Oil fields burning in Kuwait
and installing new pumps and laying down four marine pipelines. Work on the project will take place in four phases and in the first phase five tanks will be operated in the north farm, which will increase the company’s storage capacity by 3.4 million barrels and export capacity by 0.32 million barrels per day. As well as identifying and exporting new sources of oil the company is also keen to increase its gas exploration activities. In 2005 gas was discovered in the deep Jurassic reservoirs at several fields across the country including Rahiya, Mutriba and Um Niga fulfilling the country’s goal of being self sufficient in gas for use in power generation. Al-Sumaiti says this discovery represented a major milestone for KOC “The discovery in SA-153 opened the avenues for exploring the North Kuwait Jurassic interval. A long-term testing of the well through EPF (early production facility) enabled us to assess production sustainability and reservoir behaviours. Subsequent wells confirmed the value of the test. Similarly UN-01 was the first commercial gas/condensate discovery in Kuwait within Jurassic formations and this has boosted the gas exploration in the country.” He goes on to say that the discovery allowed the country to fulfil a long-held goal of becoming self-sufficient in gas which could then be used for power generation: “The results allowed KOC to change its strategy towards gas exploration and since then all steps are at hand to deliver Khaled Al-Sumaiti gas to the nation.” KOC now hopes to discover further sources of gas in Jurassic formations: “The potential exists in Jurassic and deeper Paleozoic reservoirs which have the promise to offer further discoveries,” says Al-Sumaiti. “The entire North Kuwait region offers the potential for further discoveries.” Earlier this year it announced it had officially commenced production of free gas from gas fields discovered in North Kuwait and that gas production from the country was expected to reach 175 milion cubic feet per day. The company has also signed a contract with the
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Italian company, Snamprogetti to build a gas booster station in the South East area of Kuwait which will be the main source of clean energy in the country and will produce 500 million cubic feet of gas a day. While KOC has ambitious targets for increasing exploration and discovering further sources of gas, like all energy companies it faces significant challenges from rising costs, fluctuating oil prices and a shortage of skilled manpower. In the fight to recruit sufficient staff Middle East based oil and gas companies have been forced to raise employee salaries. Coupled with the rising cost of materials for both upstream and downstream activities and the pressure to dig deeper for more oil, the industry is operating in difficult conditions. Listing what exploration costs have increased, Al-Sumaiti, says: “Exploration of unconventional traps requires specalised studies, man and material costs in the industry have gone up, there are deeper targets and HPHT environments coupled with H2S require specialised equipment and hence has additional costs.” These factors could pose challenges to KOC’s 2020 Strategy, which has the theme, ‘Unlocking the Potential of KOC’. The 2020 Strategy has seven main objectives: To develop Kuwait’s hydrocarbon reserves, infrastructure and operational capability; to maximize reserves using exploration, integrated reservoir evaluation and technology; increase production of gas resources; ensure the health and safety of its people; be an early adopter of the latest technologies; develop a skilled, competent and motivated workforce; be a performance-based and customer-focused organisation. Al-Sumaiti says he does not believe that rising costs and increased pressure to increase exploration activities will jeapordise the company’s 2020 Strategy because the company believes in taking a long-term approach and not reacting in the short-term to market conditions. “KOC is working according to a long-term strategy,” says Al-Sumaiti. “This is updated every fi ve years so we are not reacting to the market.” Another major part of KOC’s strategy is to ensure that it operates in an environmentally friendly way to minimise the impact its exploration activities on the environment. Al-Sumaiti says the company will achieve this through a combination of factors: “Minimised drilling footprint, proper handling of the drilling mud and limited flaring during tests.” He is aware that the road ahead for KOC’s 2020 Strategy will be fraught with challenges on many different levels. However if the company’s resilience in the face of war is anything to go by, its success will be assured.
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