A study of 176 oil and gas fields in the prolific energy basin of Western Canada has found that operating costs continue to rise. Ziff Energy Group analysts report that in 2002, the average cost to operate natural gas fields was up 3% to C$0.70/Mcfe, while average oil operating costs increased 6% to C$6.85/boe.

With the increasing high levels of activity and buoyant drilling, the cost of many services also increased, raising the cost of well servicing by 14% for gas and 25% for oil. Repairs and maintenance also rose by a third for natural gas. Other operating costs last year, which include field overheads, contract services, trucking and third-party processing, were up by 8% for gas but remained flat for oil.

“Over the last three years we have recommended to all our clients in Canada and the U.S. to commence programs that manage their energy use more efficiently,” said CEO Paul Ziff. “Those who did were prepared, while many others continue to be stressed by the full impact of high costs.

“While some energy costs moderated in 2002, we expect continued volatility over the next several years…alert, knowledgeable managers will outperform industry averages.” Ziff added that “volume additions at lower cost are becoming rarer, and reducing operating costs is the quickest value lever for producers. Proactive companies are reviewing the operating cost of every property they operate.”

For more information on the “Western Canadian Reducing Field Operating Cost” study, visit the web site at www.ziffenergy.com, or contact Court Mackid at (403) 234-4279.

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