Iraq Oil Potential

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Iraq ranks right up at the top of hydrocarbon-rich countries worldwide with the potential to overtake any country in production, according to geological consultant Harry “Bud” Holzman. The retired Army officer and petroleum geologist has advised the U.S. Central Command on Iraq oil and gas.
 
In 2004, the Army placed CW4 Holzman in charge of evaluating the entire Iraqi infrastructure system, from oil and natural gas to electricity, including how to estimate what the country has and how to rebuild it. He was charged with looking at everything from refineries, pipelines, and electric power generation plants and also to determine the real hydrocarbon reserves of Iraq.
 
Out of approximately 87 major fields discovered to date, only 24 are producing. The others never really produced at all, yet some of these are classified as super-giant, each with over 12 billion barrels of proved reserves. He was puzzled by the small amount of oil produced from such large reserves until he talked to some Iraqi engineers. In 2004, several informed him that they were only producing enough oil to get up to their OPEC quota of 3.5 MMBO. They could do that out of just a few fields.
 
He began his assignment by looking at the available captured data. There were so many fields, and the first one he worked on was East Baghdad since he was living just west of the field. There were 1,100 barrels coming out of one well, and that was it. He started looking at all the data, and there were 16 billion barrels sitting under his feet. The field was an anticlinal structure 110 kilometers long and 20 kilometers wide and had 10 pays, Cretaceous through Miocene. The field could produce a million barrels a day, but the existing infrastructure could only accommodate 25,000 barrels.
 
After reviewing data for numerous fields and conferring with Iraqi engineers, he concluded the total amount of oil and natural gas reserves in Iraq had been vastly underestimated. He estimated with the data he had that there were 230 billion barrels for the 84 fields at the time. Since then there’s a couple of new fields recently discovered (4-7 BBO) in the Kurdish region. He started looking at natural gas reserves, especially Akkas field in the Western Desert, and calculated almost 200-plus trillion cubic feet of reserves. Most of the current gas is being flared off. He looked at the old figures (115 BBO and 100 TCFG) and asked Iraqi engineers and Oil Ministry officials what these figures were, and they said they just gave them out from years ago. They were told to say that, and no one knew where the numbers came from. One day he asked an Iraqi engineer why there were so few Permian and Jurassic tests in the south – the same reservoirs that are so productive in Saudi Arabia and Kuwait. They had so much production coming out of the Cretaceous, the engineer just said, why drill deeper. The deeper oil reserves will still be there in the future.
 
There is a huge potential for Permian and Jurassic production in the southern part of Iraq, adding that the Jurassic, Triassic and Permian in the north will also be attractive. The Paleozoic, Silurian and Ordovician, will be productive in the west. There have been several recent major discoveries in Kurdistan in the last two years. Out of the 2,500 wells (all vertical) drilled in Iraq; there are less than 30 holes drilled into the Jurassic or deeper. Most wells are less than 10,000 feet deep. There are few stratigrapic tests in the south. One day huge reserves will be found along the western margins of the Gotnia basin in southern and central Iraq, since oil migrates from east to west across the southern region.
 
A major obstacle to production in Iraq is the horrendous condition of the infrastructure. Most everything is broken or stolen, including pumping stations and compressors. Most of the water flood projects had broken down, especially in Kirkuk and the southern part of the country. The workers were re-injecting processed crude and residual oil back into the sands and carbonates because there was no other place for it. The other major obstacle is security, especially in central and southern Iraq. The security situation in the Kurdish region is considerably better. The key to Iraq is not in finding the oil, which doesn’t take a genius. A first year geologist, engineer and geophysicist could find oil in the major structural traps scattered across Iraq. In Kurdistan the geology becomes a little more complex, with plate movement and some complex faulting. There are over 400 2-D structures that have not been drilled yet. This 2-D data was accumulated by majors and the Iraq government in the late fifties, sixties and early seventies.
 
They need an oil law. In 2007, this got bogged down in Iraqi politics and that’s where it sits today – except in Kurdistan where they formed their own oil law. The Kurdish and Baghdad governments have been discussing (fighting) over the law for years. If Iraq gets its act together with a good hydrocarbon law and brings in the service companies to repair the infrastructure, there’s no reason why the country couldn’t overtake any place in the world in production.
 
To put it even more into perspective, the country is the size of Texas with approximately only 2,500 wells drilled. The recent bidding process for service contracts to develop the large fields in Iraq was somewhat a success. All of the majors wanted to be involved in the future exploration of Iraq, even it means accepting marginal terms today on the development contracts. They have the oil; they just need to get it out. It’s easy to get to, and the exploration costs are extremely low.
 
An added attraction for the rock hounds working the area: The geology is exciting. There’s glacial in the west, deltas and salt in the south, and all the way to plate tectonics in the north. Everything in geology you’ve ever learned in school, you can use across Iraq.
 
My thanks to Dr. Roy, Dr Freed and Dr Coppenger of Trinity University for preparing me for this task. There are going to be great opportunities for both major and independent oil companies to become involved in both the development of current fields and the exploration for new reserves in Iraq. Oil service companies will be needed not just to repair but also replace infrastructure and there will be a great need for up-to-date seismic and gravity surveys, given that most of Iraq hasn’t been properly explored.
When
October 21st, 2010 11:30 AM   through   1:30 PM
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