Offshore construction costs climb

摘要

Demand and bottlenecks drive delays and price increases. Oil and gas operating company project delays, potential cancellations and budget overruns follow a 53% climb in major offshore oil and gas construction costs over the past 2 years. IHS Inc. and Cambridge Energy Research Associates (CERA) developed the Upstream Capital Costs Index (UCCI) on more man 20 onshore and offshore oil and gas development projects. After a 13% climb in the UCCI, the cumulative increase since 2000 totals 67%. According to CERA Chairman Daniel Yergin, "This continuing cost surge is central to every energy company's strategic planning and to every energy user's expectations for supply security in the coming years." These "higher costs, combined with the recent drop in gas prices, have made some projects uneconomical and triggered a re-evaluation of plans," said Richard Ward, CERA senior director and UCCI project manager. Of the nine drivers of project capital development costs (steel, offshore rigs, equipment, yards and fabrication, offshore installation vessels, and design and project management), steel is the only one to decline over the past 12 months. All others at this time are nearly at maximum capacity. "If current trends continue, 2007 is shaping up to be a year of further increases. Despite a slight slowing in the rate of increase during the 6 months to Oct. 31, we expect project capital costs to continue reaching new record levels during 2007," Ward said. "With high oil prices driving new development projects, capacity constraints continue to support increases in the cost of equipment and services."