Thursday 13 June 2019

As the oil and gas industry comes out of the recent downturn, E&P companies are tempted to chase the rewards of higher oil prices by accelerating the sanctioning of new projects.

However, hasty sanctioning can lead to less certainty of what the ultimate cost of any given project will be. Projects with high levels of so-called engineering definition are generally expected to remain within about 20% of the initial cost estimates, according to Rystad Energy.

“For offshore operators, that means the expected variation for projects to be sanctioned during the period from 2019 to 2023 could be as high as $220 billion,” says Matthew Fitzsimmons, Vice President of Rystad Energy’s Oilfield Service Research division. “Historically, the ability of operators to perform to their estimates has significantly impacted their subsequent sanctioning.”

Full article can be found here.