Insight

Pre-FID oil projects: global breakeven analysis and cost curves

01 July 2016

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01 July 2016

Pre-FID oil projects: global breakeven analysis and cost curves

Report summary

The marginal cost of new supply is one of the critical factors which will determine the future price of oil. We have updated our comprehensive breakeven analysis of future oil developments. These projects are critical for future oil supply and comprise conventional pre-FID projects and future drilling in US onshore Lower 48. Since our January 2016 report, we have seen significant changes to the cost curve. Key findings include: 70% of production from future developments is now commercial at $60/bbl in 2025 Deep/ultra-deepwater projects are hit hardest although cost deflation is evident Since 2009 the advent of tight oil has had the biggest impact on the pre-FID cost curve If prices remain around $50/bbl then most major projects are at risk of deferral or cancellation

Breakeven analysis: an update
- 70% of production from future developments is now commercial at US$60/bbl in 2025
- Deep/ultra-deepwater projects are hit hardest, although cost deflation is evident
- Since 2009 the advent of tight oil has had the biggest impact on the cost curve
- If prices remain around $50/bbl then most major conventional projects are at risk of deferral or cancellation