Energy & oil & gas / Selected work

Benchmarking system by system replaced a blanket cost mandate with a focused agenda.

A pre-FEED gas development had been told it was not first quartile, with no evidence of where or why. Two independent benchmarks — top-down against 27 peers and bottom-up to component level — put the gap in pipeline and rig rate, and cleared production facilities.

At a glance 2 of 3

cost systems in the fourth quartile

Engagement context

Consulting · Wood Mackenzie · supermajor, $2B+ gas development

My role

Independent competitiveness review (pre-FEED)

Duration

4 months

Exhibit 1

Two of three cost systems sit in the fourth quartile

Normalised unit cost vs 27-peer set

So what

The cost story is not uniform. Facilities sit mid-pack; pipeline and drilling sit in the fourth quartile, so a cut-everything mandate would spend effort where the project is already competitive.

Exhibit 2

Rig rate carries 41% of drilling and completions cost

Share of benchmarked D&C cost

So what

One line item carries the category, and it is the one genuinely open to negotiation — turning “drilling looks expensive” into a specific commercial lever.

The commercial question

An internal review placed costs outside first quartile, with no like-for-like evidence of where. Comparable shallow-water gas peers were scarce, so a credible peer set was the first problem to solve rather than an input to it — and without isolating the systems driving the gap, the default response would be to cut everywhere.

My contribution

Led the benchmarking workstream: built the 27-peer set, normalised cost top-down by system and bottom-up by component, and turned a fragmented cost picture into an independent, board-ready verdict for the gap-to-goal workshop.

How I approached it

Construct a defensible peer set

Widen the comparison criteria deliberately — production year, water depth, adjacent basins — then normalise every peer cost for scope, water depth and first-production year.
Run two complementary benchmarks

Top-down comparison locates where the project is uncompetitive; bottom-up component analysis explains why. Each catches what the other misses.
Test the goal, not just the gap

Separate structural constraints from commercially addressable drivers, and ask what the defensible target is for each cost system before setting one.

The decision that mattered

First quartile is not the right goal for every system. Separating structural gaps — tie-back distance, seabed conditions, a thin regional contracting market — from commercially addressable ones such as rig rate made the benchmark actionable rather than merely damning.

What the work delivered

The first credible like-for-like cost view: a 27-project peer set built where few ideal comparators existed.
A system-level verdict: second quartile on facilities, fourth quartile on pipeline and on drilling & completions.
The pre-FEED agenda reframed from cutting everywhere to two evidence-backed levers: pipeline and rig rate.

Sources: operator cost submission benchmarked against an independent project-cost database; n=27 peers, normalised for scope, water depth and first-production year. Component shares from transactional benchmarking; ~52% of drilling and completions rebuilt bottom-up. Client, supplier and peer identities are withheld, and exhibit internals are indexed or illustrative — they show the analytical structure, not client data. This case describes benchmarking and decision support; it does not claim ownership of the final investment decision or of subsequent savings.

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