Page 44 - Impiantistica Industriale

TECHNOLOGY

• When prices are more or less stable, ex- When oil prices are low, governments tend to re-
pansion and optimization of existing oil fi elds duce the taxes to boost business, then increase
is prioritized. Exploration and initial fi eld de- the taxes when prices rise. Exchange rate can also
velopment costs are not considered in the have a signifi cant impact as onsite activities are of-
breakeven calculation, as it is not part of the ten priced in local currency.
expense. This approach is known as the half
cycle breakeven methodology.
• When prices are low, emphasis is placed on Benefi cial tactics
maximizing production from existing oil fi elds. and strategies
Capital expenses are minimized and costs are
limited to the incremental costs needed to In an environment where break-even is harder to
produce oil from an existing fi eld. In this case, attain, Oil & Gas companies can take a number of
break-even costs are limited to production ex- steps to insulate themselves from traditional high
penses, including taxes and royalties. costs. Options for introducing process and struc-
tural changes that are more adaptable to price-
Infl uencers of break-even cost include geological related market uncertainties include:
factors, the geographic location of the fi eld and
economic market variables. Geological factors im- • Postpone planned expenses and renegotiate
ply reservoir characteristics such as size, geometry, contracts with services and equipment sup-
fl uid pressure and viscosity. These variables have pliers, so that the organization can benefi t
a direct impact on exploration costs, the amount from market-driven lower priced goods.
and quality of oil extracted, the extraction techni- • Improve operational effi ciency through the eli-
que used, and the number and type of wells drilled. mination of unnecessary activities and adop-
tion of a leaner organization.
The location of the fi eld also has a signifi cant im- • Review approved standards and adapt spe-
pact on development costs. For example, deep- cifi cations that drive higher effi ciencies while
water well construction is much more costly than maintaining safety and reliability as top prio-
onshore drilling and requires more time-to-fi rst-oil. rities.
The characteristics of the fi eld area (i.e., rugged ter- • Advocate for higher degrees of transparency
rain, deep waters) have a great impact on fi eld ac- while improving cooperation with suppliers.
cessibility for onsite activities. In the case of natural • Introduce modernized technologies in order
gas, delivery to markets has to be executed either to drive operational effi ciencies through better
through pipeline networks or through transforma- capture and analysis of big data.
tion to liquid state and accompanying transport,
both of which are costly to implement. In Figure 2, it is important to note that the specifi c
country desired oil prices are different from these
Depending on the country where assets are loca- breakeven production costs. For example, The
ted, the various political, economic and legal envi- Kingdom of Saudi Arabia (KSA) has the lowest
Fig. 2 - Breakdown of oil ronments are also important factors (see Figure 2). production cost breakeven in the world, 9$/bbl,
production costs per country Taxes for example, can be fi xed in some countries but would need the Brent price to be at 85$/bbl to
or vary in others, based on the market situation. keep a positive budget in 2019.

42 42 Impiantistica Italiana - Maggio-Giugno 2020