rebirth of rumaila

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Maxim Lyashko reports on the Rumaila oilfield redevelopment project, the first long-term oil contract of the post-Saddam era and Iraqs biggest treasure estimated to contain 15 per cent of countrys oil reserves.

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  • 1. REDEFINING REFINING With Dr Eion Turnbull, Deputy CEO of Bapco FIELD OF DREAMS KOCs exploration chief, Khalid Al-Sumaiti, outlines the companys 2030 vision BRIGHT SPARK Gerald Schotman, CTO of Shell, on the oil giants innovation strategy BAHRAINS OPPORTUNITYMinister of Oil and Gas Affairs HE Dr Abdul-Hussain Ali Mirza on why the future is bright for his countrys energy sector SPECIAL REPORTS Yemens energy outlook Untapped potential in Iraq www.ngoilgasmena.com Q2 2010 Final Cover-HIGH RES.indd 1 12/3/10 16:34:58

2. PROJECT UPDATE 88 www.ngoilgasmena.com BP Rumaila.indd 88 12/3/10 17:27:19 3. www.ngoilgasmena.com 89 Rebirth of RumailaJust to the south of the fertile lands of Al-Qurnah, the meeting point of the Tigris and Euphrates rivers, and 60 km west of Basra in south-eastern Iraq lies a stony desert with a bleak landscape that is decorated only by oases of small shrubs, isolated sand hills and dry river beds. However, underneath this wasteland lies Iraqs biggest treasure the supergiant Rumaila eld, estimated to contain 15 percent of the countrys oil reserves. Maxim Lyashko reports. improvement, and for the past two decades Rumaila remained damaged from over-drill- ing and poor reservoir management. Now all that is about to change after BP and its partner China National Petroleum Corporation (CNPC) won the right to develop the field in a historic televised auction in June 2009 and later in November of that year it for- mally signed a 20-year technical service con- tract the first long-term oilfield development contract of the post-Saddam era. The workhorse of Iraqs oil industry It seems that Rumaila is as important to Iraq as it is to BP. The British oil major helped to discover the field back in 1953 and gained further information on its structure through a reservoir study contract awarded by the Iraqi Oil Ministry in 2005. This early interest by BP is not surprising Rumalia is among the worlds last remaining pockets of so-called easy oi, meaning that it does not require expensive ultradeep drilling or pioneering production techniques. Its estimated recoverable reserves of 17.77 billion barrels are larger than the total proven oil reserves of China, Qatar or Algeria. So it is no wonder that BP has agreed to develop Rumaila without getting an ownership stake in the field while also accepting the governments low remuneration fee of only US$2 per barrel once the production has been raised by 10 per- cent from its current level. The Rumaila field is an 80 km long anti- clinal structure that was found to be trending from south to north and historically divided into two parts. When Rumaila was discovered it was believed to be a single domal structure R umailas turbulent history started over half a century ago when it was discovered by Basra Petroleum Co. in 1953. Since then the de- velopment of the field has been closely linked with Iraqs transformation into the worlds major oil producer and ex- porter as well as with the countrys infamous war conflicts in the not so distant past. Oil production at Rumaila started just a year after its discovery at a rate of 20,000 barrels per day (bpd) and reached its peak of about 1.6 million bpd in 1980, which represented an astonishing 45percent of Iraqs total output that year. How- ever, the subsequent history of oil extraction at this field had a cyclical nature due to numerous military conflicts starting with the Iran-Iraq War, during which the production from the field was completely halted. Moreover, it was Rumaila that became one of the main reasons for Iraqs invasion of Kuwait who were accused of using directional drilling technologies to pump oil from underneath the border and al- legedly stealing US$2.4 billion worth of Iraqi crude. Finally, it was on this oilfield where the last battle of the Gulf War took place in 1991. Bearing strategic importance to Iraqs economy, Rumaila was the first field in the country to restart production after the Gulf War; however, subsequent years of UN sanc- tions, post-2003 violence and long-term un- derinvestment in Iraqs petroleum sector took their toll on the fields development. Even water injection system projects at Rumaila, which were part of US-directed aid programmes aimed at the reconstruction of Iraqi oil sector in the 1990s, have not resulted in the expected BP Rumaila.indd 89 15/3/10 09:06:54 4. 90 www.ngoilgasmena.com achieved in 1980, but still accounted for almost half of Iraqs annual oil production. The con- sortium led by BP (38 percent) with partners CNPC (37 percent) and State Oil Marketing Organisation, the sales arm of the Iraqi Min- istry of Oil (25 percent), has agreed to nearly triple the Rumaila fields output to 2.85 million bpd in only six years. This would make it the worlds second largest producing oilfield after Saudi Arabias Ghawar and would alone lift Iraqs total oil production capacity from about 2.5 million bpd to 5.35 million bpd. The 20-year contract, however, comes with a spending commitment of US$15 billion. The first stage is the 33-month remedial pro- gramme involving three steps starting with a halt to any non-optimal operations that Iraqi oil engineers had to revert to in past years, often due to the lack of other options; then arresting the production decline; and finally achieving a sustainable and improved production rate of 10 percent above the initial rate prevailing at the start of the contract. BP is looking to spend a minimum US$300 million in order to carry out the appraisal programme including acquiring, processing and interpreting 1500 square km of 3D seismic survey over the two confined to the south of extensive marshland to the north, explains Michael Daly, Group Vice President for Exploration at BP. This area later became South Rumaila as prospecting moved northwards and discovered the North Rumaila continuation in 1961. The total reserves of North Rumaila are estimated at some 31 bil- lion barrels with only just over three billion barrels produced so far. This section has three reservoirs in development including the Mish- rif limestone, Upper Zubair sandstone and the heterogeneous Nahr Umr Formation. Mishrif is the biggest reservoir in North Rumaila account- ing for over 70 percent of its reserves. The South Rumaila section is thought to have 30 billion barrels, but because of the inclined nature of the formation it has so far produced three times more oil than its northern part. There are four reservoir units that have already been appraised and produced from and which are distributed between the Mishrif and Zubair formations. The Zubair reservoirs are the Upper Shale and Upper Sandstone (collectively known as the Main Pay) and Lower Sandstone members. Currently, according to Daly, the volumes are well-described only in the Main Pay and Mish- rif reservoirs. Other reservoirs still require significant definition before a definitive volume can be determined, he says. Suffice to say the volume is large. Moreover, there are additional hidden treasures for BP. First, there are discov- ered but undeveloped reservoirs Nahr Umr, Upper Shale Member, Yamama, Najma, Alan and Mus/Adaiya in North Rumaila and Lower Fars, Nahr Umar, Fourth Pay and Yamama in the South. Second, there are the undiscovered potential reservoirs that the consortium can explore and develop over the course of their 20- year redevelopment project. Path to recovery At the end of 2009, the struggling field was producing approximately one million bpd, which is far from its potential and the peak fields area and preparing the much needed geological and reservoir engineering studies and 3D simulation for the reservoirs. The most important objective for BP is achieving an im- proved production target rate, since it will be able to recover its costs and receive US$2 bil- lion worth of oil once this initial incremental production is brought on stream. The current infrastructure in place on the field consists of over 800 wells over 550 producers and more than 150 injection wells feeding 10 gathering and degassing centres, says Daly. Just over half of the producing wells are flowing today; but it is the wells that are not flowing where the short-term oil opportunity lies. Since the Rumaila service contract entered into effect on December 17, BP hasnt been wasting time in January the consortium held the first joint management committee meeting and decided on a US$1.7 billion budget for 2010 with the target to add between 150,000-200,000 bpd by December 2010. On top of that, 10 firms (including Halliburton, Schlumberger, Baker Hughes, Weatherford, Iraq Drilling Company as well as companies from China and Turkey) were invited to drill 56 new wells and do work- over projects on 30 others. Currently, the field has 10 rigs (six belonging to Iraq Drilling Com- pany and four to Weatherford and Akkad). BPs plan is to add five new rigs this year and another 10 in 2011. The consortium is also looking to drill 200 additional wells next year to pump output at Rumaila up to 1.5 million bpd. This rehabilitation and expansion project is man- aged by the Rumaila Field Operating Organisa- tion (ROO) staffed mainly by employees from Rumaila is clearly a brownfield development with a huge amount of kit in the ground and on the surface. This fact has important implications for our confidence in our ability to reach the initial production target Excess gas is burned off at the Rumala oil eld BP Rumaila.indd 90 12/3/10 17:27:27 5. 92 www.ngoilgasmena.com use a number of its proprietary technologies, including its smart field or Field of the Future technology to provide real time management and remote monitoring of wells; Bright Water injection of a polymer to help improve the efficiency of water flooding; and POWERlift ESPs which will allow for downhole repair and replacement. But in addition to refurbishing the production plants and the water injection facilities, another important task BP is facing