24 April 2003
Until two weeks ago, Iraq’s North Oil Co. (NOC) was responsible for production capacity of more than 1 million barrels per day, centering on the giant Kirkuk oil field.
Output came to an abrupt halt two weeks ago, when northern Iraq fell to US-led forces.
And now, NOC appears to have been battered almost out of existence: Its headquarters are destroyed, its data is lost, and equipment has been looted.
Yet the company’s directors are working to bring limited oil production back on stream to supply Iraqi refineries and meet local needs — with the help of one Ben Schrader, an officer in the US Army Corps of Engineers (USACE).
After the Iraqi army in Kirkuk gave in to US and Kurdish forces without a fight following the collapse of the regime in Baghdad, Kurds from the nearby semi-autonomous area invaded the town, looting and destroying anything they could get their hands on, complain NOC employees, sitting in a bare guesthouse that has been converted into a gathering place.
US soldiers moved in swiftly two days later — but largely to secure the oil production facilities, including processing plants, degassing stations, and the industrial area, which contains the crude stabilizers. They still stand guard at the 62-mile-long Kirkuk field, as well as the neighboring Jambur and Bai Hassan fields, and other fields spread from East Baghdad to Naft Khanah on the Iranian border and Ein Zalah closer to the Turkish border. All were until recently under the responsibility of NOC.
About a week later, Schrader showed up at the NOC guesthouse in Baba, Kirkuk, introduced himself as a chemical engineer with USACE in charge of civil affairs, and offered his help.
“He said we need to bring production back to supply the refineries and get life back to normal. We said fine, but our cars have been stolen, our telephone sets have been robbed, and our offices and files don’t exist,” Hamid al-Saidi, director of NOC’s engineering department, told International Oil Daily in an interview at the guesthouse Wednesday.
The US officer offered transportation and telephones and started coordinating the shutting down of wellheads with the US Army.
“We had to shut down production fast on Apr. 9, so we did it from the degassing stations, not from fields. Now we are going around shutting the wellheads to reduce pressure in the flow lines and secure them, but it has to be coordinated with the US Army, which is guarding them,” al-Saidi said.
Wells at Kirkuk, Bai Hassan, and the Avanah Dome have been shut so far; Jambur is next.
The next task to be coordinated with the US Army is the assessment of oil production facilities for damage, procurement to replace stolen equipment, and spare parts to fix damage. Once that is done, production can start without delay, according to NOC Deputy Director General Adel Qazaz.
The initial list drawn up by NOC employees of facility damage includes a fire on the Iraqi-Turkish pipeline to Ceyhan just northwest of Kirkuk, the destruction of the K3 pumping station at Haditha, the destruction of 16 flow lines as a result of the bombing of bridges at Fatha and Tikrit, north of the Baiji refinery. The pipelines carried crude, gas, and oil products between the east and west banks of the Tigris River, and on to the strategic north-south pipeline. The IT-1 pumping station on the Iraqi-Turkish pipeline is damaged but can be operated manually. Similar situations are reported at the eight degassing stations in the Kirkuk area and the two crude processing plants.
Until NOC oil production is brought back, the Daura refinery near Baghdad and Baiji refinery in the north will be supplied with crude from storage. According to Qazaz, 2 million bbl is available in storage — enough to supply Daura with 40,000 b/d and Baiji with 70,000 b/d for up to three weeks.
The first production, which oil ministry officials in Baghdad have said should start next week, is likely to come from the Baba Dome in the Kirkuk field. Qazaz says initial production should start at 150,000 b/d and will increase gradually once the damage to flow lines is fixed.
So far, there has been no conflict between USACE and the Iraqi oil ministry, the two authorities that are trying to get the oil sector back into operation.
A team from the oil ministry visited Kirkuk on Monday to coordinate the flow of crude to the refineries. Although NOC benefits from some kind of autonomy, which it inherited from its mother company Iraq Petroleum Co. before this was nationalized in 1972, directors say they still prefer to deal with the oil ministry rather than the US Army.
“We are a self-contained company and we are able to manage operations independently without having to refer to a central authority. But if we have the choice, we prefer to deal with our own ministry,” al-Saidi said.
The NOC compound is managed like a town of its own within Kirkuk. About 3,000 families live there with their own facilities, including a telephone system, power and water plants, clinics, and schools. But work is rare after widespread destruction in the compound and instructions issued by the NOC board for employees to stay at home until further notice. Cash will be badly needed soon, workers say, especially to pay April salaries. The only authority capable of supplying this today is the US Army and its civil affairs units.
By Ruba Husari, Kirkuk
(Published in International Oil Daily April 24, 2003)