UKCS operating costs remain stable with slight rise in 2017
Operating expenditure (OPEX) and unit cost per barrel of oil equivalent in the UK Continental Shelf (UKCS) remained steady in 2017 against a stronger oil price backdrop, with both rising marginally by 2%.
Last year, total OPEX for the UKCS was £6.9 billion, indicating that the recent years of sharp cost reductions are over, reflecting a period of stability. Total operating costs are still significantly less (28%) than the high cost operating cost environment peak of 2014. In addition, the average unit operating cost per barrel of oil equivalent (UOC) was £11.6 in 2017 – an increase of +£0.3.
The Oil and Gas Authority's report ‘Analysis of UKCS Operating Costs in 2017’ is based on data collected from the OGA’s UKCS Stewardship Survey and reports that the relative stabilisation of UOC is encouraging at a time when the oil price is rallying and operating costs may have also been expected to increase. This trend is expected to continue with projections showing only a marginal rise in UOC into the early 2020s.