Over the last half century, Spears has interviewed countless oil executives about the value of “faster oil”, and the answer is always the same: Time to first oil is critical to me, but I won’t pay extra for it – I expect my service companies to provide speed to me as part of their being awarded my work.
Many new technologies are introduced by oilfield service companies that reduce the time required for a job, thereby moving forward “first oil”. Take for example the drilling process – almost everything is focused on speed, with drill bits, drilling rigs and directional drilling systems competing aggressively to provide minutes of time savings over the competition. The entire US land shale-oriented “pad drilling” revolution is a result of the oil industry’s relentless pursuit of time savings.
Or take hydraulic fracturing. The rock tells you how much fluid, proppant, rate and pressure it needs to properly stimulate a section of the reservoir and those parameters haven’t changed much over the years – so you can’t really speed the pumps up when pumping a stage. All the time savings, therefore, is in eliminating the non-productive time between frac stages – reducing NPT from hours to minutes and thereby pumping more stages per day.
A new technique with a quantifiable improvement of efficiency might be able to charge a bit more than the prior technology, but that premium will not stick for more than a year or two until competing companies provide equivalent solutions.
I wonder if other industries behave like this?