Oil & Gas Costs Perspectives

Focus on conventional oil & gas projects

10th ASPO Conference
Vienna 2012

Olivier Rech
Associate Investment Advisor Energy Funds Advisors

Total development CAPEX for conventional
oil & gas projects by water depth
Source: Energy Funds Advisors analysis based on Rystad Energy data.
0
50
100
150
200
250
300
350
400
450
1995 2000 2005 2010
G$
Offshore
> 1000m
Offshore
300-
1000m
Offshore
<300m
Land
Note: costs include facility and well CAPEX. All OPEX are excluded.
Developed reserves of conventional oil & gas
Source: Energy Funds Advisors analysis based on Rystad Energy data.
0
20
40
60
80
100
120
140
160
1980 1985 1990 1995 2000 2005 2010
Gboe
Offshore
Land
Average cost of conventional oil and gas projects
3-year moving average
Source: Energy Funds Advisors analysis based on Rystad Energy data.
Note: costs include facility and well CAPEX until the first year of production. Overheads, transport infrastructures CAPEX, well and facility
CAPEX beyond the first year of production, abandonment costs, provisions and all OPEX are excluded.
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$/b
All
onshore
All
offshore
Costs of Oil and Gas: overview of the main variables
1985-2000 2000-2010 2010-2020 Post 2020
Oil services industry
Technology & innovation
Engineering and construction capacities
Human resources
Geology
Field size
Field location
Water depth
Political and legal context
Fiscal regime
Local content
State control
Strong cost
decrease
Moderate cost
increase
Strong cost
increase
Moderate cost
decrease
Neutral
?
?
?
Developed reserves of conventional oil & gas
Source: Energy Funds Advisors analysis based on Rystad Energy data.
0
20
40
60
80
100
120
140
160
1980 1985 1990 1995 2000 2005 2010
Gboe
Offshore
> 1000m
Offshore
300-
1000m
Offshore
< 300m
Land
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1980 1985 1990 1995 2000 2005 2010
Gboe
Offshore
> 1000m
Offshore
300-
1000m
Offshore
< 300m
Land
Developed reserves of conventional oil & gas
Source: Energy Funds Advisors analysis based on Rystad Energy data.
Water depth of oil & gas developments by facility (weighted by
developed reserves)
0
250
500
750
1000
1250
1500
1980 1985 1990 1995 2000 2005 2010
Water depth
0
250
500
750
1000
1250
1500
1980 1985 1990 1995 2000 2005 2010
Water depth
0
250
500
750
1000
1250
1500
1980 1985 1990 1995 2000 2005 2010
Water depth
0
250
500
750
1000
1250
1500
1980 1985 1990 1995 2000 2005 2010
Water depth
Source: Energy Funds Advisors analysis based on Rystad Energy data.
All infrastructures
Fixed platforms
Subsea infrastructures
Floating infrastructures
Average cost of conventional oil and gas projects
3-year moving average
Source: Energy Funds Advisors analysis based on Rystad Energy data.
Note: costs include facility and well CAPEX until the first year of production. Overheads, transport infrastructures CAPEX, well and facility
CAPEX beyond the second year of production, abandonment costs, provisions and all OPEX are excluded.
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$/b
Subsea
Floater
Fixed
All
onshore
Average size of conventional oil & gas projects
5-year moving average
Developed
Source: Energy Funds Advisors analysis based on Rystad Energy data.
Mb Mb
0
200
400
600
800
1000
1200
1400
1600
1800
0
200
400
600
800
1000
1200
1400
1600
1800
1980 1985 1990 1995 2000 2005 2010
Land 0-300m 300-1000m +1000m
Average cost ($/b) of conventional oil and gas projects
by type of infrastructure 3-year moving average
Source: Energy Funds Advisors analysis based on Rystad Energy data.
0,00
1,00
2,00
3,00
4,00
5,00
6,00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
0,00
1,00
2,00
3,00
4,00
5,00
6,00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
0,00
1,00
2,00
3,00
4,00
5,00
6,00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
0,00
1,00
2,00
3,00
4,00
5,00
6,00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
Onshore
Fixed platforms
Subsea infrastructures
Floating infrastructures
Note: costs include facility and well CAPEX until the first year of production. Overheads, transport infrastructures CAPEX, well and facility
CAPEX beyond the second year of production, abandonment costs, provisions and all OPEX are excluded.
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
50 Mb 200 Mb 500 Mb 1000 Mb
Average cost ($/b) of conventional oil and gas projects
by water depth 3-year moving average
Source: Energy Funds Advisors analysis based on Rystad Energy data.
Onshore
0-300m water depth
+1000m water depth 300-1000m water depth
Note: costs include facility and well CAPEX until the first year of production. Overheads, transport infrastructures CAPEX, well and facility
CAPEX beyond the second year of production, abandonment costs, provisions and all OPEX are excluded.
Discovered reserves of conventional oil & gas
Source: Energy Funds Advisors analysis based on Rystad Energy data.
0
50
100
150
200
250
300
350
1980 1985 1990 1995 2000 2005 2010
Gboe
Offshore
Land
Discovered reserves of conventional oil & gas
Source: Energy Funds Advisors analysis based on Rystad Energy data.
0
50
100
150
200
250
300
350
1980 1985 1990 1995 2000 2005 2010
Gboe
Offshore
> 1000m
Offshore
300-
1000m
Offshore
< 300m
Land
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1980 1985 1990 1995 2000 2005 2010
Gboe
Offshore
> 1000m
Offshore
300-
1000m
Offshore
< 300m
Land
Discovered reserves of conventional oil & gas
Source: Energy Funds Advisors analysis based on Rystad Energy data.
Number of conventional oil & gas projects
3-year moving average
Discovered Developed
Source: Energy Funds Advisors analysis based on Rystad Energy data.
0
50
100
150
200
250
1980 1985 1990 1995 2000 2005 2010
Land 0-300m 300-1000m +1000m
0
50
100
150
200
250
0
50
100
150
200
250
1980 1985 1990 1995 2000 2005 2010
Land 0-300m 300-1000m +1000m
Average size of conventional oil & gas projects
5-year moving average
Discovered Developed
Source: Energy Funds Advisors analysis based on Rystad Energy data.
Mb Mb
0
200
400
600
800
1000
1200
1400
1600
1800
1980 1985 1990 1995 2000 2005 2010
Land 0-300m 300-1000m +1000m
0
200
400
600
800
1000
1200
1400
1600
1800
0
200
400
600
800
1000
1200
1400
1600
1800
1980 1985 1990 1995 2000 2005 2010
Land 0-300m 300-1000m +1000m
Control over natural resources:
no single universal approach

Source: Energy Funds Advisors based on an anthropological analysis by Emmanuel Todd.
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Populations with
strong to very strong
control over
common goods

Populations with
moderate to low
control over
common goods




World Total
Liquids from
conventional
reservoirs
961 Gb
85%
164 Gb
15%
1 125 Gb
Liquids from non
conventional
reservoirs
48 Gb
22%
173 Gb
78%
221 Gb
Gas from
conventional
reservoirs
724 Gboe
80%
185 Gboe
20%
909 Gboe
Gas from non
conventional
reservoirs
15 Gboe
9%
158 Gboe
91%
173 Gboe
Degree of control over natural resources versus distribution of
hydrocarbon reserves (mean - end 2010)

Source: Energy Funds Advisors based on Rystad Energy data and anthropological analysis by Emmanuel Todd.
Populations with
strong to very strong
control over
common goods

Populations with
moderate to low
control over
common goods

Costs of Oil and Gas: outlook of the main variables
1985-2000 2000-2010 2010-2020 Post 2020
Oil services industry
Technology & innovation
Engineering and construction capacities
Human resources
Geology
Field size
Field location
Water depth
Political and legal context
Fiscal regime
Local content
State control
Strong cost
decrease
Moderate cost
increase
Strong cost
increase
Moderate cost
decrease
Neutral
Oil & Gas Costs Perspectives
Focus on conventional oil & gas projects

10th ASPO Conference
Vienna 2012
Thank you
Olivier Rech
Associate Investment Advisor Energy Funds Advisors