Dutch offshore operators cut production costs

Dutch offshore operators have slashed oil and gas production costs by 25% in real terms since the peak for operating costs in 1993.

So says Wood Mackenzie Consultants Ltd., which reckons Dutch operating costs will now increase slightly during the next 5 years.

The analyst said operating costs off the Netherlands are expected to average DFl 7.10/bbl of oil equivalent ($4.30/boe) in 1997.

This represents a decrease in real terms of about DFl 2.40/boe ($1.45/ boe) from the peak cost level in 1993.

This year's expected Dutch average compares with $4.90/boe off Norway, $3.50 off Denmark, and $3.70 for U.K. southern gas basin fields.

"In the short term," said Wood Mackenzie, "weighted average operating costs in real terms are expected to remain at a stable level, while over the period 1997-2002, average operating costs in the Netherlands are expected to increase slightly in real terms to DFl 7.50/boe ($4.54/boe).

"The impact of higher-cost production from mature fields with declining production levels is offset, to a large extent, by low-cost production from recent and upcoming new field developments."

The analyst said Amoco Netherlands Petroleum Co. has by far the lowest operating cost among Dutch offshore operators, with costs of around DFl 2.40/boe ($1.44/boe).

Amoco brought P/15 and P/18 gas fields on stream in 1993 (OGJ, Feb. 21, 1994, p. 36). Production peaked in 1994 but remains near plateau levels in 1997.

"Thus Amoco remains at a low operating cost position from this production complex, and operating costs per bbl of oil equivalent are expected to rise slowly to around DFl 4.90 ($2.94) by 2002 as production declines."

Conoco Inc. has the highest operating costs off the Netherlands, expected to average DFl 17.90/boe ($10.74/boe) in 1997.

Conoco operates Kotter and Logger oil fields, both of which are close to depletion and make relatively high tariff payments to the Q/1 pipeline system. The fields are expected to cease production this year.

Operating costs for Dutch onshore fields are expected to average DFl 2.20/boe ($1.30/boe) in 1997, said Wood Mackenzie, a decrease of DFl 0.90/boe ($0.53/boe) from peak 1988-90 levels.

"All onshore Netherlands production," said Wood Mackenzie, "is so dominated by Nederlandse Aardolie Maatschappij BV's giant low-cost Groningen gas field that higher-cost fields, such as the relatively expensive Rijswijk concession fields, have only a small impact upon overall costs."