Operating an oil and gas company in Orange County, California, comes with a variety of risks that must be taken into consideration. Political risk is a major factor, as oil and gas companies are subject to a variety of regulations that limit where, when, and how extraction takes place. This is especially true for those operating overseas, as they may be subject to sudden nationalizations or changes in foreign ownership rules. Geological risk is also a factor, as it can be difficult to accurately estimate the size of a reservoir.
Price risk is also an issue, as the cost of extraction can be higher than expected if the geological barriers are too great. Supply and demand shocks can also affect the price of oil and gas, making it difficult for companies to close or restart projects quickly. In addition to these risks, there are also health risks associated with living near oil and gas wells. Studies have linked adverse birth outcomes to living near oil and gas wells in California. To reduce these risks, some states have adopted setbacks of 2,000 feet or more from homes and schools.
The Western States Petroleum Association has argued that there is no direct causality between adverse health impacts and living near oil wells. Oil and gas companies tend to prefer countries with stable political systems and a history of granting long-term leases. The gradual elimination of wells within 2,500 feet of homes will reduce the negative health effects of front-line communities, as well as reducing regional environmental hazards. Los Angeles City Council has recently voted to develop a proposal that would phase out oil drilling throughout the city. For those considering operating an oil and gas company in Orange County, it is important to understand the risks involved. Political risk is a major factor, as regulations can limit where, when, and how extraction takes place.
Health risks associated with living near oil and gas wells must also be taken into consideration. Companies should also consider the political stability of countries they are operating in and ensure that they are compliant with local regulations.