UKCS Operating Costs Drop

UKCS Operating Costs Drop
Operating costs in the UK Continental Shelf (UKCS) dropped by 14% in 2016, with operators securing reductions of approximately $1.5 billion.

Operating costs in the UK Continental Shelf (UKCS) dropped by 14 percent in 2016, with operators securing reductions of approximately $1.5 billion (GBP 1.1 billion), according to a new report from the Oil & Gas Authority (OGA).

The inaugural Analysis of UKCS Operating Costs in 2016 report revealed that total operating expenditure (OPEX) for the UKCS was $9.6 billion (GBP 7.2 billion) in 2016 compared with $11.1 billion (GBP 8.3 billion) the previous year. Prior to 2014, OPEX was escalating in the UKCS, exacerbated by the low oil price environment, according to the report.

Over 50 percent of operators secured OPEX reductions during 2016, the report showed, although the majority of this cost saving was dominated by four operators who achieved 60 percent of overall OPEX reduction during the year.

The range of operators who achieved reductions in operating cost was diverse and included new entrants, national oil companies, oil majors and independents.

Total OPEX is expected to remain relatively constant to 2022, according to the report, which outlined a number of methods to facilitate ‘sustainable improvements’ to the sector going forward.

These include the continuous improvement of production efficiency, while maintaining high safety standards, continued focus on improving the efficiency of business and operational processes, further consolidation of assets and infrastructure across the UKCS, and a close working relationship between the MER UK Technology Leadership Board and the Oil & Gas Technology Centre to support the development of technology that can deliver further operational cost efficiencies.


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