Operational production costs in the oil and gas industry have fallen across the globe with the UK emerging as a cost-cutting powerhouse, according to research from Rystad Energy.
Operational production costs in the oil and gas industry have fallen across the globe with the UK emerging as a cost-cutting powerhouse, according to research from Rystad Energy.
From 2014 to 2018 the UK reduced operational production costs by 31%, followed by Norway (19%) and the US (15%).
‘The reduction in operating expenditure is largely the result of offshore regions, such as the United Kingdom, Brazil, Nigeria, Angola, the Gulf of Mexico and Norway, feeling the squeeze of uncertain oil prices, which in turn has driven operators and contractors to nurture operational improvements in pursuit of lower unit prices,’ Sara Sottilotta, oilfield service analyst at Rystad Energy, said.
Secondly, with a greater focus on strategic planning, more efficient maintenance management and improved implementation of technology, opex per barrel of oil equivalent (boe) has fallen, it added.
‘The UK has experienced the greatest reduction in opex per boe, falling from more than $30 per barrel in 2014 to $16 per barrel in 2019. The drop is attributable to the general increase in production and the falling share of production from mature fields as new fields came on stream and old fields were shut in,’ Sottilotta said.
Brazil experienced the second greatest drop in opex per boe, from $16 per boe in 2014 to $11 per boe in 2019. This reduction was driven primarily by a significant increase in production, especially from the giant Lula field. In contrast, Mexico’s operating cost per barrel has risen by 86% since 2016, the result of decreasing production and an increasing share of production from mature fields.
