although blasting activities are supposed to be minimized, they are still required in most cases. Second, these operations worsen the quality of air (“Laws and Regulations Applicable to Oil and Gas Production”).
There is a considerable amount of emission that occurs due to drilling. It includes vehicle emission, storage of gasoline, diesel, and other fuels, and air pollution when blasting. The affected area might be up to several square miles. Wild animals often suffer from dust pneumonia. Third, there is an enormously negative impact on ecological resources (“Laws and Regulations Applicable to Oil and Gas Production”). Such operations require removing vegetation and topsoil. It ruins the natural habitat of wild animals. Therefore, their diversity and population become much less.
There is a high demand for in-situ development projects, and organizations that work in the industry need new approaches to minimize negative environmental effects of their operations without increasing the overall costs. All the stakeholders should be satisfied with the offered production waste management solutions. Most of such strategies aim at reducing, reusing, recycling, and recovering (“Lowering Environmental Impact and Waste Management Costs”).
The company’s services can offer various benefits for all the involved parties. First, their methods help to reduce waste by 22 percent (“Lowering Environmental Impact and Waste Management Costs”). The tested approaches guarantee such a significant improvement. Second, the company can considerably reduce transportation costs and health and safety risks. Third, it also guarantees a reduction in drilling fluids costs by 36 percent (“Lowering Environmental Impact and Waste Management Costs”). It might be implemented due to the lower freshwater requirements.
The next issue important for the company is oil prices. This is the major factor that determines the development of the entire industry. Oil companies should always reflect on the past to design strategies for the future. The prices in the industry go through cycles, and it is paramount to identify the current phase. The general economic rule tells that when the demand for the product exceeds its amount in the market, the price goes up.
Therefore, when a new supply source occurs, other companies have to reduce sales. A historical outlook is also important regarding the issue. When the collapse took place in 1986, oil prices did not change until 1990 (Ross). However afterward, a declining trend occurred due to the increase in production in the Middle East and Norway. This process resulted in several mergers. Consequently, at the beginning of a new millennium, prices started rising. This period was characterized by the growth of demand and political instability.
However, the current trend is not very favorable for the company. Since 2014, oil prices have dropped by approximately 70 percent (ESB Economic Bulletin). It happened due to enormous investments and technological innovations that resulted in significant production growth. These factors were interdependent as innovations attracted new investors. The supply increase occurred during the period of low demand.
Geopolitical problems were the major factor that caused this situation. The decision made by the Organization of the Petroleum Exporting Countries to keep production at the same level also aggravated the situation, and in 2015, oil prices fell one more time due to the same factors (ESB Economic Bulletin). Climate conditions and economic factors also affected the demand for oil at the beginning of 2016. Therefore, analyzing current economic and political trends is paramount for the company. These factors directly affect oil prices, which is a major issue in the industry.
Opinion
The last significant issue for the company is based on the research of several pertinent factors. These are political risks. This is a very important problem for all of the key players in the oil industry. Politics can affect it by various regulations that impose both restrictions and supporting initiatives on companies working in this area (“Laws and Regulations Applicable to Oil and Gas Production”).
However, usually, such firms have to cope with various regulations that limit their activities. Another important problem is that such laws might be interpreted differently, depending on a particular state. It is especially relevant when a company operates on deposits overseas. Firms working in the oil industry prefer states that have a stable political environment. One of the most attractive factors is long-term leases (“Landowner’s Guide to Oil & Gas Leasing”). However, in most cases, companies have to perform in states where the amount of resources is greater regardless of the political situation.
Many risks are associated with this issue, for example, nationalization or unexpected changes in regulatory policies. The countries’ governments can easily enact new laws to gain more profit from a foreign firm. Such risks can be often obvious, and they depend on a particular political system. However, some unfortunate events are very difficult to predict. States can change foreign ownership regulations to the advantage of local organizations.
Therefore, to reduce such risks, the company needs to conduct profound analysis taking into consideration socio-economic, political, and historical factors. Also, it is necessary to establish strong and stable relationships with other players in the industry.
In conclusion, the company is faced with different issues as the energy industry involves various elements. However, the most relevant problems include environmental, economic, and political. Halliburton is a multinational company that performs in different countries. That is why the above-discussed aspects have a particular interest in this corporation. Its services have a significant environmental impact that needs to be reduced. Also, all the company’s strategies depend on the current oil prices and trends pertinent to this aspect. Finally, political risks are very serious as they directly influence Halliburton’s profitability. Therefore, all these issues require close consideration to address them effectively without compromising the overall performance.
Works Cited
“Corporate Profile.” Halliburton. Web.
ESB Economic Bulletin. Current Oil Price Trends. Web.
“Landowner’s Guide to Oil & Gas Leasing.” Department of Environmental Conservation. Web.
“Laws and Regulations Applicable to Oil and Gas Production.” Tribal Energy and Environmental Information. Web.
“Lowering Environmental Impact and Waste Management Costs.” Halliburton. Web.
Ross, Chris. “The Future of Oil and Gas? Look to the Past.” Forbes. 2017. Web.