que$tor benchmarking analysis report - ihs...
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Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
QUE$TOR 2020 Q3
QUE$TOR Benchmarking November 2020
Energy Industry
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Content list
QUE$TOR Benchmarking / November 2020
1. Benchmarking purpose and method
2. Benchmarking summary results
3. Project cost variations
4. Offshore cost category variations
5. Onshore cost category variations
6. Effect of drilling
7. General conclusions
8. Offshore summary
9. Onshore summary
10. Results and chart interpretation
11. Benchmarking project portfolio
12. Technical upgrades
13. Global market trends
14. Cost data adjustments
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Benchmarking purpose
• This benchmarking analysis serves multiple purposes:
✓ Checking that the new capital cost estimates are consistent with the global market changes
described in the QUE$TOR 2020 Q3 Release Notes document, available from the QUE$TOR
application by clicking in the main Menu on Help<Release Notes
✓ Understanding how technical changes in the application impact project cost estimates
✓ Comparing the cost change effects by region, component type, and cost category
• This document provides a summary of the effects that cost and technical changes have
on project cost estimations when a QUE$TOR project is updated from the previous
version, QUE$TOR 2020 Q1, to the updated version QUE$TOR 2020 Q3.
• The following benchmarking results are meant to supplement the market trend
discussions contained in the Cost database update section of the QUE$TOR 2020 Q3
Release Notes document.
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QUE$TOR Benchmarking / November 2020
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Benchmarking method
• Our benchmarking analysis consists of running a set of projects using three different
versions of QUE$TOR:
1) the previous version, i.e. QUE$TOR 2020 Q1
2) an intermediate version that only includes latest technical changes and new features
3) the updated version, i.e. QUE$TOR 2020 Q3, inclusive of both cost and technical changes
• The results of the analysis show the variations of project costs, in US dollar terms, when
technical changes and cost changes were applied. In particular:
• Technical changes are the changes in results from the previous to the intermediate version.
• Cost changes are the difference between the results of the intermediate version and the results of the
updated version.
• Combined changes are the difference between the previous and the updated version, i.e. the effect of
cost and technical changes together.
• The analysis uses a large sample of projects (~250 offshore and ~200 onshore) based on
real assets and potential developments all around the world.
• Every region contains both offshore and onshore projects. The overall portfolio is not
intended to include all possible cases but to be a representative sample of what is feasible
in each region. As a result some project types or regions may be more or less represented
than others.
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QUE$TOR Benchmarking / November 2020
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Benchmarking summary results
QUE$TOR Benchmarking / November 2020
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• From Q1 2020 to Q3 2020, average total project costs varied between -4.5% and +6.7%
(when drilling is included) and between -4.6% and +7.5% (when drilling is excluded).
• Most market segments had cost trends declining in the last six months. Increases in project costs
observed in some regions were a result of new features and technical adjustments. A full description
of the technical changes can be found in the Technical upgrades page. In some specific cases, the
appreciation or depreciation of local currencies against the US dollar had an effect on the project cost
changes.
• The effects of drilling were different in offshore and onshore projects. Excluding drilling costs, most
offshore regions increased due to the effect of technical changes, which impacted mainly Installation
costs. Excluding drilling costs, most onshore regions decreased due to the combined reductions in
Equipment, Materials, and Prefabrication/Construction costs.
• Offshore, Equipment and Materials costs varied between -1.8% and +7.1% whilst
Installation costs varied within -7.1% and +6.1%. The significant decrease was registered
in Subsea as a result of reduction in day rates and technical adjustments.
• Onshore, Construction costs varied the most, between -7.4% and +14.1%. The cost
changes of the other key cost categories were within the -12.3% to +3.9% range.
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Source: IHS Markit © 2020 IHS Markit
Project cost variations due to technical changes
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Average variation in offshore and onshore project costs by region due to just technical changes
QUE$TOR Benchmarking / November 2020
When only technical changes were applied, average total project costs increased in most regions,
except in C.I.S. where offshore projects decreased and in Australasia and Africa where onshore project
costs remained flat.
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Effects of technical changes on offshore and onshore project
costs
In all regions, technical adjustments and new features affected most projects. Differences
in cost variations for offshore and onshore projects derived from the different impact of
specific technical adjustments.
• Offshore – Variations in offshore project costs were the result of the following technical changes:
• New assumptions behind the breakdown of offshore installation vessels caused cost estimates of some
installation activities to increase, impacting installation costs in projects with a Topsides component. They also
caused a decrease in installation costs in projects containing a Jacket component. This was particularly
pronounced in the C.I.S. region, which was the only region showing a small decrease.
• The additional line items in offshore drilling increased installation costs in offshore drilling, contributing to the
increase in project costs in most regions.
• Onshore - Onshore project costs increased in most regions due to the following technical changes:
• The update of onshore drilling duration data increased drilling durations and consequently construction costs in
onshore drilling in most regions.
• The generator set and turbine list update caused changes in weight and variations in civils area requirements
with an increase in site preparation costs.
• The Far East showed the greatest increase (+8%) because it included regions with significant increase in
drilling durations. Australasia and Africa did not show any significant change because onshore drilling duration
data were unchanged in both regions.
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QUE$TOR Benchmarking / November 2020
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Project cost variations due to combined (cost + technical)
changes
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Average variation in offshore and onshore project costs by region due to technical and cost changes
QUE$TOR Benchmarking / November 2020
From Q1 2020 to Q3 2020, average total offshore project costs varied globally between
-4.5% and +6.7% whilst onshore costs varied between -3.3% and +5.9%
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Why offshore and onshore projects costs varied differently in
some regions
Differences in cost variations for offshore and onshore projects were due to the different
influence of technical and regional cost changes. In this release, the impact of technical
changes on total project variations was comparable to the effect of market cost changes in
several regions.
• Europe showed the highest increase in offshore project costs because of the additional effect of the
strengthening European currencies versus the US dollar.
• Increases in offshore project costs were due to the combined effect of various technical changes:
generator set and turbine list update, addition of line items to offshore drilling, increase in topsides
material bulk factors associated with high pressure manifolds, and new offshore installation vessel
definition for Topsides components.
• Decreases in offshore project costs were caused by the new offshore installation vessel definition for
Jacket components, exchange rate adjustments, regional cost data corrections, and declines in
market cost trends.
• Increases in onshore project costs were the result of the onshore drilling duration data update, which
has resulted in longer well drilling durations. Additional increases were due to the data update for
generator sets and turbines, which impacted civils costs.
• Decreases in onshore costs were attributable to decreasing Equipment and Materials costs, reduced
labour rates and to the depreciation of local currencies against the US dollar.
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QUE$TOR Benchmarking / November 2020
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Project cost distribution by cost category
QUE$TOR Benchmarking / November 2020
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Distribution of cost category costs
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Project cost distribution by cost category
• Most medium-to-large-value* cost categories varied between -10% and +16% for offshore
projects and between -6.0% and +8.4% for onshore projects.
➢ Offshore Installation and onshore Construction were the two cost categories showing the largest
increase (up to 17.8% and 42%, respectively) for medium-to-large-value projects.
• For small-value* cost categories, offshore projects had the largest increases and the
greatest reductions. Variations in onshore project costs were more moderate.
➢ Installation was the offshore cost category with the largest range of variations. For small-value
installation costs, the greatest cost reduction (-52.3%) was caused by the new offshore installation
vessel definition for Jacket components and a decline in day rates for some offshore vessel types in
some regions. The largest increase in offshore Installation costs (up to 108%) was the result of the
new offshore installation vessel definition for Topsides components.
➢ Materials was the offshore cost category with the largest increase (up to 116%) for small-value
projects because of the increase in topsides material bulk factors associated with high pressure
manifolds.
➢ Construction was the onshore cost category with the largest increase (up to 48%) because of the
update of onshore drilling durations data increased drilling durations and consequently construction
costs in onshore drilling in most regions.
* Small-value and medium-to-large-value cost categories are assumed to be approximately below and above a $0.2bn threshold, respectively.
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QUE$TOR Benchmarking / November 2020
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Project cost distribution by cost component
QUE$TOR Benchmarking / November 2020
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Distribution of component costs by cost category
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Project cost distribution by cost component
• Most cost components varied between -5.0% and +6.7% for offshore projects and between
-2.3% and +2.8% for onshore projects. Some components varied more significantly:
• Subsea was the offshore cost component with the largest reduction (-11.5%) due to a decline in
Installation costs. Some regional adjustments (declines of about 5-20% depending on the region)
implemented for subsea supply vessel and subsea diving vessel affected this component cost
globally.
• Terminal was the onshore cost component with the largest reduction (-6.4%) due to a decrease in
Construction costs. This is because labour rates declined significantly in the regions (i.e. Africa, South
America, and Russia) with a high number of projects including Terminal components.
• Semi-sub was the offshore cost component with the greatest increase (+9.4%) due to an increase in
Materials costs. Topsides material bulk factors were increased in several projects with high pressure
manifolds. This resulted in an increase of semi-submersible operating weight with subsequent
increase in their hull weight, materials and fabrication costs.
• Onshore drilling was the onshore cost component with the greatest increase (+13.9%) due to a
significant increase in Construction costs. This was caused by the increase in onshore drilling duration
data, a technical upgrade implemented in most regions.
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QUE$TOR Benchmarking / November 2020
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Offshore Equipment costs by region
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Average offshore Equipment cost changes by region
QUE$TOR Benchmarking / November 2020
Offshore Equipment costs decreased in most
regions, except in Europe and Middle East.
• Collapsed demand and rescheduling of projects
caused by COVID-19 pandemic caused equipment
prices to drop globally since Q1 2020. North America
showed the largest reduction (-1.8%)
• Europe showed the largest increase (+6.6%)
because the strengthening effect of European
currencies versus the US dollar exceeded the
decline in market trends. All major West European
currencies (i.e. Norwegian kroner, European euro
and British pound) appreciated against the weak US
dollar by +11%, +6% and +5%, respectively.
• Middle East showed a moderate increase (+2.1%) in
Equipment costs as the selected procurement
strategy for Equipment in this region is set up as
Western Europe and therefore it saw an increase in
US dollar terms.
• In most of the remaining regions, declining costs and
weak local currencies were responsible for the cost
reductions. Although the Australian dollar increased
in strength, the decline in Equipment costs was
stronger than the appreciation in exchange rate.Source: IHS Markit © 2020 IHS Markit
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Offshore Materials costs by region
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Average offshore Materials cost changes by region
QUE$TOR Benchmarking / November 2020
Offshore Materials costs varied between -2.0% in
C.I.S. and +7.5% in Europe, in US dollar terms.
• Low demand for materials in the oil and gas sector
was one of the major factors causing Materials costs
to decline almost globally.
• Again Europe and Middle East increased because of
the European currency appreciation against the US
dollar. Middle East projects had the procurement
strategy for Materials set up to be as Western
European, therefore it saw Materials cost rising.
• Similarly to Equipment, in most of the remaining
regions, declining costs and weak local currencies
were responsible for Materials cost reductions.
Although the Australian dollar appreciated, the
decline in Materials costs was stronger than the
appreciation in exchange rate.
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Offshore Fabrication costs by region
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Average offshore Fabrication cost changes by region
QUE$TOR Benchmarking / November 2020
Offshore Fabrication costs varied between -7.8%
in Latin America and Africa and +6.8% in Europe.
• Europe, the Middle East, and North America showed an
increase as a result of the combined effect of technical
changes and market trends.
• Average Fabrication costs in Europe and the Middle
East increased by 6.8% and 5.9% because a number
of offshore high-pressure projects had Topsides bulk
factors increased. This affected the Materials weights
and consequently the Fabrication costs.
• Fabrication costs for Latin America, Africa, and the
C.I.S. decreased due to a significant reduction in labour
rates.
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Offshore Installation costs by region
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Average offshore Installation cost changes by region
QUE$TOR Benchmarking / November 2020
Offshore Installation costs had a mixed variation
globally.
• Europe, Africa, Latin America, and North America
showed an increase in Installation costs. This was due
to the combined effect of technical changes and market
trends.
• Average Installation costs in Europe increased by 6%
because a high number of offshore projects with
Topsides components had installation cost increasing
as a result of the new installation vessel breakdown.
On top of this, most offshore vessels in Europe saw an
increase in day rates.
• Installation costs for C.I.S, Australasia, Middle East and
Far East decreased. The significant decrease in C.I.S.
was due to a significant number of projects affected by
the new offshore vessel breakdown for Jacket
component.
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Offshore component costs varied in the range -3.0% to +2.0%
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Average offshore cost variation by component
• Reductions in vessel purchase prices, materials cost
and labour rates were responsible for the decrease in
Tanker costs
• Decreases in subsea specialized vessels impacted
the Subsea Installation costs as a result of both
market decline and technical adjustments
QUE$TOR Benchmarking / November 2020
• The increase in Offshore drilling was due to the
additional line items (i.e. site survey, ROV drill rig
support, rental tooling for wellhead and xmas tree
completion) to the offshore drilling cost sheet
• The increase in Semi-submersible and Topsides is
attributable to the increase in Installation costs as a
result of the new offshore vessel breakdown
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Onshore Equipment costs by region
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Average onshore Equipment cost changes by region
QUE$TOR Benchmarking / November 2020
• Onshore Equipment costs increased globally,
mainly due to technical changes
• The update of onshore drilling durations data mostly
impacted projects with many wells
• The update to the power generation and compressor
set data increased civils area and site preparation
costs in some projects
• In Australasia and Europe, the higher increase
was due to currency adjustments as local
currencies strengthened against the US dollar
• Market trends did not dominate the average
onshore Equipment cost changes as market
costs for equipment decreased globally since
the first quarter of 2020
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Onshore Materials costs by region
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Average onshore Materials cost changes by region
QUE$TOR Benchmarking / November 2020
• Onshore Materials costs had a mixed trend,
due to technical changes, market trends and
fluctuations in the exchange rates against the
US dollar
• Latin America showed the largest decrease in costs
(-4.4%), largely related to both the significant
declines in OCTG costs in Onshore drilling and to
extreme volatility in the exchange rates in this
region.
• Regional variations in steel costs affected project
cost estimates for Onshore drilling, Pipelines, and
Infrastructure components.
• The increase in Europe and Australasia was due to
the appreciation of local currencies. The Middle East
was also affected as most projects had the Materials
procurement strategy set up as Western Europe.
Source: IHS Markit © 2020 IHS Markit
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Onshore Prefabrication costs by region
21
Average onshore Prefabrication cost changes by
region
QUE$TOR Benchmarking / November 2020
• Most regions showed a decrease in onshore
Prefabrication costs as a result of declining
labour market trends
• Latin America had the largest reduction (-12.3%) in
Prefabrication costs as onshore labour rates
dropped significantly in the region in US dollar terms.
Construction costs were similarly affected but in this
cost category the decrease was offset by the
increase in onshore drilling durations due to the data
update.
• Australasia was the only region recording a
noticeable increase in onshore labour rates since the
first quarter of 2020. This was due to the significant
appreciation (+14%) of the Australian dollar and a
better-than-expected performance of the labour
market in the region.
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Onshore Construction costs by region
22
Average onshore Construction cost by region
QUE$TOR Benchmarking / November 2020
• Most regions had an increase in onshore
Construction costs as a result of technical
changes
• Construction costs increased in Onshore drilling
component as a result of the update of the drilling
duration data
• Construction costs increased in those components
including power generator and gas compressor set
as the generator set and turbine list update
increased their footprint, and consequently the site
preparation and civils costs
• Africa and Latin America showed a decrease
because of the effect of reduced labour rates in
different components (e.g. Wellpad group,
Production facility, Terminal) but also because
of the depreciation of local currencies
• Africa showed the largest reduction (-7.4%) as it was
one of the regions where the drilling duration data
did not change
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Onshore component costs varied globally between -1.7%
and +6.1%
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Average onshore cost variation by component
QUE$TOR Benchmarking / November 2020
• Equipment, Materials, Prefabrication, and Construction costs decreased in
all onshore components, excluding Onshore drilling. The negative trend in
these cost categories was primarily attributable to global decreases in the
corresponding market segments due to the unprecedented impacts of
COVID-19 and the oil price drop
• In the Onshore drilling component, the effect of the increase in drilling
durations exceeded the general declining market cost trends in most
regions, except in Africa and Australasia where the drilling duration data
were unchanged
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How and why onshore project costs varied
• Including onshore drilling, the average onshore project costs increased in most regions:
Far East (+5.9%), Europe (+4.1%), Middle East (+3.5%), Australasia. (+2.0%), the C.I.S.
(+0.9%), and North America (+0.7%).
• Africa (-3.3%) and Latin America (-1.8%) were the only two regions which had project
costs declining.
• Average onshore project costs changes were caused by the combined effect of the cost
data update and technical adjustments, although technical changes played a major role
this release:
• The update of drilling duration data significantly increased Onshore drilling costs in most regions.
• Major cost categories (i.e. Equipment, Materials and Fabrication) have seen a reduction in costs
throughout most regions, in US dollar terms, as a result of the economic impact of the COVID-19
outbreak.
• The project cost reduction in Africa and Latin America was due to the additional effect of local
currency depreciation.
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Effect of drilling costs on total project cost variations
• Two major technical changes, i.e. the onshore drilling duration data update and the
additional line items in offshore drilling, have caused an increase in drilling costs. When
both offshore and onshore drilling are excluded, project costs are not impacted by these
changes.
• When offshore drilling costs are excluded, regions with an increase in average offshore
project costs saw a further increment (e.g. Europe costs increased by +6.7% with drilling
and by +7.5% without drilling) whilst regions showing a decrease became even more
negative (e.g. Australasia decreased by -1.6% with drilling and by -3.3% without drilling).
• When onshore drilling costs are excluded, most regions had a decrease in their project
cost variation (e.g. Far East costs increased by +5.9% with drilling and decreased by
-0.4% without drilling). This is because the increased costs of the technical changes are
taken away and the onshore market trends were globally negative in US dollar terms.
• The regional mixed effect was due to the fact that the actual costs are summed for all
types of offshore projects in each region and then the percentage change is calculated
between the new and the old version. Larger projects have a larger impact on the results
generating this regional variation.
• Market variations in offshore rig day rates had a minor impact on offshore drilling costs,
which remained dominated by technical change effects.
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Project cost variations due to technical changes, excluding
drilling
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Variation in offshore and onshore costs (without drilling) by region due to just technical changes
QUE$TOR Benchmarking / November 2020
Excluding drilling costs, technical changes had a small impact on project costs, especially onshore.
Offshore, the adjustment of Topsides material bulk factors in high pressure projects caused the +3.7%
cost variation in the Middle East.
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Project cost variations due to combined (cost + technical)
changes, excluding drilling
27
Variation in offshore and onshore costs (without drilling) by region due to technical and cost changes
QUE$TOR Benchmarking / November 2020
When drilling costs are excluded, from Q1 2020 to Q3 2020, average total offshore project costs varied
globally between -4.5% and +6.7% and onshore costs between -3.4% and +3.1%.
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General conclusions
• From Q1 2020 to Q3 2020, average total project costs varied between -4.5% and +6.7%
(when drilling is included) and between -4.6% and +7.5% (when drilling is excluded).
• The changes in offshore costs were mainly attributable to the effect of technical adjustments in
Offshore drilling and Installation costs. When drilling is excluded, decreases in Installation costs
caused cost declines in several regions, most notably the C.I.S. and Latin America.
• The effects of technical adjustments in Onshore drilling impacted onshore costs globally, producing
positive variations for most regions. However, excluding drilling changes, more regions showed
project costs decreasing due to the reduction in Equipment, Materials, Prefabrication, and
Construction costs.
• The majority of medium-to-large projects, offshore and onshore, had their key cost
categories varying between -10% and +16%.
• Cost categories in small projects, for both onshore and offshore, varied primarily due to the
combined effect of technical adjustments and cost changes, and fluctuated within a much
bigger range of -20% to +20%.
• Most cost components varied between -5.0% and +6.7% for offshore projects and between
-2.3% and +2.8% for onshore projects.
• Onshore drilling was the onshore cost component with the greatest increase (+13.9%) due
to a significant increase in Construction costs.
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Offshore summary
• Offshore total project cost variations by region were between -4.5% (C.I.S.) and
+6.7% (Europe), and were mainly driven by technical changes affecting
Equipment, Materials and Installation costs.
• The regional variations were due to the combination of cost data updates and
technical changes:
• Equipment and Materials costs decreased in most regions due to declining costs and weak local
currencies. However, strong European currency appreciation against the US dollar marked
increases in costs in both Europe and the Middle East.
• Fabrication costs increased in Europe and the Middle East because of Topsides bulk factors
adjustments affecting high-pressure projects. Decreases in Latin America, Africa, and C.I.S. were
due to significant reduction in labour rates.
• The effect of the new offshore installation vessel definitions impacted project costs differently
depending on the component type. Europe showed the largest increase (+6.1%) in Installation
costs due to many projects containing Topsides components. The C.I.S. had the greatest
reduction (-7.1%) because Installation costs decreased in numerous projects with Jacket
components.
• Without drilling costs, regional trends were primarily negative, with only Europe and
the Middle East noting increases of +7.5% and +3.6%, respectively. Project cost
changes for all other regions were between -4.6% and -1.2%.
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Onshore summary
• Onshore total project cost variations by region were between -3.3% (Africa) and
+5.9% (Far East), and were mainly driven by technical changes affecting
Equipment, Materials and Construction costs.
• Two regions, Africa and Latin America, showed decreases in their average onshore
total project costs. The regional variations were due to the combination of cost data
updates and technical changes:
• Although market trends for equipment declined globally, onshore Equipment costs increased in
all regions due to the technical update of onshore drilling duration data
• Materials costs had a mixed trend as the balance between market decreases in steel costs and
increases in drilling duration data produced different results by region
• Prefabrication costs decreased in most regions as a result of declining labour rates whilst
Construction costs mostly increased being affected by the increase in duration data in the
Onshore drilling component
• Without drilling costs, regional trends were primarily negative, with only Australasia,
the Middle East and Europe showing increases up to +3.1%. Project cost changes
for all other regions were between -3.4% and -0.4%.
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Results and chart interpretation
• Benchmarking results are analyzed and presented to provide information to QUE$TOR
users on expected variations of project cost estimations.
• The project portfolio used in this analysis includes a large sample of projects which are
based on real assets and potential developments around the world.
• Results are presented in column and scatter charts using the following parameters:
• Change in offshore and onshore costs by region and project type: percentage variations for offshore
and onshore projects are calculated by summing up all capital costs of all the projects of a certain
type (i.e. offshore and onshore) and located in a specific region; then by calculating the variation of
this total sum between the updated and the previous version of QUE$TOR.
• Cost change by cost category: this is calculated by summing up all the capital costs of that specific
cost category (e.g. Equipment, Materials, Construction, Fabrication, etc.) for all components for all the
projects in the portfolio (i.e. offshore and onshore) in all regions; then by calculating the variation of
this total sum between the updated and the previous version of QUE$TOR.
• Cost change by component type: this is calculated by summing up all the capital costs for all the cost
categories of that specific component (e.g. Topsides, Production facility, Tanker, Infrastructure, etc.) in
the portfolio (i.e. offshore and onshore) in all regions; then by calculating the variation of this total
sum between the updated and the previous version of QUE$TOR.
• Cost change by project type: this is calculated by summing up all the capital costs for all the projects
of a specific type (i.e. offshore and onshore) in the portfolio in all regions; then by calculating the
variation of this total sum between the updated and the previous version of QUE$TOR.
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QUE$TOR benchmarking portfolio offers global coverage
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25-30 projects 10-15 projects 3-5 projects
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Technical upgrades
• The technical changes that have most significantly affected project cost estimations are:
• The onshore drilling durations data update increased onshore drilling durations and, therefore, the drilling costs. The
additional line items in offshore drilling impacted offshore drilling costs due to increased durations and day rates for
certain vessel types to better account for required activities.
• The update of technical data and changes to the generator set and turbine list, including expanding the onshore
generator sets, increased Topsides and onshore component costs due weight changes, and variations in civils area
requirements for some machines.
• The offshore installation vessel definition has improved the level of detail of individual vessel types used in
installation activities for jacket, bridge link, and topsides components, resulting in modified cost estimates for
installation activities within these components.
• The adjustment of Topsides material bulk factors associated with high pressure manifolds caused an increase in
Materials costs in some Topsides components, which had a cascaded effect on substructure costs (e.g. by
increasing the semi-submersible hull steel quantity required to support a larger weight).
33
• Technical changes implemented in QUE$TOR 2020 Q3 were:• Generator set and turbine list update
• Subsea individual riser editable properties
• Moveable links in subsea schematic
• Addition of transit distance to spoolbase in Subsea and
Offshore pipeline
• Onshore drilling duration data update
• Additional line items in Offshore drilling
• Subsea testing and commissioning vessel changes
•
• Compact deck configuration added in Topsides
• Offshore installation vessel definition
• Inclusion of gas turbine area in the onshore product export civils
area
• Fast rescue craft option added in Topsides facilities
• Pressure profile changes related to hydrostatic pressure and
frictional loss from the seabed to surface, when landfall is selected
• Adjustment of Topsides material bulk factors associated with high
pressure manifolds
QUE$TOR Benchmarking / November 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Global market trends
• There is no denying that the COVID-19 pandemic has been one of the greatest
challenges our world has faced for generations.
• The lockdowns and quarantines have taken a huge bite out of oil demand and this has eroded oil
prices.
• Energy markets are fundamentally changing, shifting towards low carbon, a shift driven by social
expectations, technology, and changes in consumer spending patterns.
• In response to the rapidly changing market conditions, many companies have decided to
either cease or decrease capital expenditures, and upstream oil and gas companies are
facing increasingly complex strategic decisions.
• Weakening economic growth, intensifying trade tensions, and global political risks are
dominating the rest of 2020 and setting the ground for an uncertain and challenging
2021.
• The effect of all these factors remains unclear as we move forward. Economic recovery
and investment decisions depend largely on how soon the pandemic will be under
control; an effective vaccine and its rapid distribution could produce a rapid return to a
new normal, whilst a longer duration for lockdowns and social distancing throughout the
world could mean a deeper recession and slower recovery.
34
QUE$TOR Benchmarking / November 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Cost data adjustments
• The global oil and gas market has continued to adjust to the uncertainty caused by
COVID-19 and the weakness in the oil price. Overall material, labour, equipment costs,
and most vessel rates have been decreasing. As the second and third quarters of 2020
have progressed, the unprecedented effects of COVID-19 have continued with no clear
end in sight. Cost volatility is expected to continue.
• QUE$TOR takes a considered view and tries to avoid any transient cost variations with
the aim of providing accurate cost data to be used for cost estimation purposes.
Therefore, users may see some differences in trends, especially for commodity prices as
compared with the latest available data.
• Some costs were adjusted to be closer to the latest real project data available and not
necessarily to align with the most recent market movement; others were adjusted in the
view of how the market will probably evolve. The adjusted data were:
• Subsea control costs were increased for some regions to have a more global rate despite global
market trends being almost flat.
• Day rates for some construction vessels (e.g. J-lay pipe vessel) were decreased in most regions to
be more in line with market levels. However, market trends for these vessels slightly decreased or
remained flat. Some regional adjustments (declines of about 5-20% depending on the region) were
also implemented for subsea supply vessel, subsea diving vessel, dredging vessel, and rock
dumping vessel.
35
QUE$TOR Benchmarking / November 2020
Confidential. © 2020 IHS MarkitTM. All Rights Reserved.
Customer suggestions and feedback
QUE$TOR Benchmarking / November 2020
• Does this report provide enough information?
• Does it meet your expectations?
• Is there anything you would like us to add or replace?
We would love to hear your thoughts
Please provide your feedback by contacting us at
Thank you!
36
QUE$TOR Customer Support
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QUE$TOR Benchmarking / November 2020