Activity Survey 2015

Cost Reduction Whilst it is true that the falling oil price has placed additional attention on the costs of operating UKCS assets and developing new opportunities, the industry had already acknowledged cost as a major concern in the late spring of 2014 and subsequently began work on a number of pan-industry cost reduction initiatives. These recognised that significant cost benefit can be delivered by tackling the fundamental behaviours driving cost escalation on the UKCS. The initiatives cross four thematic areas outlined below, prioritised by the size of potential impact. Alongside a revised fiscal regime and the swift implementation of the recommendations of the Wood Review, successful cost reduction initiatives will undoubtedly extend the productive life of the UKCS and deliver a more internationally competitive and sustainable basin.

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The proposals for cost reduction initiatives are still being rolled out across the wider industry and will take time to gain traction.

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Figure 38: Cost Reduction Initiatives

1. People

Benchmark Contractor Rates

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Offshore Partnership Agreement

Optimise Offshore Rotas

2. Offshore Efficiency

Increase Wrench Time

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Share Best Practice

Seek Efficiency Driving Technologies

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3. Logistics Planning

Establish Rig Clubs

Establish Support Vessel/Helicopter Clubs

Sharing of Spares with Inventory Visibility

Crew Sharing

4. Standardisation and Simplification

Stop Gold Plating

Look Back Analysis/Reset of Cost Base

New Entrant Low Cost Standard/Transformational Ideas Forum

Source: Oil & Gas UK

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