Whatever Happened to the Kuwait Oil Field Contamination?Oil Field Contamination?A 20 Year Perspective

Brian Freeman, PE, PMP, REMBrian Freeman, PE, PMP, REM

AgendaAgenda

• Baseline• EvaluationEvaluation• CompensationSt t• Status

• Roadmap• Doing Business in Kuwait

Environment As A WeaponEnvironment As A Weapon

• Oil TrenchesOil Trenches• Releases to OceanO i• Overpressure Reservoirs

After The LiberationAfter The Liberation• 7,260 sq km of impacted surface 

areaarea• 695 sq km serious oil 

contamination• 798 wellheads detonated• 798 wellheads detonated

– 603 caught fire– 45 gushed

• Over 9 million barrels of oilOver 9 million barrels  of oil discharged to sea

• Over 1 billion barrels  of oil released/burned from wellsreleased/burned from wells

• 100 km of oil filled trenches• Over 62 million cubic meters of 

contaminated soilscontaminated soils• Unexploded Ordnance“Oil Lakes” Final Monitoring and Assessment Report, Volume 1, Summary Report, CIC, Report, 27 Aug 2003

Capping the WellsCapping the Wells

ContaminationContamination

• Wet Oil ContaminationWet Oil Contamination– Contamination with a free liquid component

• Dry Oil Contamination• Dry Oil Contamination– Oil stained soil without a liquid component

• Tarcrete– Solid oil based crust with no soil contamination

“Oil Lakes” Final Monitoring and Assessment Report, Volume 1, Summary Report, CIC, Report, 27 Aug 2003

Wet Oil ContaminationWet Oil Contamination

Dry Oil ContaminationDry Oil Contamination

TarcreteTarcrete

UXOsUXOs

BLU‐61

BLU‐77

Oil FieldsOil Fields

Remediation ChallengesRemediation Challenges

• Saline ConcentrationSaline Concentration• Local Conditions

O• UXOs• Weathered/Emulsified Oil

Lab MethodologyLab Methodology

• TPH using Hexane Extractable MaterialTPH using Hexane Extractable Material – (Method 9071B)

• Bulk sampling• Bulk sampling• Other Analytes:

– Cadmium/Mercury were non‐detects– Pb, Ni, and Va were low range of detection

Contamination LevelsContamination Levels95.0% 5.0%

0 228,747

1.6

D

0 8

1.0

1.2

1.4

x 10

^-5 Lognorm(73472,94194)

Minimum 0.00

Dry

0.2

0.4

0.6

0.8

Valu

es x

u 0 00Maximum +∞Mean 73,472.00Std Dev 94,194.00

Mea

n =

73,

472.

00

90.0% 5.0%

46,391 488,354

5.0 Wet

0

50,0

00

100,

000

150,

000

200,

000

250,

000

300,

000

350,

000

mg/kg

0.0

2.5

3.0

3.5

4.0

4.5

x 10

^-6 Lognorm

(194431,158986)

Minimum 0.00

Wet

0.0

0.5

1.0

1.5

2.0

Valu

es Maximum +∞

Mean 194,431.00Std Dev 158,986.00

Mea

n =

194

,431

.00

0

100,

000

200,

000

300,

000

400,

000

500,

000

600,

000

700,

000

mg/kg

0.0

AssessmentsAssessments

• Kuwait forms PAAC (Public Authority for ( yCompensation Resulting from Iraqi Aggression) in May 1991

• Major Assessments by Consortium of• Major Assessments by Consortium of International Consultants in Kuwait– UNCC Claims 5000432 and 5000434

• Iraq assessed $52 Billion USD for compensations in 2004 

K i d d $24 2 Billi– Kuwait awarded $24.2 Billion • Only $25 Billion (total) has been paid to date

Environmental CompensationEnvironmental Compensation

$520,960  $160,582,073 

$1,160,049,990 Iran

Jordan

$3,003,666,082 Kuwait

Saudi Arabia

Total: $4,324,819,105 USD 

Kuwait’s ShareKuwait s ShareUNCC Claim Number Claim Description Award (USD) 5000398 Oiled Shoreline Technology Assessment $          8,237,792 5000432 l k d h l $5000432 Oil Lake Contamination and Treatment Assessment Technology $        10,484,988 5000433 Technology Assessment for Restoration of Desert Surface Damaged by Military Fortifications: Field Studies of 

Vegatation Methods $             160,344 5000434 Technology Assessment for Restoration of Desert Surface Damaged by Oil, Fires, and Fire Fighting: Ecological 

Assessments, Pilot Testing of Re‐vegation Methods $          7,246,880 5000403 E t bli h t d O ti f D t R it d E R i t f Fi Y $ 6 763 5465000403 Establishment and Operation of Data Repository and Exposure Registry for Five Years $          6,763,546 5000404 Human Health Risk Assessment $          1,150,771 5000405 Long Term Health Impact Assessment $          4,846,396 5000406 Clinical Monitoring Programs $          7,278,268 5000407 Human Health Assessment Survey $             770,190 5000256 $5000256 Remediation of Damage to Groundwater Resources $        41,531,463 5000450 Remediation of Areas Damaged by Military Fortifications $          9,019,717 

Remediation of Areas In and Around Wellhead Pits $          8,252,657 Remediation of Areas Damaged by Tarcrete $     166,513,110 Re‐vegation of Damaged Terrestrial Ecosystems $     460,028,550 

50002595000259 Remediation of Damage to Marine and Coastal Resources $          3,990,152 5000466 Remediation of Damage at Open Burning/Open Detonation Sites $             162,259 5000454 Remediation of Areas Damaged by Oil Lakes, Oil‐Contaminated Piles, Oil Trenches, and Oil Spills $ 1,975,985,580 

Re‐vegation of Damaged Terrestrial Ecosystems $     283,300,389 5000460 Compensatory Project for Shoreline Resources $          7,943,030 

Total Kuwait Award: $ 3,003,666,082 

Kuwait Compensation SummaryKuwait Compensation Summary

• Assessments: $46 939 175 USDAssessments:  $46,939,175 USD 

• Remediation $2 956 726 907 USD• Remediation: $2,956,726,907 USD

PlayersPlayers

• PAACPAAC• KEPA• KNFP• KISR• KOC• UNCCUNCC

ProcessProcess

Contract ActivitiesContract Activities

• Environmental Data Management, Reporting and o e ta ata a age e t, epo t g a dAssessment System – IES

• National Lab– E&E

• Legal Consul– ??

• PPCS– Cancelledf• Information Management System 

– E&E

Re‐OrganizationRe Organization

• Shift from PAAC to KOCShift from PAAC to KOC• Shift from KOC to KISR

S h• KISR now the KNFP

Current ActivitiesCurrent Activities

• Pre‐Qualification by KOCPre Qualification by KOC• Tender for SEED

3 diff t t t– 3 different contractors

• SEED– 3 sites of 8 features– Technology demonstration– Award expected in late 2011

KNFP Road MapKNFP Road Map

• “Fast Track Project Implementation Program” (FTPIPFast Track Project Implementation Program  (FTPIP– Removal of the oil contaminated soil from its location to a “Temporary Designated Location” p y g(TDL) 

• Managed according to international environmental standard

• Monitored by KEPA/KISR 

I iti ti f il di ti ti iti th– Initiation of soil remediation activities once the oil contaminated material/soil reaches the TDL.

FTPIP Contract StrategyFTPIP Contract Strategy

• PMC with very limited rolePMC with very limited role• Contaminated material/soil removal and transportationtransportation

• Establishment/construction and management f TDLof TDL

• Remediation of the contaminated material/soil

• Award first contracts the end of 2011

Terms of ReferenceTerms of Reference• Zoning of oil lakes, identify boundaries of oil lakes

bl h l f l l k l l l f• Establish volume of oil lakes material levels for each pre‐defined zone

• Determine presence of any UXOs (by MOD)• Assess remediation technologies using KOC’s SEED project experience

• Prepare TOR for material removal and t t ti

ptransportation

• Prepare TOR for material/soil treatment • Manage material transportation contracts g p• Manage material/soil treatment contracts• Prepare and provide KNFP/KISR/UNCC verification datadata

• Prepare monitoring plans in cooperation with KEPA/KISR

Doing Business in KuwaitDoing Business in Kuwait

• Pre‐Qualification• Pre‐Qualification• Direct Contracts• Agencies• Business Climate• Foreign Corrupt Practices Act

Direct ContractDirect Contract

• Pro:Pro:– Awarded to a foreign company– No need for a local office

• Cons:– You wont get anything done

• Visas, customs, rentals, leases, bank accounts

– High tax visibility• 15% capital gains tax• 15% capital gains tax• Kuwaiti accountant required

– Fund your own bonds and local insurance– If you set up an office – need a 51% local partner

AgenciesAgencies

• Prosos– Local agent will get you the contract– Support you with Ministry issues – A strong agent will finance you– Don’t need an office or 51% partner– Will not let a contract be cancelled

• Except through gross negligence

• Con• Con– A weak or politically insignificant agent will hurt you– Have to include agent fees (usually 5% of contractHave to include agent fees (usually 5% of contract value)

Pre‐QualificationPre Qualification

• 3‐5 Years of Financial Records in International3 5 Years of Financial Records in International Accounting Format– Tax returns won’t do it– Tax returns won t do it

• 5‐10 yrs experience in the area of expertise• Organizational charts• CVs of key personnel

Business ClimateBusiness Climate

• Long business cycles• Long business cycles• Scope creep• Poorly written specs and SOWs• No appreciation of contractor risk• No appreciation of contractor risk• Low experience pool• Hidden Agendas• Your risk tolerance: High• Your risk tolerance: High

– Their risk tolerance: Very Low

Foreign Corrupt Practices ActForeign Corrupt Practices Act

• Poorly understood lawPoorly understood law• You will not go to jail for what your agent does

Cl d t d i ili d l– Classy, educated, civilized people

• We are operating outside the US– They have corruption laws too

• Listening to a lawyer that has never worked/lived overseas is like listening to the Pope about birth control

Help is out there…Help is out there…

• US GovernmentUS Government– Dept of CommerceUS Embassy in Kuwait– US Embassy in Kuwait (http://kuwait.usembassy.gov/trade.html)

• Commercial Affairs Department• Isabella.Cascarano@trade.gov

• American Business Council of Kuwait– www.abckw.org

Questions?Questions?