Turning on the Water Taps | 345 (January-February 2019)

In order to increase oil production, Iraq will have to resolve its water access problem.

2019-07-01 13:48 Views 472

Over the last 10 years, Iraq has become one of the global leaders in oil production increase. It added 2.1 million barrels per day (mbd) during 2010-18 – more than any other OPEC member-state’s.

In 2018 it produced 4.5 mbd of oil, and, if not for OPEC-mandated restrictions, this figure would have likely reached 4.6-4.8 mbd.

The Iraqi government’s plans don’t fail to impress: it hopes to produce 6 mbd by 2020 and 7 mbd by 2025. Gas production, meanwhile, shall increase from 1.7 billion cubic feet per day to 3 billion.

The country’s southern oilfields will play a key role in this strategy as they’re responsible for 75% of Iraq’s total oil production. Raising oil production will depend largely on increasing the fields’ oil recovery factor*, which currently stands at 15-42%. For comparison, the analogous figure for Saudi Arabia stands at 50% today and is set to increase to 70%.

The oil reservoirs of southern Iraq were formed predominantly out of lime- and sandstone during the Cretaceous Period. The most effective way to increase oil recovery factors in such conditions is to increase reservoir pressure through water injection.

This requires, on average, 1.3-1.5 barrels of water for each barrel of oil extracted. Hence, in order to fulfill the Iraqi government’s plans to increase oil production through 2025, the volume of injected water will have to increase from the current 3.5 million barrels a day to 9-11 million.

River Water

Iraq’s oil industry has been utilizing water injection technology at oilfields since 1961. In recent years, IOCs operating in the country have significantly increased the technology’s efficiency by implementing their accumulated experiences elsewhere in the world. They utilize both fresh- and groundwater to maintain well pressure, as well as water from the adjacent Dammam Reservoir.

Fresh water is limited in Iraq. Rainfall is uncommon, while water levels in the Tigris and Euphrates rivers have shallowed due to damn construction in nearby countries. Hence household and agriculture use take a priority.

The Qarmat Ali Water Treatment Facility, which has a daily capacity of 1.3 million barrels, supplies the oil reservoirs of southern Iraq with freshwater. Several smaller local water intakes have also sprung up in recent years around particular oil fields. Unfortunately, this is still not enough to maintain current oil production levels (let alone to increase them).

Dammam

Hence IOCs are on the lookout for new sources of water.

LUKOIL has made its bet on the Dammam reservoir. In addition to drilling Dammam wells, the company is piloting a project to convert oil wells into water injection wells. Dammam reservoir is located 1060-1130 meters underground and Mishrif hydrocarbon-bearing formation - 2600-2800 meters underground. A secondary opening of the Dammam reservoir allows water to flow into the oil well due to natural pressure caused by the difference in depth.

As of May 1, there are 22 water injection wells in operation at the West Qurna-2 oilfield. In addition, LUKOIL plans to convert one existing well for water injection before the end of the year. At the moment water injection at the field amounts to 380 thousand barrels a day.

In order to meet its target of increasing oil production at West Qurna-2 from 400 to 800 bpd by 2025, LUKOIL will have to increase the total number of water injection wells to 59 with a total daily capacity of 800-1000 barrels. The Dammam Reservoir is expected to remain the primary source of water for West Qurna-2.

However, all oil companies operating in the country realize the need to find new sources of water for southern Iraq.

Seawater

The best hope lies with seawater transported from the Arabian Gulf through a project called CSSP/SIIP.


Originally, the Common Seawater Supply Project (CSSP) envisaged construction of seawater intake and outfall structures, seawater filtration and deoxygenating stations on the coast, as well as pipelines to deliver water to the oil fields. ExxonMobil was awarded rights to realize the project in 2010, but by 2012 the project had been taken over by the Basra Oil Company.

ExxonMobil’s departure, combined with falling global oil prices, resulted in the project being de-facto frozen. In an effort to reinvigorate CSSP, in 2015 Iraq’s government restarted negotiations with potential investors. This resulted in the project changing both name (SIIP –South Iraq Integrated Project) and configuration.

In addition to the already envisioned treatment facilities, Iraq’s government foresaw development of the Bin Umar and Artawi oilfields (with a combined capacity of 9 billion barrels), construction of export infrastructure and a gas processing plant with a daily capacity of 1 billion cubic feet.

The government wants to increase daily production at the Bin Umar and Artawi oilfields from 40 to 500 thousand barrels and use the resulting proceeds to finance construction of the remaining infrastructure.

During the first phase of the project, its daily capacity for water treatment would reach 5 million barrels with the prospective to be expanded to 7.5 million barrels later. The project is estimated to cost $53 billion. It will supply seawater to Rumaila, Zubair, West Qurna, Majnoon, Halfaya and Maisan oilfields.

According to the latest information, the project may be awarded to a consortium consisting of ExxonMobil and PetroChina. Under the most optimistic scenario, a contract will be signed this year and the first phase of CSSP/SIIP will be complete no earlier than 2023.








Similar articles

Strategy
Oil Journal | 347 (May-June 2019) 2019 | Turning on the Water Taps
2019-07-01 13:48

In order to increase oil production, Iraq will have to resolve its water access problem.read more

Strategy
Oil Journal | 340 (November 2017) 2017 | “We are back to reality”
2017-11-28 10:25

On October 17-19, Energy Intelligence and The New York Times co-hosted the 38th Oil & Money Conference in London. Oil Journal offers key quotes from t...read more

Society
Oil Journal | 338 (August 2017) 2017 | Where there’s water, there’s life
2017-09-16 20:24

LUKOIL sponsors water network for villages in Southern Iraq.read more

Business
Oil Journal | 342 (July-August 2018) 2018 | Keeping up with Iraq
2018-07-31 15:38

Social unrest didn’t disrupt output from the major oil fieldsread more