November 09, 2016
Author: Espen Erlingsen, VP Analysis
Publisher: Offshore Magazine
At an average breakeven price of 32 USD/bbl, producing fields are the cheapest supply sources. Non-producing shale and oil sands are the marginal sources of supply in 2020, with high drilling/completion costs for the former and high capex/opex for the latter.
Rystad Energy liquids cost curve, is made up of nearly 20,000 unique assets and considers each asset’s breakeven oil price and potential production in 2020. The breakeven price is the Brent oil price at which NPV equals zero, and considers all future cash flows using a real discount rate of 7.5%.
Resources are split into two lifecycle categories as of present day: producing and non-producing (under development, discoveries and undiscovered). For each lifecycle, associated costs are indicated such as opex and capex. Lifecycle categories are further split into different supply segment groups shown as colored boxes. The width of the boxes represents production in 2020 from a given supply source. The height of the boxes shows the range of breakeven oil prices that 60% of the production lies within.
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