October 6th, 2010

What’s Behind Iraq’s Reserves Revision

 

By

While one cannot exclude strategic motive to announce the reserves increase at this time, there is certainly room for doing so.

Let us hope that the MoO is embarking on a policy of enlightening the industry, the public and the concerned Iraqi technocrats. The MoO statement while informative to the public, it is short of the necessary elaboration to be more meaningful to the oil technocrats.

However, in my opinion Iraq oil reserves, as the case with others, should be described in terms of the Oil-In-Place (OIP), which is based on more tangible parameters and less problematic to assess than the proven reserves, particularly before or at the initial stages of development. The proven reserve is the product of a Recovery Factor which is often in the range of 25%-50%, while the use of the latest art of technology has pushed the upper limit beyond to 55%-60% and the target is 70%. World average Recovery Factor assessed at 35% by BP over a decade ago.

My information suggests that the MoO past assessments used, with rare exceptions, Recovery Factors in the range of 25%-31%. However, our many friends with long involvement in the MoO’s assessment of reserves are better informed than me.

Our assessment of Iraq potential reserves of 1997 in Petrolog & Associates used 31%, simply to err on the conservative side.

I would guess that the present MoO announcement of Iraq increased reserves needs not go further than re-assessing the Recovery Factor in light of suggestions from its 11 IOCs’ contracts, let us hope, though, with proper technical justification.

The Forum