MercoPress. South Atlantic News Agency

Oil production costs rise 53%

The oil production increase their cost

The cost of producing oil and gas has risen about 53 percent in the past two years, and the trend is expected to continue this year, according to a report released yesterday.

Those same costs have climbed 67 percent since 2000, but most of the increase has come since the end of 2004, according to an analysis by Cambridge Energy Research Associates and its parent, IHS Inc, which together have created what they call the Upstream Capital Costs Index. The index tracks nine key cost areas for offshore and land-based projects such as construction, equipment and personnel. ''If current trends continue, 2007 is shaping up to be a year of further increases,'' said Richard Ward, a senior director at CERA and the index project manager. ''With high oil prices driving new development projects, capacity constraints continue to support increases in the cost of equipment and services.'' The rising cost of doing business in the oilfield is expected to be a hot topic when dozens of industry leaders, academics and analysts gather this week for CERA's annual energy conference in Houston. In recent weeks, companies such as Halliburton Co. and Schlumberger Ltd., which provide oilfield services, equipment and personnel to oil companies, have said they expect strong demand for their products this year. At the same time, oil companies have acknowledged increasing exploration, production and other costs. (AP)