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Boosting Efficiency to Safeguard the Future of the Industry

Why is change needed?

  • The cost of oil and gas operations on the UK Continental Shelf (UKCS) has more than doubled over the last five years.
  • No other basin in the world has seen such rapid cost inflation and the UKCS is now the most expensive province in which to operate.
  • The basin is spending more than it earns. It had significant cost challenges when oil was at $110 per barrel, but with the oil price collapse the scale of the issue has escalated.
  • At the end of 2014, almost 20 per cent of production was loss making at a $50 oil price and over the year, that loss amounted to more than £4 billion across the basin.
  • There needs to be an urgent, structural reduction in the industry’s operating costs to place the industry on a more secure footing.

There are still many billions of barrels of indigenous oil and gas to recover. The industry has a strong future, provided we can address the regulatory, fiscal and cost challenges we face today.

Bold action and behavioural change is urgently needed to restore international competitiveness and sustain future activity through investment.

How has industry reacted?

The oil price slide has heightened attention on the costs of operating UKCS assets and developing new opportunities – but the industry had acknowledged costs as a major concern well before the price collapsed. Companies have already started on the difficult road to reduce costs and become more efficient.

Early signs show that this concerted effort is paying off, as production from the UKCS increased in the first half of 2015 and the cost of operating on the UK Continental Shelf is expected to fall by the end of 2016. It is, however, widely acknowledged that there is still much more to do.


Efficiency Spotlights – individual company stories

Companies are addressing costs individually by working smarter and more efficiently. Oil & Gas UK is encouraging companies with a story to tell to share short case studies illustrating how efficiency savings are being made across the industry, with a view to inspiring others. These case studies are hosted here.



Oil & Gas UK is taking the lead to help drive pan-industry initiatives to achieve efficiency improvements and transformational change, formalising those initiatives under the Efficiency Task Force (ETF). The ETF aims to drive a pan-industry improvement in efficiency – creating a sustainable industry in a lower oil price world.


Efficiency Tools

The UK offshore oil and gas industry is currently challenged by high costs, a decline in production efficiency and the low oil price. The sector is working hard to address these challenges, through both long-standing tools (see left hand menu) and the Efficiency Task Force Toolkit.


Get in touch

Please get in touch by contacting [email protected]

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