Unveiling the Upstream Capital Costs Index (UCCI)
The Upstream Capital Costs Index (UCCI) is a unique metric that tracks the composite capital cost of materials, facilities, equipment, and personnel for oil and natural gas projects. Managed by S&P Global, the index serves as a robust tool for monitoring and forecasting performance in the oil and gas sector.
Key Benefits and Takeaways
- The UCCI tracks composite capital costs for oil and natural gas projects, covering materials, facilities, equipment, and personnel.
- Owned and managed by S&P Global, the index serves as a benchmarking tool for analysts and traders in the oil and gas industry.
- Part of a larger family of indexes, the UCCI provides valuable insights for business decisions in the energy sector.
Why The Upstream Capital Costs Index (UCCI) Matters
S&P Global’s UCCI provides a clear and concise benchmarking tool for stakeholders in the oil and gas industry. Its use extends beyond tracking; it helps in forecasting the performance of underlying oil and gas assets. Additionally, the index is one of several critical tools published by S&P Global or related to energy investments.
Components: More Than Just Numbers
The UCCI encompasses 28 diverse projects that include LNG, pipeline, onshore, and offshore initiatives across various geographic locations. This holistic view tracks changes in operating and capital costs over distinct periods. The upstream segment—exploration and production (E&P) of oil and natural gas—is a focus area, encapsulating costs related to searching for and extracting energy resources.
Historical Significance and evolution
Formed in 1983 in Cambridge, Massachusetts, Cambridge Energy Research Associates (CERA) became a pioneering entity in energy research and consulting. In 2004, IHS Energy acquired CERA, and by 2009, the organization had evolved into IHS CERA, Inc. The most recent transformation came in 2022 when IHS CERA merged with S&P Global, becoming a part of a broader portfolio of financial and labor cost indexes.
Insight on Upstream, Midstream, and Downstream
- Upstream: Refers to exploration, drilling, and initial production stages in the extractive industry. Upstream costs cover the financial outlays for discovering and bringing oil and gas to the surface.
- Midstream: Encompasses the transportation and intermediate processing operations. This is the phase where raw materials are moved from extraction sites to refineries for further purification.
- Downstream: Represents the final stages of production before the product reaches consumers, including refining and distribution to the end market.
The Bottom Line
The Upstream Capital Costs Index (UCCI) is an essential tool for businesses and analysts in the energy sector. By offering a detailed measure of capital costs for oil and gas extraction activities, the UCCI helps ensure informed, data-driven decision-making for stakeholders and industry professionals.
Related Terms: Composite Capital Cost, Upstream Operating Costs Index, Downstream Capital Costs Index, North American Cost Index, Upstream Innovation Index.
References
- S&P Global. “S&P Global Completes Merger with IHS Markit, Creating a Global Leader to Power the Markets of the Future”.
- S&P Global. “Costs and Supply Chain Indexes”.
- S&P Global. “About S&P Global Market Intelligence”.
- American Fuel & Petrochemical Manufacturers. “Infographic: Downstream, Midstream and Upstream”.
- Business Development Bank of Canada. “Weighted Average Cost of Capital”.
- CERAWeek. “About CERAWeek”.
- IHS Markit. “History of IHS Markit”.
- Rigzone. “CERA Changes Name Under IHS Brand”.
