http://www.energybulletin.net/29479.htmlThe Kurds want "maximum" control of Kirkuk and all other fields — discovered or not — in their autonomous area. Their stance is a significant roadblock to passage of the draft. There is a proposed Kurdish Petroleum Law, and the Kurds have already signed PSA agreements with several smaller oil companies, including Norway's DetNorske Oljeselskap (DNO), who are developing the Tawke field. Wood Mackenzie believes Kurdistan is a region to watch in 2007 —
The Wood Mackenzie report states that the region is largely unexplored but there are five oil fields and two non-associated gas fields within its borders.
Brown said: "Speculative estimates for total reserves potential of the region are between 12 billion and 45 billion barrels of oil, and 100 tcf of gas, which would put Kurdistan on a par with prolific producing regions such as the Caspian and North Sea. Whilst this may be over-stating its potential, there remains a high probability of significant discoveries."IHS Energy also remains optimistic.
“The market has not had access to this level of data and analysis on Iraq’s oil reserves and production capabilities for many years,” said Ron Mobed, president and chief operating officer of the energy segment of IHS. “Clearly, the sourcing of accurate data is invaluable in planning, negotiating and contracting for the rebuilding of Iraq’s oil infrastructure...
“In 2007, the Iraqi government is expected to launch a bid round for 65 exploration blocks and 78 fields are also to be offered for development,” Mobed added. “The Iraq Atlas will help companies evaluate these blocks and fields quickly and accurately.”
The IHS Energy study confirms the standard Iraq reserves number of 115 billion barrels, and "estimates that there could potentially be another 100 billion barrels of oil in the Western Desert of Iraq." The atlas' release now neatly coincides with Western pressure on Prime Minister Nouri Al-Maliki's government to pass the oil law. In February, 2007, the New York Times set the stage in Iraqi Sunni Lands Show New Oil and Gas Promise, stating that such estimates are "likely to have significant political effects: the lack of natural resources in the central and western regions where Sunnis hold sway has fed their disenchantment with the nation they once ruled." The Times concedes that E&P in western Iraq is many years away. The timing of the IHS Energy report is curious — the prospectivity of the western desert has long been known, and has been derisively labeled the Holy Grail of the oil industry.
A complete list of the reasons why the prospects for increased Iraqi production are dim would fill a long book. Here is a summary of two of the complex problems in the north —
* The Kurdish area does not yet include the ethnically diverse city of Kirkuk, but the regional government will likely assume control there after the referendum scheduled in December, 2007. A victory by the Kurdish factions will insure control of the Kirkuk oil field. However, exporting Kurdish oil is difficult. UPI's Energy Watch reports
A pipeline from Kirkuk to Ceyhan, Turkey, is attacked so often when it dips into Sunni areas it's considered inoperable. (Royal Dutch Shell, in partnership with the state-owned Turkish Petroleum Corp., wants to build another more direct pipeline.)
Almost all Iraqi exports come from the Basra area in the south. Kurdistan is landlocked (see the graphic above). With its main export pipeline out of service, the Financial Times (Iraq’s Kurds to go it alone on oil deals) tells us how the Tawke oil will be transported —
DNO, the Norwegian oil company that has signed one of the five existing contracts with the Kurdish government, expects to produce the first new oil out of Kurdistan, and for that matter Iraq, in May. It has provisions to truck as much as 10,000 barrels a day, but even 20,000-25,000 b/d would be possible, though logistically difficult and about 10 times more expensive than moving the oil by pipeline.
Turkish cooperation in exporting Kurdish oil is uncertain. Turkey opposes an independent Kurdistan and the annexation of Kirkuk.
* Iraq's northern oil fields are old and damaged. The supergiant Kirkuk field, where production began in 1927, has a high water cut, which the EIA attributes to overpumping. The forecast recovery factors are dropping. Oil Experts See Long-Term Risks to Iraq Reserves (New York Times reprint, November, 2003) reports that —
Fadhil Chalabi, a former top Iraqi oil executive now based in London, said Kirkuk's expected recovery rate had dropped to 15 percent from 30 percent. An American oil executive said Iraqi engineers recently told him that they were now expecting recovery rates of 9 percent in Kirkuk...
Before the American invasion, the Iraqis mistreated the Kirkuk oil field. From the EIA —
In addition, some analysts believe that poor reservoir management practices during the Saddam Hussein years --including reinjection of excess fuel oil (as much as 1.5 billion barrels by one estimate), refinery residue, and gas-stripped oil -- may have seriously, even permanently, damaged Kirkuk. Among other problems, fuel oil reinjection has increased oil viscosity at Kirkuk, making it more difficult and expensive to get the oil out of the ground.
Shell is now studying the state of Kirkuk to determine what the level of damage is and how production there might be increased.
It seems an obvious point to make: Iraq will not contribute much new oil to the world's supply for many years, or perhaps decades, to come — Iraq is a failed state. SNIP
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