PRODUCTION COSTS RISE FOR NORTH SEA OPERATORS

The average cost of production in the North Sea has risen sharply during the past 4 years. A survey by analyst County Natwest Woodmac, Edinburgh, Scotland, said for 1987 the average cost was less that 2.50 ($4.25)/bbl in 1991 money but rose 30% to 3.25 ($5.52)/bbl in 1990. The increase is due to the loss of production from Piper field, other unplanned shutdowns, safety modifications and refurbishment programs, and the rising cost of supply services.

June 10, 1991

The average cost of production in the North Sea has risen sharply during the past 4 years.

A survey by analyst County Natwest Woodmac, Edinburgh, Scotland, said for 1987 the average cost was less that 2.50 ($4.25)/bbl in 1991 money but rose 30% to 3.25 ($5.52)/bbl in 1990.

The increase is due to the loss of production from Piper field, other unplanned shutdowns, safety modifications and refurbishment programs, and the rising cost of supply services.

This year the average operating cost is likely to fall to 2.90 ($4.93)/bbl, reflecting a reduction in spending for exceptional safety items and a slight recovery in oil production levels.

The survey says because of increases in supply services, the 1991 operating cost will still be nearly 20% above the figures for 1987.

Recovery in the level of U.K. oil production will bring a drop in operating costs during 1992-95. However, because of maturity of major fields and higher supply costs, the overall average will still be up 10% from 1987 figures at about 2.80 ($4.76)/bbl in 1991 currency.