Taking to the water: Looking offshore in an effort to raise oil and gas production

Increasing both oil and gas production are central elements of Kuwait’s national development strategy. The former provides the bulk of the revenue on which the nation’s economic expansion has been based while the latter provides much of the nation’s electricity. Both represent potential feedstocks for the downstream industrial processes by which Kuwait aims to diversify its economy. The ability, therefore, of Kuwait Oil Company (KOC) to meet the ambitious production targets it has set itself is of great significance to the nation’s economic wellbeing.

Kuwait’s oil production targets date from 2010, when the government announced a new spending plan to develop the economy in which oil sector spend amounted to KD15.6m ($55.7m) – or more than half the total of KD30.8m ($110m). The new strategy called for a sizeable increase in crude production capacity from the roughly 3m barrels per day (bpd) of 2010 to 3.5m in 2015 and 4m bpd by 2020. At the time, however, no mention was made of the individual oil projects that would underpin this rise, and therefore the manner in which KOC will meet its target has become a matter of speculation.

WATER WELLS: The exploration and production activities of KOC over recent years suggest a two-pronged strategy of an increasing amount of well intervention applied to existing fields, many of which are ageing and no longer producing oil under their own pressure, and the exploitation of new fields which were previously considered too challenging for commercial production. Kuwait’s famous Burgan field has been worked for 66 years under primary production from natural water drive, but in 2010 KOC decided to introduce a water injection process to the field’s topmost reservoir, Wara Sands. The pilot project, which began with 60m barrels of water per day (bwpd) in its first phase, with a second phase of 670m bwpd due to start in 2014, targets 5% of the reserves that will ultimately need water injection as natural water drive dies off, and forms part of a KOC strategy to pre-emptively introduce secondary and tertiary enhanced oil recovery (EOR) techniques to Burgan’s five giant reservoirs to maintain production levels over coming years. The decision was an unusual one in that it is the first time that KOC has made a field intervention of this type without extensive laboratory screening, but as a result of its calculated risk the company claims to have made a significant leap in terms of EOR experience within a short timeframe.

NEW TECHNIQUES: For the purposes of the trial, KOC decided to utilise low salinity water (LSW) in two single well injection tests, using portioning tracers to measure the change in residual oil saturations (Sorw) – the oil saturation which cannot be produced from a reservoir from gas or water displacement. The technique offers a number of advantages, including its relatively low cost, a history of successful field trials, strong laboratory evidence that it can reduce Sorw levels and the fact that it can be used to boost the performance of other EOR techniques which might be deployed in the future, such as polymer flooding. The results of KOC’s experiment were encouraging: in both wells Sorw was reduced by an average of three saturation units (SU), which translates to 23.7% of the oil remaining after standard effluent waterflood. This makes low salinity water injection an economically attractive technology for further deployment in Burgan.

Kuwait’s new fields, meanwhile, present KOC with the challenge of heavy oil. In 2012 WorleyParsons completed the Front-end Engineering and Design (FEED) work for the Lower Fars Phase 1 project located in the north of the country, part of the Lower Fars heavy crude scheme which occupies a central part in KOC’s strategy to meet its 2020 production target. Within the Lower Pars complex, which encompasses a number of oil fields and a large free gas field, the heavy oil contained within the sandstones of the Al Ratqa field have been identified as the most promising prospect, and KOC has estimated that $7bn worth of capital expenditure will be required to exploit it. In order to do so, it has decided to adopt the unconventional technique of cyclic steam stimulation (CSS), a process which involves a first stage of injection of steam via a borehole, a second soaking stage and then a third stage of production. The scope of the project is large, and will include drilling operations for hundreds of wells, data collection, pilot schemes for combined EOR techniques aimed at maximising production, water treatment facilities and the new infrastructure required to service this remote part of the country.

NEXT STAGE: With the FEED work completed, KOC is in a position to move on to the engineering, procurement and production (EPC) stage, which it intends to award in three packages. The first bundle will include the construction of crude oil central processing facilities (CPF), a water treatment plant and a hazardous waste disposal treatment plant for water effluent. A second package will link the production facilities with the coastal Al Ahmadi export Oil production, 2007-12 terminal, and will include an infield pipeline system, a water supply inlet pipeline to the CPF from Sulaibiya water treatment plant and a 24-inch export pipeline, which will run for 165 km. The third package will provide for offsite infrastructure and utilities as well as local production infrastructure. It is thought that KOC will invite bids for the new projects in late 2013 to reach its target of producing 50,000 bpd of heavy oil by 2015 and more than 250,000 bpd by 2030.

A NATURAL CHOICE: Kuwait’s desire for more natural gas, meanwhile, stems from its utilisation in electricity production and the shortages of it that have led the country to import liquefied natural gas (LNG) to meet peak demand over the summer months. After the significant gas finds in the Rahiya, Mutriba, Um Niga and other fields during 2006, Kuwait began its first commercial production of natural gas in 2009. Having reached a production rate of 572m cu feet per day in 2011, KOC plans to increase output to 4bn cu feet per day by 2030, including 1.5bn cu feet per day of gas not tied to oilfield output. Key to meeting this target is the discovery of new non-associated gas fields, which also bring the advantage of not affecting Kuwait’s OPEC quota. “We have to produce oil to get the gas. What is helping us now is the Jurassic gas ... it does not affect our quota with OPEC,” Khalid Al Sumaiti, deputy managing director for exploration and production at KOC, told the local press in 2011. However, while its onshore gas discoveries over the last decade have proved fruitful, interest has more recently turned to Kuwait’s offshore potential. In 2012, KOC chairman Sami Al Rashid told the press that the company planned to carry out surveys of the nation’s offshore reservoirs during the year. Kuwait has been active in its offshore territory since 1961, when it granted a 5600-sq-km concession to Shell. Three wells were drilled by Shell over the following two years, while KOC also sank its first three offshore wells.

OFFSHORE AGAIN: A second phase of offshore exploration began in 1981, which saw KOC acquire 6000 km of seismic data in 1983 and 1984 as well as drill two wells – neither of which was a commercial discovery. A further review of Kuwait’s offshore potential was undertaken between 1995 and 1997, this time as a joint effort between Shell and KOC, the lithostratigraphical nomenclature of which forms the basis for the stratigraphical framework used today. Recent years have seen rising activity in the offshore sector: in 2007 just 11 rigs were operating in Kuwaiti waters; by 2010 a high point of 56 operating rigs had been reached, a number which fell back to 49 by the following year. Nevertheless, KOC believes that its offshore areas hold untapped potential in the form of non-associated gas. While the firm has had some success extracting natural gas from the northern Jurassic-era fields discovered in the mid2000s, those fields have turned out to be more complex than originally anticipated. If Kuwait is to meet its gas production target of 4bn cu feet per day by 2030, a rising number of offshore projects is likely.

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The Report: Kuwait 2013

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