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Upstream cost deflation: How far will development costs fall?


Upstream cost deflation: How far will development costs fall?

Report summary

Development costs for new projects will deflate by as much as 30% during 2015, with some of the largest falls in tight oil and deepwater projects.

What's included?

This report includes 1 file(s)

  • Upstream cost deflation: How far will development costs fall? PDF - 315.77 KB 5 Pages, 0 Tables, 3 Figures

Description

This Macroeconomics and Global Trends Insight report presents our research on this key topic, and draws out the implications for economies and commodity markets.

This report delivers a clear understanding of our unique global economic outlook and identify risks and uncertainties to watch out for.

Wood Mackenzie's global trends and macroeconomic analysis underpins all our commodity demand analysis, ensuring we continually deliver an integrated and consistent view.

Our comprehensive understanding of commodity markets gives us a unique insight into the pace of global development and the risks associated with it.

  • Development costs are falling in all sectors
  • North American unconventional costs respond fastest with falls of 25-30%
  • Deep and ultra-deepwater deflation will be about 20-25 %
  • Shallow offshore conventional projects costs will fall by 18-23%
  • US Dollar appreciation helps many onshore conventional regions
  • Collaboration will be critical in achieving efficiency gains
  • Better project economics
  • Development costs deflation will reward investment through the cycle

In this report there are 3 tables or charts, including:

  • Development costs are falling in all sectors
    • Development cost deflation by category
    • Service sector margins
  • North American unconventional costs respond fastest with falls of 25-30%
  • Deep and ultra-deepwater deflation will be about 20-25 %
  • Shallow offshore conventional projects costs will fall by 18-23%
  • US Dollar appreciation helps many onshore conventional regions
  • Collaboration will be critical in achieving efficiency gains
  • Better project economics
    • Impact of deflation on unsanctioned deepwater project returns
  • Development costs deflation will reward investment through the cycle
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