18 January 2005
Iraq’s oil ministry has awarded contracts for reservoir studies at its giant Kirkuk and Rumaila oil fields to UK major BP and UK-based Exploration Consultants Ltd. (ECL), a senior Iraqi official said Friday.
Royal Dutch/Shell will also play a supporting role to the oil ministry on the Kirkuk study under a technical service agreement, the official added — which will include the Anglo-Dutch major financing that field’s reservoir work.
ECL came out as the big winner in the tender, which was first issued in June. It was shortlisted in November for both studies and was chosen Friday to conduct both the Kirkuk reservoir study and front-end data management work for Rumaila, before BP takes over the second stage of the latter.
“We have awarded the contracts to BP and ECL because they had the best technical offer, the shortest period in time and the cheapest price,” Hazem Sultan, director general of the ministry’s reservoirs and field development department, told International Oil Daily from Amman Friday, as he wrapped up two weeks of talks with half a dozen companies.
The losers include Halliburton’s Landmark, Schlumberger, and France’s Beicip, the consultancy affiliate of the Institut Francais du Petrole.
ECL incorporates a number of entities specializing in consultancy services to the oil industry, seismic operations and well site geological services, with offices in the UK, US, Canada and Australia.
Both studies are due to be completed within 11 months of the start of work, which according to the contracts should be no later than Mar. 1. Each will cost about $2 million, Sultan said.
Although Shell was not shortlisted for the Kirkuk study in November, it was invited to the Amman talks in early January. It signed a letter of understanding on Friday, which will fall under a technical assistance agreement currently being finalized and which should be signed in the coming weeks, according to the Iraqi official.
“Shell came forward with a proposal to provide technical and financial assistance for the Kirkuk study, which we have accepted,” Sultan said.
“[Shell] will pay for the cost of the Kirkuk study and we will assign it with technical follow-up and back-up, to insure that the objectives of the study are met and deliverables are of best quality,” he added.
“Shell’s participation in the Kirkuk study is part of a broad program of assistance to the Iraqi energy industry in areas in which its leaders have identified the industry’s greatest needs,” Gavin Graham, director of new business development for Shell Exploration and Production in the Middle East, said in a statement Friday.
“Shell’s contribution to the study, which will improve the understanding and reservoir management of the Kirkuk field, is in line with our continued commitment to supporting the Iraqi oil industry, and establishing a material and enduring presence in the country,” Graham added.
The supermajor is already working on a nine-month gas master plan, aimed at helping the Iraqi oil ministry with long-term strategic decisions in planning and marketing to optimize gas production and utilization, and has a training program for Iraqi oil ministry and company staff.
The first stage of both new reservoir studies — to be carried out by ECL in Iraq over the first three months of the contract — will consist of “data gathering, conditioning and database building,” where production data collected by the oil ministry will be scrutinized, cleaned and fed into a database, according to Sultan.
The work aims to give the Iraqi oil ministry its first comprehensive studies of its largest producing fields in the north and south, with a view to introducing the latest technologies to monitor the reservoirs and their performance.
In a second stage, to be conducted outside of Iraq by joint BP-Iraqi and ECL-Iraqi teams, a geological model for each reservoir will be built, and data exported to those models. These will then be improved with geo-statistical analysis.
BP said in a statement that the database and results would be transferred to the Iraqi oil ministry as they are developed, and that no BP staff would operate inside Iraq. ECL has already established a presence in Iraq, recruiting local experts.
In following stages under these contracts, simulation models will be built, and used to establish a historical match with previous performance of the reservoirs.
“Once the match is accomplished, we will predict the future performance of reservoirs under different scenarios of production,” Sultan said. “The final selection of scenarios will be based on economic appraisal of each scenario, with a view to maximize oil recovery,” he added. “In parallel we will optimize production from well bottom through production facilities, in order to ascertain problems and bottlenecks and provide remedies to improve well performance.”
The Kirkuk reservoir study involves an extra feature due to the nature of the reservoir, Sultan said. “It’s a fractured reservoir that requires a comprehensive detailed fractured study,” he said.
Kirkuk — which has been producing since 1928 and, after maturing, has been declining in recent years — was last assessed by an outside company in the late 1970s and early 1980s. Reservoirs at the less mature North and South Rumaila fields were last assessed in the 1980s.
Under the former regime of Saddam Hussein, when Iraq was subject to sanctions, the fields were pushed to produce at maximum capacity without adequate maintenance. The Kirkuk field was producing at close to 700,000 barrels per day when Saddam was in power, while the Rumaila fields supplied the majority of Iraq’s output, at more than 1.2 million b/d.
The Iraqi oil ministry originally targeted thorough multiphase reservoir studies for both fields, but later reduced the scope of work to cover only the first phase, to give quick results that would allow it to adjust production patterns as soon as possible.
In parallel with the studies, the ministry wants to conduct 3-D seismic surveys in both areas.
“We will try and do the seismic survey under the technical assistance agreements we signed with several companies and issue a tender for the acquisition of the seismic data. Other companies will then be contracted to do the interpretation of the data,” Sultan said.
Once the seismic data is available and interpreted, the ministry will move on to do more detailed studies of the Kirkuk and Rumaila reservoirs, he added.
By Ruba Husari, London
(Published in International Oil Daily Jan. 18, 2005)