Difficulties in Applying Lean in Process Industries - Dissertation Example

The Oil Industry has changed over time and the number of large oil discoveries made in recent years continues to fall. Ibrahim (2007) explains that the percentage of large oil finds has fallen dramatically and most large findings are natural gas and are located in deep water or other high cost operating areas.  IOC’s must adjust to the changing environment in which large discoveries are rare.  The Oil Industry has changed over time and the number of large oil discoveries made in recent years continues to fall.

Ibrahim (2007) explains that the percentage of large oil finds has fallen dramatically and most large findings are natural gas and are located in deep water or other high cost operating areas.  IOC’s must adjust to the changing environment in which large discoveries are rare.  A second issue that has a detrimental impact on IOC’s profitability is the Nationalization of the existing oil fields.  The Nationalization of 65% of the World’s Oil fields (Fox, 2007) has dramatically changed the competitive environment for the Independent Oil Company (IOC).

This reduces the number of opportunities for the Independent Oil Company and increases the level of competition between them.   The increased competition caused by Nationalization has resulted in most IOC’s focusing on technically demanding fields that are not dominated by the National Oil Companies (NOC) because of the technical expertise needed to develop them. The Company has expertise in the development of both deep water and shale development which is being used as niche expertise to entice representatives from many countries to give access to develop business units in their respective countries.

  The Company is using its expertise to focus on opportunities where demand for energy will be high and its technical expertise will provide it opportunities.  The East Asia area with its growing economies and limited access to new technologies are one of these markets.  Energy demand is projected to grow by 53% worldwide during the next 25 years with the bulk of this growth (68%) coming from China and India (EIA, 2011) which provides a clear message that IOC’s will need to target this region for growth.

The need for technology and market growth has contributed to the Company’s recent focus on expansion into South East Asia. The Indonesian government awarded a contract to ExxonMobil in 2010 (Nathalia, 2010) due to its technical expertise. The Company is using its particular expertise to make its own opportunities.  The Company has focused on developing its business in South East Asia due to its close proximity to China and India.  It recognized the number of opportunities that could be leveraged base on the expertise available in the company.

The Company was successful in achieving a production rate of almost 100,000 barrels per day from its initial production rate of 20, 000 barrels per day during the same ten year period.  The Company was successful in achieving this early goal but did this success come at the expense of future operations which is not sustainable in this increasingly competitive environment.  As the production facilities have now been in operations for up to four years, the Company is now focusing on improving profitability from its existing assets as new assets go into production.

  There are numerous case studies in other industries that clearly shown the benefits to companies of reductions in energy consumption and improved reliability of facilities. Lingbo et al. (2010) reviews the missed saving in a water treatment facility and illustrates the benefits of having a more efficient facility.