Economic Report 2000 Index

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Meeting the Challenge Development and Operating Costs The combination of the small discovery and development volumes and the harsh operating environment of the North Sea engenders high development and operating costs/boe. The UKCS at $4/boe has the highest average development costs of all the provinces illustrated in Figure 20. Similarly, at over $4/boe the ongoing cost of UKCS operations is the highest amongst competing provinces. The current work of PILOT, and CRINE before it, has placed an emphasis on applying new technology and contracting philosophies to reduce continually UKCS extraction costs. Failure to achieve these cost reductions may jeopardise the viability of new developments in the face of competitive pressures. However, one key advantage that the UKCS has over many of these provinces is an extensive infrastructure which fosters swifter development cycles and lower cost access for new fields in the catchment area. Achieving these lower costs for ongoing operations will extend the lives of producing fields on the UKCS. Figure 19 - Largest discovery (1996-1999) Figure 20 - Development cost $/boe Figure 21 - Average operating costs $/boe