The discovery of a large amount of underground oil in the UK was reported in 2015. To be more precise, the area near Gatwick airport is said to hold about 160 barrels per square mile (Moylan 2015). However, it is important to state that only a small part of this finding will be unearthed by UKOG (Oil find near Gatwick airport boosts UK’s oil production hopes 2015). Moreover, just like all other oil drilling projects, this one is associated with a multitude of stakeholders and risks.
In particular, each project of this kind involves four main kinds of stakeholders – financial, business, internal, and social. However, usually, apart from these groups of participants, there are more stakeholders affected. For instance, the project may produce an impact on such agents as nongovernmental organizations, policymakers, regulators, or separate individuals and beings such as the species of animals and plants living in the area that will be covered by the project, climate, and human rights organizations.
In that way, one of the main risks the company needs to take into consideration is associated with the task of addressing the needs of multiple different stakeholders; also, it is important to notice that at times, the needs of two or more groups of stakeholders may clash or cross, and in such situations, the company may end up having to choose whose interests should be followed and whose – neglected risking to cause a conflict with the latter group (Suslick & Schiozer 2004).
One of the more recent reports of Moylan (2016) that was published in spring this year mentions that the project has already caused negative responses and criticism from some communities. One of them is called Friends of the Earth, whose campaigner made a statement that drilling multiple wells in the area is most likely going to cause a backlash among the local communities due to the harmful influence on their daily lives and the environment (Maylan 2016). That way, the potential contribution of the stakeholders to the development of the project is quite significant. The company must evaluate the needs of all the stakeholders because they present one of the major risks to the oil extraction plan of actions due to the project’s dependency on the stakeholders’ opinions and support (Brouthers & Bamossy 1997).
One more critical risk is posed by the oil prices that are not particularly high and rather unstable at the moment. Due to this tendency, the financial stakeholders of the project may be reluctant to take part in it fully. To sum up, the primary risks of this project are very similar to those of any other oil extraction operation and are the following: issues of land ownership, environmental concerns, the backlash from the side of the local communities, protest of human rights and environmental protection organizations, the potential risk of oil spills, the difficulties of transportation, the presence of the fractured limestones in the oil, and the fluctuating oil prices (Nixon 2008). Due to the combination of all of these risks, the input of time, funds, and effort into the project may turn out to outweigh the output of the oil that can be sold for a significant profit. In other words, it is critical to assess the exact amount of oil that will be recovered and estimate its value compared to the effort and risks that will be faced during the extraction.
References
Brouthers, KD & Bamossy, GT 1997, ‘The Role of Key Stakeholders in International Joint Venture Negotiations: Case Studies from Eastern Europe’, Journal of International Business Studies, vol. 28, no. 2, pp. 285-308.
Moylan, J 2015, Oil discovery near Gatwick airport ‘significant’. Web.
Moylan, J 2016, Gatwick oil ‘could add billions’ to UK economy. Web.
Nixon, R 2008, Oil Drilling: Risks and Rewards. Web.
Oil find near Gatwick airport boosts UK’s oil production hopes 2015. Web.
Suslick, SB & Schiozer, DJ 2004, ‘Risk analysis applied to petroleum exploration and production: an overview’, Journal of Petroleum Science and Engineering, vol. 44, pp.1-9.