How Far Can Costs Fall?

Back in February, I wrote about how I expected upstream capital costs to fall as the oil price collapsed,  and then in July, I wrote again with an update on how the IHS UCCI (Upstream Capital Costs Index) had actually fallen up to that time. Well, this is a further update on that, mixed in with a bit of speculation on how far the fall might go before we touch bottom. 

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Rise Early, Work Hard, Strike Oil

Everyone knows  J. Paul Getty's formula for success: rise early, work hard, strike oil; and pretty much everyone I know in the oil business rises early and works hard, some of them even strike oil. So it's hard to find many oil folk who don't believe in the quote, of course the tricky bit is the last part of the aphorism. Striking oil generally requires a decent dollop of good fortune as well as brilliant geoscience and that elusive material, money; however when we do strike oil these days we generally manage to keep it in the well unlike these pioneers in times past who needed to have a decent turn of speed when they struck oil.

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The Best Time for EOR is Before You Produce a Drop of Oil

The sad truth of working in oil companies is that being assigned to work on enhanced oil recovery ("EOR") projects is sometimes considered career death. All the glamour jobs are on the big discoveries, putting in place billions of dollars of plant and equipment and bringing on hundreds of thousands of barrels per day of production. EOR is thought about as fields decline and managers are looking for some way to stave off decommissioning or being assigned to the "Acquisitions and Disposals" basket.

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UK Heavy Oil Developments: Another Billion Barrels to Come

The development of heavy oil in the UK goes back further than most people realise. All the way back to 1787, in fact. That was when miners struck a spring of natural bitumen while digging a canal tunnel for the Coalport Canal; indeed, with a little imagination the “Tar Tunnel” might be described as the UK’s first horizontal production well. 

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