Slow and steady does not win all races. When Usain Bolt won Olympic gold in both the 100 and 200 metre sprints for an unprecedented third consecutive Games in 2016, it was the result of an entire existence built around speed and fastidious attention to detail and fine margins.
For early production facilities (EPFs), speed is just as much a raison d’être – every day of delayed production erodes profit and undermines the investment. If a typical EPF can boast production of 10,000 barrels per day of oil, then a week’s delay could easily equate to $600,000 of deferred revenue at $60 per barrel. A month could defer more than $2.4mn while incurring significant operational costs.
What’s more, EPFs are having their moment. Their sweet-spot is somewhere in the $50-$65 per barrel range. At this price-point, they are economic enough to attract the industry’s attention, but any higher and they begin to lose it to the big industry projects as they become profitable again. Of course, confidence plays a role too – the industry has to be confident of a sustained oil price before it launches wholeheartedly into megaprojects – but it’s hard to escape the conclusion that EPFs are enjoying their time in the sun, making it all the more important to press the advantage and maximise revenue while possible.
Like Bolt, theirs is an existence built around speed and like him, success hinges on obsessive attention to the smallest details. EPF operators are resourceful and adaptable, but even a small mistake along the supply chain can derail and delay a project at great cost. The race to first oil requires serious investment, backed by experience and expertise in every single facet of the project. Take for example, valves.
The additional edge
In Beijing, Bolt famously devoured 1,000 chicken nuggets in ten days to fuel his triple gold. His supreme biomechanical advantages allowed him to do so while still topping the podium. But to maintain his dominance in London and Rio, he had to adjust, shifting to a healthier diet high in protein and vegetables to eke out every possible advantage.
The lesson for EPFs is that speed requires continuous improvement and investment. While some projects might be profitable with relatively little effort, others will demand every possible marginal gain.
Valves make up a relatively small portion of an overall project, but demand exactly this kind of close attention. If they’re wrong or late, the whole project can be held up while the right components are procured.
On the one hand, the need for speed would suggest buying off-the-shelf, ready to ship valves wherever possible. However, on the other, it’s crucial to get it right first time. Even if it’s a case of 90% stock to 10% tailored valves, the ability to get both quickly and reliably is a small detail that the success of the entire project depends on.
Experience and expertise
Just as Bolt gained experience from every race on the gradual path to his records, for operators and suppliers in the EPF space, each project is a learning opportunity.
Developers have become extremely adept at deploying a modular, quick-start design approach to EPFs, allowing them to minimise time to first oil. They have also demonstrated a flexibility and openness to ongoing improvement that is difficult to achieve in larger projects.
Again, this applies right down to the individual component level. A good valve supplier will not just fill an order sheet, but actively engage with the project’s specifications based on accumulated experience and expertise. Maybe a different valve here will mean a quicker deployment? Perhaps an adjustment there will mean more reliable production?
A two-way, consultative relationship with suppliers may seem like the slower option, but can in fact make significant improvements on time to first oil, as well as minimising the chance of delay and disruption.
A misnomer?
EPFs sound temporary, and are often designed to operate for just a few years. However, some end up being semi-permanent installations, capable of lifespans of up to 15 years with careful maintenance.
In fact, there is a trend in some African and Middle Eastern markets for smaller, local operators to use EPF facilities on a longer-term basis to extract the last 10% or so of recoverable oil in fields.
These are typically projects where multinational players with large projects have lifted the majority of the oil, but left behind the final, unprofitable reserves. Using cheaper, more agile EPF facilities, local operators can then turn a good profit from what remains.
In this way, certain EPFs become not just long-term, but late production facilities. A misnomer indeed.
But it’s not just an issue of naming – this throws up engineering challenges too. For example, as fields mature, water injection and disposal modules are frequently required. An EPF typically won’t be deployed with these, as they aren’t necessary for early production. However, a forward thinking modular design from the start prolongs asset life and allows for changes of use in the future.
Similarly, with an eye on the future, EPF developers need to ensure they procure high quality components that will be capable of standing the test of time with proper maintenance. Even if an asset is originally only scheduled to run for two years, odds are it will run on for longer, and designing parts that will only last the two years is dangerously short-termist.
This combination of attention to detail, experience and expertise, and an eye on the future, is essential across the supply chain for EPFs. It needs to be embedded in the approach to every component, as well as the bigger picture design and build stages. Anything less risks running a losing race, missing targets and losing revenue.
If Usain Bolt, the fastest man in history, had to keep investing time and effort in the small things to stay ahead, then we lesser mortals seeking speed in the EPF race certainly need to do the same.
Staff Writer
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Comment: A matter of fine margins for EPFs
James Moir, group sales director at PJ Valves, on how hitting first oil is about making the right decisions at the right time
Slow and steady does not win all races. When Usain Bolt won Olympic gold in both the 100 and 200 metre sprints for an unprecedented third consecutive Games in 2016, it was the result of an entire existence built around speed and fastidious attention to detail and fine margins.
For early production facilities (EPFs), speed is just as much a raison d’être – every day of delayed production erodes profit and undermines the investment. If a typical EPF can boast production of 10,000 barrels per day of oil, then a week’s delay could easily equate to $600,000 of deferred revenue at $60 per barrel. A month could defer more than $2.4mn while incurring significant operational costs.
What’s more, EPFs are having their moment. Their sweet-spot is somewhere in the $50-$65 per barrel range. At this price-point, they are economic enough to attract the industry’s attention, but any higher and they begin to lose it to the big industry projects as they become profitable again. Of course, confidence plays a role too – the industry has to be confident of a sustained oil price before it launches wholeheartedly into megaprojects – but it’s hard to escape the conclusion that EPFs are enjoying their time in the sun, making it all the more important to press the advantage and maximise revenue while possible.
Like Bolt, theirs is an existence built around speed and like him, success hinges on obsessive attention to the smallest details. EPF operators are resourceful and adaptable, but even a small mistake along the supply chain can derail and delay a project at great cost. The race to first oil requires serious investment, backed by experience and expertise in every single facet of the project. Take for example, valves.
The additional edge
In Beijing, Bolt famously devoured 1,000 chicken nuggets in ten days to fuel his triple gold. His supreme biomechanical advantages allowed him to do so while still topping the podium. But to maintain his dominance in London and Rio, he had to adjust, shifting to a healthier diet high in protein and vegetables to eke out every possible advantage.
The lesson for EPFs is that speed requires continuous improvement and investment. While some projects might be profitable with relatively little effort, others will demand every possible marginal gain.
Valves make up a relatively small portion of an overall project, but demand exactly this kind of close attention. If they’re wrong or late, the whole project can be held up while the right components are procured.
On the one hand, the need for speed would suggest buying off-the-shelf, ready to ship valves wherever possible. However, on the other, it’s crucial to get it right first time. Even if it’s a case of 90% stock to 10% tailored valves, the ability to get both quickly and reliably is a small detail that the success of the entire project depends on.
Experience and expertise
Just as Bolt gained experience from every race on the gradual path to his records, for operators and suppliers in the EPF space, each project is a learning opportunity.
Developers have become extremely adept at deploying a modular, quick-start design approach to EPFs, allowing them to minimise time to first oil. They have also demonstrated a flexibility and openness to ongoing improvement that is difficult to achieve in larger projects.
Again, this applies right down to the individual component level. A good valve supplier will not just fill an order sheet, but actively engage with the project’s specifications based on accumulated experience and expertise. Maybe a different valve here will mean a quicker deployment? Perhaps an adjustment there will mean more reliable production?
A two-way, consultative relationship with suppliers may seem like the slower option, but can in fact make significant improvements on time to first oil, as well as minimising the chance of delay and disruption.
A misnomer?
EPFs sound temporary, and are often designed to operate for just a few years. However, some end up being semi-permanent installations, capable of lifespans of up to 15 years with careful maintenance.
In fact, there is a trend in some African and Middle Eastern markets for smaller, local operators to use EPF facilities on a longer-term basis to extract the last 10% or so of recoverable oil in fields.
These are typically projects where multinational players with large projects have lifted the majority of the oil, but left behind the final, unprofitable reserves. Using cheaper, more agile EPF facilities, local operators can then turn a good profit from what remains.
In this way, certain EPFs become not just long-term, but late production facilities. A misnomer indeed.
But it’s not just an issue of naming – this throws up engineering challenges too. For example, as fields mature, water injection and disposal modules are frequently required. An EPF typically won’t be deployed with these, as they aren’t necessary for early production. However, a forward thinking modular design from the start prolongs asset life and allows for changes of use in the future.
Similarly, with an eye on the future, EPF developers need to ensure they procure high quality components that will be capable of standing the test of time with proper maintenance. Even if an asset is originally only scheduled to run for two years, odds are it will run on for longer, and designing parts that will only last the two years is dangerously short-termist.
This combination of attention to detail, experience and expertise, and an eye on the future, is essential across the supply chain for EPFs. It needs to be embedded in the approach to every component, as well as the bigger picture design and build stages. Anything less risks running a losing race, missing targets and losing revenue.
If Usain Bolt, the fastest man in history, had to keep investing time and effort in the small things to stay ahead, then we lesser mortals seeking speed in the EPF race certainly need to do the same.
Staff Writer
Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and... More by Staff Writer
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