Oil and Gas Authority publishes UKCS Operating Costs 2018 report
Operating costs, efficiency and expenditure on the UK Continental Shelf (UKCS) remained stable in 2018, according to a new report by the Oil and Gas Authority (OGA).
The UKCS Operating Costs 2018 report has, for the first time, been delivered in an interactive online dashboard. The findings include:
Total UKCS operating expenditure (OPEX):
- Total OPEX remains stable, with a slight 6% rise to £7.2 billion, driven largely by new field activity. This has delivered an additional 70,000barrels of oil equivalent per day (boepd) compared to the previous year.
- Operating costs are dominated by five operators, which comprise approximately half of OPEX spend in 2017 and 2018.
- OPEX is anticipated to rise by 2% (6% in nominal terms) by 2020, due to new fields coming online. After that, total OPEX is expected to fall at an average rate of 3% annually due to a combination of fields ceasing production and a decrease from what is predicted to be a year of high activity in 2020.
Unit Operating Cost (UOC) – operating cost per barrel
- UOC also remained stable, with a marginal 2% rise to £11.6/boe
- More than half of operators saw a decrease in their average UOC, with this improvement in cost efficiency mostly being driven by production gains
- The 2018 UOC remains within the OGA key performance indicator (KPI): average UOC to be within +/- 15% of 2017 levels, in 2017 real prices) and below previous projections
- The OGA’s medium term projections suggest UOC will steadily rise, increasing 10% over the next five years to £12.8/boe (2018, real prices). This is influenced by production decline rather than cost inflation. This is more than 20% lower than the 2014 level in both real and nominal terms, demonstrating industry’s ability to keep costs stable