Oil & Gas UK Economic Report 2014

ii) Operating Expenditure The costs of operating assets on the UKCS reached a record £8.9 billion in 2013, 15.5 per cent higher than in 2012. Following a sharp rise in 2008 and then three years of largely stable operating costs, significant inflation occurred in 2012 and 2013. Oil & Gas UK believes that this rising trend will continue in 2014 and operating costs are forecast to surpass £9.5 billion.

1

The number of active fields on the UKCS continues to grow with 300 producing fields in 2013 compared with 278 in 2004. Economies of scale suggest that costs are likely to be lower if production can come from a smaller number of larger fields and, therefore, as the number of fields has increased, so have total operating costs.

2

3

4

Figure 18: Operating Expenditure on the UK Continental Shelf

12

5

10

6

8

6

Actual Forecast

7

4

8

2

Operating Cost - £ Billion (2013 Money)

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Oil & Gas UK

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ECONOMIC REPORT 2014