Costs up in western Canada's oil, gas fields

Oct. 20, 2005
Operating costs for oil and gas fields in western Canada have increased "significantly," according to Ziff Energy Group, Calgary.

By OGJ editors
HOUSTON, Oct. 20 -- Operating costs for oil and gas fields in western Canada have increased "significantly," according to Ziff Energy Group, Calgary.

The largest cost increase in 2004 was for gas fields, Ziff said in its 2005 study of 200 fields. The study uses data from 10 producers, including majors, energy trusts, and midsized independents.

The study said the weighted average operational expenditures for gas fields increased 12% to more than 80¢ (Can.)/Mcf. Ziff said the main contributors to the hike were increased service costs due to the high levels of activity as well as higher energy costs.

Operational expenditures for oil fields ranged from $5.70/bbl to more than $10/bbl in the four strategy areas studied by Ziff.

Gas operating costs in seven areas studied peaked at as high as $1.40/Mcf in a shallow gas region.

The study examined the effect of different well productivity levels and quantified specific potential savings for each field assessed. In each cost category, the study found that 2005 costs are expected to rise even more as operators strive to maximize sales.

The study found that both majors and trusts have executed successful programs to manage costs in fields with declining production.

Project Manager Gordon Clarke said, "Currently, energy management is of great interest to producers as they try to produce more with less energy, lower product losses, and reduced emissions."

In the major Central Alberta oil-producing group, average well productivity has declined from 40 b/d to 60 b/d. Producers have been able to improve their labor productivity from an average of 11 wells/person to 15 wells/person through enhanced communications, automation, and improved well reliability.

"Field staff today spend less time driving roads and more time on value-adding production-enhancing work. This bodes well for the future of our oil fields," Clarke said.