Outlook for the UKCS in 2007

Operating Costs

Operating expenditure also rose in 2006, by 15% to £5.5 billion. A high priority in a mature oil and gas area is to maintain the integrity of the assets; however, cost inflation was also a substantial contributory factor.

Combining the increase in operating costs with the decline in production, the unit operating cost (UOC) has risen from $5/boe in 2003 to $9-10/boe in 2006. Looking ahead, the most mature areas of the UKCS, the northern and gas dominated southern parts of the North Sea, are expected to be the most expensive in which to operate.

Figure 32: UKCS Unit Operating Cost by Region 2005-2008

Note: “NNS”, “SNS” and “CNS” mean northern, southern and central North Sea respectively; “WoS” means west of Shetlands.