World Energy Outlook 2006

The average capital cost of the capacity to produce each new barrel of
oil equivalent per day due to come on stream in the period 2006-
2010 is estimated at $31 000. Costs vary considerably across regions. The most
expensive are over $60 000 and include oil sands (bitumen mining) and gas to
liquids projects as well as projects based in Sakhalin and Arctic regions. By far
the cheapest are in the Middle East, at a little over $10 000 (Figure 12.12). In
most cases, costs have risen sharply since the projects were sanctioned –
especially in the Arctic regions and for the development of oil sands in Canada,
where significant new infrastructure is needed.
Figure 12.12: Estimated Capital Intensity of Upstream Development
Projects by Region, 2006-2010
Middle East
South America
Siberia
North Sea
Gulf of Mexico
Gulf of Guinea
Asia
Caspian
Oil sands
Arctic
Sakhalin
Gas to liquids
Source: IEA database and analysis.
0 10 20 30 40 50 60 70 80 90
thousand dollars per barrel of oil equivalent per day
At sanction Current rates
Implications for Oil and Gas Production Capacity
Of the more than 120 major upstream projects we analysed, 89 have been
sanctioned, creating a minimum expected gross addition to oil production
capacity of 12.7 mb/d by 2010. This increases to 15.4 mb/d with the addition
of 23 planned projects (Table 12.2). Almost two-thirds of this capacity is
expected to come on stream by 2008. The Middle East, transition economies
Chapter 12 - Current Trends in Oil and Gas Investment
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© OECD/IEA, 2007