Improving Cost Engineering in the Upstream Oil and Gas sector

Cost predictions and estimates of oil and gas projects have become notoriously difficult for more than two decades. The increasing cost overrun of upstream oil and gas projects even in the seemingly stability in oil price at an average of $110bbl for the past one year has confirmed that there exist serious predominate issues to cost overrun either than the speculations of oil price as a factor. Project cost overrun stands tall among the many problems the oil and gas industry faces in the midst of uncertainty surrounding the security of oil supply for the short run. The study however focuses specifically on the upstream sector because of its importance as the source of all petroleum products and supply. Aside the persistent operational cost overruns in the industry, the other cost element that has defiled available cost control methods and strategies in the industry is Capital cost or Expenditure (CAPEX) for projects. The study identifies and demonstrates how cost overrun in the oil and gas industry can be improved to a tolerable level using appropriate cost estimation models and software’s.