Oil & Gas UK Economic Report 2014

Figure 20: Unit Operating Costs

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Actual Forecast

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2 Unit Operating Costs - £/boe (2013 Money)

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Oil & Gas UK

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• Production efficiency – improving the efficiency of offshore operations (see Section 5 regarding the work of PILOT) • Logistics and planning – improving industry co-operation in operations and work planning, so that scarce resources are better used, such as by establishing rig clubs, sharing crews for shutdown maintenance and stocking spare parts • People – enhancing skills and looking at work patterns • Standardisation and simplification – harmonising standard items, where practical, to minimise gold plating and reduce whole life costs

This growth in costs experienced over the last three years is not sustainable and, were it to continue, it will ultimately result in reserves being left stranded as critical infrastructure and hub fields are decommissioned prematurely. However, if Oil & Gas UK’s forecast increase in production over the next few years materialises, it will have a beneficial impact on UOCs for a lot of fields, but many still need to do more to address their cost base. Overall, there is no single solution for controlling costs, but there are a number of factors that have been highlighted where potential savings could be achieved:

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ECONOMIC REPORT 2014