Insight
Global upstream costs: will the savings stick?
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Will this downturn be different for upstream operators and the supply chain? Are the majority of the cost savings made in 2014-17 structural and here to stay – or cyclical and set to erode as the oil price increases? Since 2014, we have removed almost US$1 trillion of upstream capital expenditure from our estimates for 2015-20 – the result of project deferrals, supply chain deflation and optimisation. The US onshore industry shows how quickly cost inflation returns when the market recovers, yet also how important efficiency and productivity gains can be. Across the globe, part of the savings will undoubtedly stick. But how much and for how long?
Table of contents
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Capital expenditure: almost US$1 trillion cut in survival mode
- New project approvals: less is more?
- US Lower 48: a bubble of cost inflation in the Permian
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Operating costs: can producers manage the recovery?
- How was opex reduced?
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Cyclical or structural? That is the question
- Drilling market: rig rates to recover in 2019-20; are efficiencies peaking?
- Subsea market: the cycle rebounds
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What could drive structural change?
- Lean thinking – a cultural shift
- Supply chain consolidation and collaboration
- Digitalisation – tapping into upstream's data riches
- Takeaway: what will the industry look like in 2020?
Tables and charts
This report includes the following images and tables:
- Global upstream development capex, 2014-20 (by PRMS classification)
- US Lower 48 capex, 2014-20 (by region)
- US Lower 48 horizontal oil rig count, 2014-17
- Observed and expected cost deflation, 2015-18 (Wood Mackenzie cost surveys)
- Observed/expected opex deflation, 2015-18
- Operating costs index, 2014-20
- Deepwater drilling: rig market, 2014-20
- Deepwater drilling: rig rate trends, 2014-20
- Subsea market: tree awards and cost trends, 2013-20
What's included
This report contains:
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