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INDUSTRY TREND periods of low oil price as they attempt to maximise returns from their sunk costs. The lifespan of an oil and gas installation is not definitive—there are many around the world that are operating well beyond their initially engineered lifespan. With increased recovery rates from reservoirs, improved technology and higher demand for hydrocarbons, this trend is likely to continue internationally as well as in Australia. The hydrocarbon industry moving from the capex to the opex phase is an exciting time for Australia. It augurs well for profitable opportunities as the country cements its position as one of the world's major energy suppliers. Howard Woolcott is a Director at Calash Australia Pty Ltd. Calash is a leading provider of commercial due diligence and advisory services in the energy sector on a global basis with offices in Aberdeen, London and Sydney. Visit www.calash.com for more information. Improving production techniques extend asset life and drive opex | Calash 2013 Original production profile Incremental production profile Production and therefore the opex value in the oil and gas industry. This trend is likely to continue as long as global demand for oil and gas continues to rise, meaning the opex market (including maintenance and inspection services) will develop as more key projects start up and new reserves come onstream. Opex-intensive phases provide a relatively stable financial environment given that facilities undergo regular shutdowns and maintenance due to the need to maintain operational efficiency and abide by statutory regulatory requirements. Forecasting opex is often difficult as it is dependent on the final level of capex investment and timings of proposed projects. However, once facilities are underway, the experience of UK North Sea operators shows that ageing infrastructure requires more maintenance, a factor that has seen a year-on-year increase in operating costs. As well as being driven by capex (for example, additional infrastructure), existing opex grows independently, and whereas capex is susceptible to oil prices, opex typically provides a more stable environment in which to operate. As a result, companies are likely to keep existing infrastructure in operation during Time Extended asset life Natural Resources • Issue 1 11