Oil prices have recently been going up. It’s an ideal time to get into the business because interest rates are low, and regulation has been loosened up by the current administration.
Production has been consistently increasing. In one year, production levels in the US went from 2.4 billion in 2012 to more than 2.7 billion in 2013. Technological advancements like horizontal drilling and hydraulic fracturing have paved the way for accessing more oil and gas resources.
This booming industry has become a massive contributor to economic development. In the US, the oil and gas industry comprise 6.7% of the economy. It may look like a small number, but it has brought 30% of economic development since the recession. $1.2 trillion is contributed to GDP per year, and there are 9.3 million jobs given by this industry.
With these numbers, the oil and gas industry has been attracting more investors and entrepreneurs looking to have a start-up. Here are three essentials for opening an oil and gas business:
Money
Capital for an oil and gas business could start from $50 million-$300 million dollars. These aren’t the highest prices, however, as billion-dollar investments are common in this industry.
While this needs a considerable amount of money, business owners can likely turn to venture capital, crowdfunding, or loans—unless, of course, they are billionaires. Venture capital involves investors lending money to the primary owner for something in return, like a seat in the board of directors. Crowdfunding is where several people contribute to the business’ capital in exchange for products, services, or exclusive perks.
For those who want to retain sole ownership of the business, they can apply for a loan from banks and financing services where they should present their business plan, among other requirements.
Muscle
At the start of the business, a great deal of manpower is needed for the construction. This process involves contractors and oil experts who know the ins-and-outs of this industry, especially because this is a high-risk resource. Throughout your business, trustworthy employees will keep your business running and accomplish day-to-day tasks.
Mind
Other than manpower, a business needs its brains. The team would need an adviser, a legal team, and accountants. These people help the business owner through legal, federal, and regulatory responsibilities of owning a petroleum company. The government has become more lenient about environmental regulation of the oil and gas industry. This means that your team should be able to navigate these new rules and take advantage of them.
Since this is a high-risk/high-return situation, accounting can go a little bit crazy along the way. It’s essential to have skilled accountants who can handle the bookkeeping when things go haywire. Joining an accounting organization like COPAS provides oil and gas entrepreneurs with resources and educational opportunities. Specialized organizations like this are a gateway to a network with other experts and accounting professionals.
The stakes are high when starting a business, but with research, the right team, and capital, it will all work out. Your potential business contributes millions of dollars to the country’s economy and offers millions of people job opportunities. With the latest advancements and changes in environmental regulations, there’s a lot more room for growth in the petroleum industry
