Oil & Gas UK Economic Report 2015
Unit Operating Costs Perhaps the most meaningful way to assess the long-term sustainability of the UKCS is by looking at the trends and distribution of UOCs. From an average cost of £17.80/boe in 2014, UOCs are expected to fall by around four per cent in 2015 to £17/boe. In 2016, further planned reductions in operating costs, as well as a potential increase in production, could lead to average UOCs falling by almost £2/boe to £15-16/boe. However, this improvement is far from certain. If initiatives to improve efficiency fail to deliver, or the production upturn does not materialise, average
UOCs will remain in the £17-18/boe range for the near future. The distribution of UOCs is skewed in the UKCS. Focusing on the bulk of UKCS fields 23 in Figure 40 opposite, there is a range from less than £5/boe up to more than £60/boe. In 2014, two thirds of all fields had a UOC less than the mean average of £17.80/boe and over 50 fields were at less than £10/boe. On the other hand, just over one-third of these fields had UOCs in excess of the mean average. This suggests that while the pressures of a lower oil price are felt across the basin, most fields remain viable even in the current business environment.
Figure 39: Average Unit Operating Costs
20
Q4 2014 Forecast
18
16
Q2 2015 Forecast
14
12
10
8
6
4
2
Unit Operating Cost (£/boe - 2014 Money)
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Oil & Gas UK
23 Those that produced at least 1,000,000 boe in each year.
54
ECONOMIC REPORT 2015
Made with FlippingBook