Before we begin this guide, let’s get one thing straight. Starting an oil company is not for everyone. You’ll need a decent amount of capital, a good team, and have plenty of time to put aside. It’s hard work, risky, and even dangerous – but it can be extremely lucrative.
So, with all that in mind, are you still interested? If so, read on. We’ll go through some of the basics with you and point you in the direction of some alternative resources. Let’s get started right away.
1. Business Essentials
Just like you would with any other company, you’ll need to register your business and set up partnerships and a board of directors. This isn’t something you can do solo, because of the risks. If something happened, you would be liable for everything as a sole owner. You have to incorporate to have a protection barrier between you personally, and you the company.
2. The Team
There are three core areas to look at first when you begin to build your team. You will need a geologist, who has experience in working with oil. Next, unless you have a lot of funding behind you already, you will need someone to raise finance for you. Find someone you can trust who has experience of getting early rounds of capital for startups – preferably in the oil industry. Finally, you’ll need an accountant. They will help you plan your finances and tell you on where to go next. Again, experience in the oil industry is essential.
3. The Land
Once your geologist has reported back to you with potential sites, it’s important to buy the land. Don’t lease it, because if you hit on a high oil site, it’s going to be messy. Whoever owns the land is going to want a piece of your pie, and your rental rates will skyrocket. One more thing -make sure you buy land that covers your geologist’s report. If your oil sneaks into someone else’s area, it’s going to cause legal issues.
4. The Equipment
Next, you need to get equipment. However, it’s important to go through all the legal and environmental issues that surround oil drilling first. Once you know where you stand, you will be able to determine the type and size of the drill you can use. The oil needs to be pumped to a refinery where you can process it. When the oil is ‘cleaned’, make sure it is delivered somewhere that is contaminant free. You will need clean pipes, rotary shaft seal parts, and spotless tanks. Any sludge or dust could end up spoiling your oil, and it can take a lot of money and time to clean once somewhere has been contaminated.
5. The Infrastructure
Unfortunately, it’s not just a case of drilling for oil and selling it on. You will need to build a complete infrastructure to support your efforts. In many instances, an oil drilling area is often like a small town. You’ll need to build roads, set up trailers for employees to live in, and also have your own medical team for any emergencies. Yes, it’s difficult – and it’s not something you should do on your own. But with a good team and a lot of capital behind you, it’s not a bad business in terms of payback!