Cost increases pre-Deepwater already meant the oil E&P industry needed $80 oil to justify offshore efforts. Mark it higher now, dude.
“From 2000 to 2004, we saw finding and development, F&D, costs rise from $4 to $6 per barrel. By 2008 we saw those costs rise to $18 per barrel. This is massive cost inflation,” Khan said. “In order for companies to meet their cost of capital at $18 per barrel in F&D costs, we need an $80 oil price. So far these costs have been flattening out. A higher level of regulation could add to that.”