Unit operating costs in the Permian Basin have increased significantly, according to a recent Permian Basin field benchmarking study by consulting firm Ziff Energy Group. The average operating cost for oil fields increased 25% in 2004 to more than $7.60 per barrel since 2002. The leading operators reported much lower average oilfield operating costs, below $5 per barrel. Average operating cost for gas fields jumped 31% to almost $0.90 per thousand cubic feet; leading gasfield operators reported average operating costs of less than $0.60 per thousand. According to Ziff, part of the increase is tied to rising commodity prices, while the rest of the cost increase occurs to what Ziff analysts call "core" costs. The firm also reports that total unit operating costs by company averaged $7.25 per barrel of oil equivalent in 2004 and ranged from some $4.50 to nearly $8 per barrel equivalent. Also, purchased electricity costs were up 56% for oil fields and 67% for gas fields in 2004, and taxes were the largest single cost for both oil and gas fields. The study was of 2004 results for nine companies that operate a total of 201 Permian fields. Six operators produce almost half of the basin's oil and gas. Eight are independents. The fields make nearly half of basin oil production and a third of gas production. -Oil and Gas Investor This Week