Economic Report 2018

ECONOMIC REPORT 2018

UKCS Operating Expenditure The improvements in the cost of operating assets on the UKCS is a key measure of the improved efficiency of the basin. Between 2014-17, the UKCS saw reductions of operating expenditure of 43 per cent in US dollar terms (30 per cent in Sterling), significantly greater than those across comparable basins which saw average reductions in operating expenditure of 23 per cent. When operating expenditure is considered alongside the production of the basin between 2014-17, UOCs on the UKCS halved from $30 to $15/boe in 2017. Again, these reductions are the greatest across comparable basins, however, the UKCS remains a relatively expensive basin in which to operate.

Figure 20: Unit Operating Costs in Comparable Offshore Basins

16

60%

2017 UOC (LHS) Reductions in UOCs 2014-17 (RHS)

14

50%

12

40%

10

30%

8

6

20%

4

10%

2

Reduction in Unit Operating Costs 2014-17

Unit Operating Costs ($/boe - 2017 Money)

0%

0

Norway Malaysia

India Mexico - Gulf of Mexico

West Africa US - Gulf of Mexico

Brazil

UKCS

Source: Rystad Energy

Across a ‘peer group’ of comparable basins, average UOCs in 2017 were $7/boe – less than half the levels on the UKCS – with UOCs on the Norwegian Continental Shelf (NCS) almost one-third of those seen on the UKCS last year.

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