Natural Gas

By: Jenna Song, Pooja Marella, and Alan Ritchie (4th)

Situational Factors

  • Power plants located next to the natural gas drilling place.
  • Natural gas is very light, and easily evaporates, so it needs to be contained. It is often transported from underground pipelines. Closer it is to the power plant, the less natural gas that evaporates.
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Site Factors

  • Labor:

There is cheap labor in countries other than the U.S. that has abundant supply of natural gas.

Cheap labor allows more productivity at a low cost. (More efficient)

Ex: Egypt

  • Capital:

Natural gas requires lots of initial costs, so borrowing money can help us have a good start. Efficiency can help us get maximum profit.

Ex: We get our money from the World Bank of the UN. It trusts us, and there is an interest of 2%.

  • Land:
We would have lands near places known to have abundant natural gas. Lots of our land would be devoted to drilling the natural gas.

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Transportation Systems

  • Underground pipelines




-Expensive to construct (Digging paths require expensive machinery)

Conclusion: There would be less accidents and even with expensive initial costs, we would bring in profit from the efficiency of this transportation.

  • Ships
-Large quantities at one time
Conclusion: There needs to be a port for the ship, but if there's a port then the gas can be transported greatly at one time.

Final Conclusion: We would use underground pipelines to distribute natural gas, because it is safe and would be profitable from the efficiency of transporting gas.

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Transnational Company

  • JAP is our natural gas company and it will be an transnational company.
  • Supplies natural gas to other countries.
  • JAP has plants in many parts of world.
  • Ex: Egypt
  • Relies on Middle East to help make profit
  • Our company will be transnational, because cheap labor is prominent in other areas such as LDCs. Cheap labor can maximize profits. Other countries need to have the gas, so being an transnational company will allow the diffusion of natural gas to other areas.
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Vertical Integration

We want to be vertically integrated, so we do not rely on other companies. We can do processes our own way and not have to follow other company's procedures with natural gas. This would leave us off better economically because we wouldn't be paying other companies for these processes. We can cheaply transport natural gas to other places without having to rely on other companies more expensively.

Ways to be vertically integrated are-

  • Own the land that we are drilling on so that you won't get in trouble with the government
  • Own the trucks and pipelines that we will be using to send to the refineries
  • Own the equipment used to drill from these areas
  • Own advertisements used to grab the market's attention
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