Review Article
Year: 2020 | Month: August | Volume: 7 | Issue: 8 | Pages: 472-484
The Impact of Oil Drilling On the Economy- An Empirical Review
1Dr Akashraj Devanga Pruthviraj, 2Bol Ring Morwel
1Associate Professor, Department of Economics, University of Juba, South Sudan.
2President of Nile Drilling & services Co. Limited, Nile Petroleum Corporation, South Sudan.
Corresponding Author: Dr Akashraj Devanga Pruthviraj
ABSTRACT
The main aim of this article is to illustrate the impacts of oil exploration and drilling on the economy alongside its impacts on the surrounding environment based on the findings of various studies conducted internationally. The impact that oil drilling (petroleum and gas-field oil production) has on the economy varies globally depending on the region and the economic classification of the region. Oil drilling operations depend on several factors that range from technical factors that affect oil drilling operations in the field to external factors like politics and regulations. Researchers have shown that technical factors in the oil drilling field have sufficient impacts on the levels of oil production. First, findings showed that the pressure of the borehole breakdown is highly dependent on the formation module of the borehole, the wellbore size and the composition of the drilling fluids. Studies have also been conducted on the combined impact of pressure and temperature on the dynamic viscous behaviour of drilling fluids on oil. It was concluded that the geometric modeling of the oil reservoirs had impacts on drilling, production and compaction of the reservoir. Oil drilling is also affected by factors outside the oil field. First, the international crude oil prices combined with the global GDP have an impact on the oil drilling cost in different regions around the world. Secondly, market inefficiencies such as market volatility ranging from speculative effects to fundamental shocks in supply and demand affect the crude oil prices. Oil drilling companies also tend to reduce their drilling activity when anticipated investment uncertainty increases. Corporate strategies in oil drilling, whether National Oil Companies or International Oil Companies, have an impact on oil drilling operations. Additional factors like internal conflicts, religious tensions, corruption, law and order among others have significant impacts on oil prices thus impacting oil drilling operations. Regulations from regulatory regimes and Management Based Regulations (MBR) are a major factor that impact oil operations. Hence this article will give an insight to the impacts of variables have on oil drilling and the global economy in general.
Keywords: Crude oil, offshore oil drilling, OPEC, Non-OPEC, On-shore oil drilling.
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