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IHS: Upstream, capital operating costs rise

Capital and operating costs of oil and gas upstream projects continue to increase in a trend not likely to end next year, according to IHS indexes.

In the 6 months ending Sept. 30, the proprietary IHS Upstream Capital Cost Index, which is based on 2000 costs, increased by 1% to 230. In the 6 months before that period, the index had risen 2.3% (OGJ Online, July 2, 2012).

The new level matched the index peak set in the comparable period of 2008, IHS said.

Of 10 markets tracked in the index calculation, only two had declines: steel, 9%, and engineering and project management, 0.1%.

The IHS Upstream Operating Cost Index increased to 190 in the 6 months ending Sept. 30 from 189 in the preceding period.

Influences in operating costs noted by IHS include oil-price declines, economic uncertainty, high activity levels, and shortages of skilled workers.

IHS said it expects capital and operating costs to rise by 4-5% in 2013.

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