Cost of drilling rises steeply for oil majors: "the margins are not there."

FT: Chevron’s boss reports that the cost of drilling wells in the Gulf has risen 25% since Macondo. “It now takes two to three months longer than before the accident to secure a drilling permit, while deepwater well costs have soared driven by changes such as having to test blowout preventers.” “….Cost inflation, which reared its head from 2005-2008 on the back of soaring commodity prices, is back.
….Philip Whittaker, associate director for energy at Boston Consulting Group, points out, however, that the reasons for the inflation of 2010-2013 may be rather different to those of five years ago. Prices back then were driven by soaring commodity input costs such as the price of steel, the rising cost of rigs and construction, and staffing.
….“We’ve moved from a world where there was excess margin in the system to one where the margins are not there. The costs are high because of the sheer complexity of the work being done rather than because of hyperinflation costs in the system,” says Mr Whittaker.”
….Analysts also point out that, unlike the majors, independents are better able to shift their strategy to chase higher returns if need be. North America-based Occidental, for example, last year slowed down the pace of its investments in the US to cut operating and capital costs. The decision paid off, improving returns on capital and boosting its share price.”