By OGJ editors
HOUSTON, Oct. 6 -- Western Canada's operating costs at oil and natural gas fields continue to rise, meaning that reducing operating costs is the quickest value lever for producers, said Ziff Energy Group, Calgary.
In its 2003 study of 176 oil and gas fields in western Canada, Ziff reported that average oil operating costs increased 6% to $6.85(Can.)/boe in 2002 from $6.50(Can.)/boe in 2001. For gas, the average cost increased 3% to 70¢/Mcfe in 2002 from 69¢/Mcfe in 2001.
Energy costs for electricity and gas dropped sharply last year, but gas has risen again since then. With increasing levels of drilling activity, the cost of many services also increased, raising well servicing costs by 14% for gas and 25% for oil.
Repairs and maintenance rose 33% for gas. Other operating costs—including field overhead, contract services, trucking, and third-party processing—rose by 8% for gas, but were flat for oil.
CEO Paul Ziff said, "Over the last 3 years, we have recommended to all our clients in
Canada and the US to commence programs that manage their energy use more efficiently. Those who did were prepared, while many others continue to be stressed by the full impact of high costs. While some energy costs moderated in 2002, we expect continued volatility over the next several years."
He believes that "alert, knowledgeable managers will outperform industry averages . . . . Proactive companies are reviewing the operating cost of every property they
operate."
