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Exploration • Drilling • Field Services


ExxonMobil and Shell raise Iraq’s West Qurna-1 production target


Reserve appraisals carried out in the months since ExxonMobil and Shell took over the West Qurna-1 field in southern Iraq have now enabled the companies to raise their targeted output by 500 000 b/d to 2.825 million b/d at full development, demonstrating the upside potential of Iraq’s oil industry when modern technologies are applied. Samuel Ciszuk reports.


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xxonMobil and Shell have done a considerable amount of reservoir appraisal and surveying work on the West Qurna-1 field since being awarded the contract, as well as significant pro bono work of


the same kind in the preceding years, explaining to some extent why such massive results can be available so early. Mainly, however, the reserve and production


capacity results show the huge upside potential that can be achieved relatively easily and quickly through the application of modern technologies. Iraq was underexplored for decades compared with other large oil-producing states, as little was invested in finding more reserves or developing technical abilities amid wars, sanctions, and insurgency. Hence, what has thus far been known about Iraq’s vast existing reservoirs is largely based on technologies used in the 1960s and early 1970s, but there have been incredible technological leaps since then—in reservoir science for instance, or the use of computers in reservoir modelling, not to mention production technologies allowing for commercial production from much deeper layers. Using the latest technologies, ExxonMobil and


Shell have been able to quickly discover and firm up greater recoverable resources, with the certainty now allowing them to expand their production capacity target by 500 000 b/d from 2.3 million b/d to 2.825 million b/d. Tis inclusion of the added reserves into the work plan of two listed companies acts to raise the credibility of the Iraqi reserve review, which, when originally revealed, caused a lot of scepticism internationally. It was seen as premature for Iraq to make such a vast reserve hike given the small amount of work already carried out, but it was actually in line with what several IOCs said their initial pro bono assessments had indicated and what some of them used as significant reasons for agreeing to the tight Iraqi contractual terms. IOCs are paid a set fee per barrel produced under


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the Iraqi technical service contract (TSC) contract framework, so much higher production levels would also mean a significantly higher revenue flow from the project, probably with a higher incremental value to the IOC per barrel.


Development plans ExxonMobil and Shell will not have to develop the added volumes within the remaining six years of the timeframe to reach the initially agreed plateau production, although it will be in the companies’ interest to bring the full volumes onstream as soon as possible to receive the per-barrel fee. Te consortium has said that it hopes to raise production from under 240 000 b/d now to about 750 000 b/d within three years, with the help of a series of small water injection projects. After that, further large production increases will rely on a massive water desalination plant coming onstream in the south of Iraq in a joint venture between several oil companies, in order for further injection to be installed and increases to be possible. Te baseline production of the West Qurna-1


project has been jointly agreed as 244 000 b/d, with the consortium aiming to achieve the 10 per cent increase to 268 000 b/d demanded for the companies to start receiving payment on the increment brought onstream in May, as a ambitious drilling programme gets under way. Reuters reports Madhi Swati, a member of the


West Qurna-1 Joint Management Committee, as saying that ExxonMobil and Shell plan to drill 100–120 new wells during 2011, perhaps making a 300 000-b/d production level possible by the end of that year. In total, ExxonMobil and Shell are understood to be looking at adding 1,500 new wells to the existing 370 in order to reach full production. Reuters was also reporting today that Schlumberger had been awarded a 10-well drilling contract that still has to be signed, with another


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