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ECONOMIC REPORT 2015
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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.
0
2
4
6
8
10
12
14
16
18
20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Unit Operating Cost (£/boe - 2014 Money)
Q4 2014 Forecast
Q2 2015 Forecast
Source: Oil & Gas UK
Figure 39: Average Unit Operating Costs
23
Those that produced at least 1,000,000 boe in each year.