The Oil and Gas Authority (OGA) has revealed that North Sea producers cut their operating costs (opex) by about 14% last year.
The OGA said in a new report that total opex for the UK continental shelf (UKCS) had dropped by around £1.1billion to £7.2billion in 2016.
The regulator said UKCS producers had responded well to the oil price downturn and had driven down overall opex by more than 25% between 2014 and 2016.
And lower costs are expected to be sustained for the next five years, the regulator said in its report, titled Analysis of UKCS Operating Costs in 2016.
Average unit operating costs (UOC) fell for the second year in a row – to £12 per barrel.
It means the UOC – opex divided by the number of barrels produced − is now more than a third lower than in 2014, before the downturn.
OGA chief executive Andy Samuel said “significant progress” industry had made towards “consolidating the operational cost base” in the UKCS.
But Mr Samuel called for operators to collaborate in order to make sure cost reductions last.
He said: “The reduction in unit operating costs, driven by a combination of lower costs, higher efficiencies and higher production volumes, is a positive story for the UKCS through what has been a difficult operating environment in recent years.”
“This analysis allows the OGA to identify cost-efficient assets and operators and provide benchmarking metrics which benefit our asset stewardship engagements and help drive further improvements in efficiencies.
“It is important that operators continue to collaborate and share lessons learned to sustain cost efficiencies for the future, while continuing to maintain high standards of health, safety and environmental management.
“This will enable industry to withstand future oil and gas price fluctuations and be more profitable in periods of stability and growth.”