part 2

An oil spill is "a release of a liquid petroleum hydrocarbon into the environment due to human activity, and is a form of pollution."[footnoteRef:1] On April 20, 2010, BP (British Petroleum) was ultimately responsible for an oil explosion of the Deepwater Horizon and has had a serious effect on the marine environment. BP, one of the largest private sector energy corporations, was unable to prevent such a devastating event. However, with the new proactive tool, G.O.L.D (Global Oil Leakage Detector), this destructive event could have been prevented or even avoided. With this product, it allows oil companies to monitor current waters in the hopes of preventing leaks and assisting in oil spills. [1: Wikipedia. http://www.wikipedia.com. Oil Spill. July 4, 2010.]

Strengths

G.O.L.D is a proactive tool, a new product, and is the only one on the market at this time that ensures such positive results. G.O.L.D is of high quality and reasonably price which would be marketed to only oil companies across the world.

Weaknesses

Competing against products that have been used for decades may be the biggest challenge. With G.O.L.D being created and produced by a new company, building a strong, positive brand name and reputation is also a test.

Opportunities

One of the opportunities for G.O.L.D is that it is the first on the market to do so. The equipment being used to clean-up oil spills are containment booms, dispersants, absorbents, burns, and also skimmer boats which are the same tactics used for the past two decades. Unlike other companies in the market, our company’s researchers and top scientist have devoted their time, efforts, and attention to this oil spill detection device. This product will offer immediate detection of any leakage, faster clean-up, and ensure the safety of the marine life. Also with the current Deepwater Horizon explosion, more than 50 oil companies across the world are eagerly awaiting such a product in order to prevent another catastrophe that could do extreme damage to its business.

Threats

One threat to our product would be competing with other oil spill clean-up products on the market. For instance, the fairly new product on the market called TEPCO Terracap Additives. This product contains absorbents that offer economical solutions to remediate and clean-up a wide variety of fuel spills, oil spills, and other organic hydrocarbon spills from hard surfaces, soils, and of course water.[footnoteRef:2] There are several products out on the market that ensures clean-up in a healthy and environmentally safe way. [2: RTSACO. Oil Spill Clean-up Products. http://www.rtsaco.org. July 4, 2010.]

The top six current and potential direct competitors in oil spill detection technology are as follow[footnoteRef:3]: [3: Fortune 500]

These six companies are in the business of oil and gas equipment and services. They all have different technology in detecting oil leakage.

We will analyze the top 3 competitors in the table below:

Listed below identifies current and potential indirect competitors. They are involved because oil spill affects them and they may push for new technology and solutions:

1. United States Environmental Protection Agency (EPA)

2. United Nations Environment Program (UNEP)

3. United States Department of Energy

4. WSPA: World Society for the Protection of Animals

U.S. demanding for refined petroleum products will grow by over 35 percent in the next two decades, according to the U.S. Energy Information Administration. Over the next quarter-century, a briskly growing world will need large increases in energy supplies[footnoteRef:4]. Coastal states have opposed new offshore drilling, in the past. The effect of oil spills on tourism and coastal industries and the “visual pollution” of oilrigs looming off the coast have always been concerns. Environmental action organizations maintain that offshore oil and gas operations have detrimental effects onshore because these operations require roads, pipelines, and processing facilities on America’s beaches, wetlands and coastal areas[footnoteRef:5]. [4: Energy Information Administration (US Dept. of Energy) Energy Statistics, Data, and Analysis. Annual Energy Outlook, 2007 & 2008] [5: Florida Department of Environmental Protection, Mining & Minerals, Florida Oil and Gas Report, 2001-2007]

According to Lisa Flavin, Senior Policy Advisor for the American Petroleum Institute (API), “The oil and natural gas industry has worked hard to achieve a harmonious relationship with the environment and surrounding wildlife. In fact, the industry has invested nearly $100 billion in emerging technologies that allow offshore operations to be cleaner, safer and more efficient.”[footnoteRef:6] Through new seismic exploration and extended reach drilling technologies, API’s geologists can see and survey underground oil and natural gas deposits more effectively than in days past. This improves exploration success rates while reducing environmental impact. Despite the improvements in technology and better government oversight, detractors of oil drilling remain unconvinced. According to Dr. Sisskin, “They make it sound as though there are no more accidents anymore, but that is not true. In 2006, there were 133 fires and explosions in the Gulf of Mexico. People say we won’t have spills because we’re using pipelines instead of tankers. That’s not true because they will need tankers for deep sea drilling.”[footnoteRef:7] The MMS predicts there will be no less than one oil spill a year of 1,000 barrels or more in the Gulf of Mexico over the next 40 years. Oil is toxic for most marine species and, according to the National Academy of Sciences, cleanup methods can only remove a small fraction of oil spilled in marine waters[footnoteRef:8]. [6: http://www.api.org/aboutoilgas/] [7: The National Resources Defense Council, Legislative Facts, July 2008 http://en.wikipedia.org/wiki/Roman_numerals /policy] [8: U.S. Department of the Interior, Minerals Management Services, OCS Oil Spill Facts, September 2002]

A. Customer Needs

Oil producers need a product that would protect against losses of their most viable asset. They are looking for a low maintenance, high quality, long lasting and efficient product that would detect oil leakages. They need a product that can detect leakages on land and at varied oceanic depths while under the most extreme weather/oceanic related conditions. Oil producing customers need a product that can accommodate any oil piping apparatus to date. Lastly, they’re looking for a product that is readily available with a manufacturer’s warranty and guaranty.

B. Current/High Potential Customers

Exxon-Mobil (United States), Royal Dutch Shell (Netherlands/United Kingdom), BP (United Kingdom), Chevron Corp. (United States), Conoco Phillips (United States) and Total S.A. (France) are considered super majors. The term super major, also called International Oil Company (IOC), illustrates the six largest, non-state owned energy companies, as seen in popular financial news media around the world. These companies’s acceptance of G.O.L.D. (Global Oil Leakage Detector) would attract the state-owned oil companies of the world. We will be trying to appeal to the IOC, who controls 6% of global oil and gas reserves.

Other current/high potential customers could include, as follows: offshore drilling companies (Transocean, Statoil, Diamond Offshore Drilling, Inc. and etc.); oil pipeline companies (Saudi Aramco, British Pipeline Agency, Kenya Pipeline Company, and etc.); and oil pipeline manufacturers (Arab Pipe Manufacturing Co., Smart Pipe Co., He Bei Shen Zhoe Steel Pipe Manufacturing and etc.). These current/high potential customers welcome a variety of open markets that would benefit from global oil leakage detection.

a. Describe each key competitor’s current positioning/marketing strategy

This part of the market is ultimately untapped due to the lack of research and development. However, one company, in particular, that has been on the market for some time is Pristine Sea. Pristine Sea is a natural clay that has been chemically treated. "When applied to hydrocarbons found floating on the water, it will immediately begin a chemical reaction-solidifying and breaking up the oil into little cakes."[footnoteRef:9] Their intentions are to develop products to solidify and render a wide range of radioactive and hazardous waste. Since being founded, the company has progressively grown and has broadened "its range of services and products to meet the challenges of dealing with marine oil spills and dust mitigation.[footnoteRef:10] [9: Fluidtech. Pristine Sea. http://fluid-tech0inc.com. July 5, 2010.] [10: Fluidtech. http://www.fluidtech.inc. July 5, 2010.]

b. What are each key competitor’s major sources of competitive advantage?

· Halliburton - Helium Leak Detection Services[footnoteRef:11] [11: Halliburton ]

· National Oilwell Varco - Tubular Leak Detection[footnoteRef:12] [12: National Oilwell Varco]

· Baker Hughes - CPIG Pipeline Inspection Services[footnoteRef:13] [13: Baker Hughes]

c. What additional sources of competitive advantage could each develop in the future?

In the future, the GOLD could face competition from other environmental companies who will try to reinvent our product. Copycat companies could use “less expensive” materials or manufacturers in order to make a “less expensive” version of our product. Energy companies will be willing to save money if we’re not efficient, and would switch to other brands to save capital. d. Global Finest (Optical Fibre Pipeline Leak Detection)

Global Finest offers an amazing product in leak detection, but hasn’t put the company in the best position to promote its’ state of the art product. Global Finest needs to expand its web-based marketing to include social networks, oil databases, and place ads in the leading oil revues and journals.

We recommend these changes in marketing strategy because the more people see things, the more they tend to want it. By making themselves and their award winning product more visible and the proper exposure, it will sell itself!

These marketing strategies would be implemented in stages: 1- Join and advertise on all the major social networks, 2- Take out one-page ads in the entire major oil related revues and journals. The overall success of these marketing strategies could be measured by various means, such as: quarterly asset/sales summaries, regulated financials, and customer feedbacks

Sources:

1. Fluidtech. Fluidtech Inc. http://www.fluid-tech-inc.com. July 5, 2010.

2. Investing Blog. BP Stock Price-Oil Spill. http://www.investingblog.org. July 5, 2010.

3. RTSACO. Oil Spill Clean-up Products. http://www.rtsaco.org. July 4, 2010.

4. USA Today. Despite Previous Spills, Oil Clean-up Research Fall Short. http://usatoday.com. July 4, 2010.

5. Wikipedia. Oil Spills. http://www.wikipedia.org/OilSpills. July 4, 2010.

6. Wikipedia. British Petroleum. http://www. wikipedia.org/BP. July 4, 2010.

7. EPA: <http://www.epa.gov/osweroe1/docs/oil/fss/fss06/chase_1.pdf>

8. Fortune 500: <http://money.cnn.com/magazines/fortune/fortune500/2010/industries/218/index.html >

9. Halliburton: <http://www.halliburton.com/ps/Default.aspx?pageid=442&prodid=PRN%3a%3aIVPX5CKG4 >

10. National Oilwell Varco: <http://www.nov.com/Tubular_and_Corrosion_Control/Tubular_Leak_Detection.aspx >

11. Baker Hughes: < http://www.bakerhughes.com/products-and-services/downstream-chemicals/pipeline-services/pipeline-management/pipeline-inspection-services/cpig-pipeline-inspection-services >

12. Smith International: < http://www.smith.com/$bc9eae40-7ef7-435c-b45b-4f91fda4aea3 >

13. Cameron International: < http://www.c-a-m.com/forms/Product.aspx?prodID=5e505612-7a79-4bb7-ad1a-3762981d64dd >

14. FMC Technologies: <http://www.fmctechnologies.com/~/media/Subsea/Services/CPM/WHAT%20-%20CPM_low%20res.ashx >