Activity Survey 2015

To maintain the sustainability and competitiveness of producing on the UKCS in the current oil price environment, there needs to be a 40 per cent reduction in UOC to offset the fall in production seen since 2011. Realising this will require a combination of both cost reduction and increased production efficiency from existing assets, combined with more investment in new production.

1

2

Figure 35: Average Unit Operating Costs

20

3

18

16

14

4

12

10

8

5

Actual Quarter Four 2014 Forecast

6

20% Operating Expenditure Reduction 40% Operating Expenditure Reduction

4

Unit Operating Costs (£/boe - 2014 Money)

2

6

0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: Oil & Gas UK

7

Figure 36 shows the UOCs in 2014 for fields producing half a million barrels or greater, split by area (the bar width represents associated production). Of the 158 fields, 21 report a UOC greater than £30/boe. Some of the most expensive fields have little associated production, but are key hubs containing critical infrastructure and are therefore vital to the future of the basin.

8

Figure 36: Unit Operating Costs and Associated Production Volumes by Field and Area in 2014

page 45