New prospects in KuwaitOctober 25, 2019
Emad Al Sultan, CEO of Kuwait Oil Company (KOC), talks to TOGY about how the company plans to reach Kuwait’s oil and gas production targets, advances made at the Jurassic field projects and the modernising technologies and recovery techniques being implemented in the market. KOC undertakes exploration, drilling and production of oil and gas in Kuwait.
What steps is KOC taking to reach the country’s ambitious oil and gas production targets?
KOC is implementing its oil and gas production growth strategy through an aggressive capital expenditure plan in order to continue supplying the energy needs of Kuwait and the requirements of our international customers. In the last few years, such capital expenditure averaged slightly over USD 6 billion per year, and in the current fiscal year, 2019/20, KOC is investing USD 8.6 billion. This figure will total USD 50 billion for the period 2021-2025.
Several projects are under construction and some are in engineering phases, and we expect to commission them within the next five years. These include three new gathering centres in the North Kuwait (NK) asset and the South and East Kuwait (SEK) asset. Two gathering centres were commissioned last year in North Kuwait.
KOC’s current oil production stands at slightly over 2.7 million bopd, following the OPEC production agreements. Our current target is to produce 3.2 million bopd within the next five years. We also expect to increase KOC’s non-associated gas production capacity from the current 500 mcf [14.2 mcm] per day to approximately 900 mcf [25.5 mcm] per day by 2023.
What are the most important tenders launched by KOC over the last year?
Among the several tenders that have taken place, I would like to highlight two important contracts signed recently. Firstly, there is the drilling of exploratory and development wells to start the offshore development, signed with Halliburton, and secondly is the construction of a gas export pipeline from NK to the MAA [Mina Al Ahmadi] Refinery, signed with Larsen & Toubro. These are the key tenders to be underscored over the last year.
What are the country’s latest upstream developments, and what opportunities or challenges has KOC encountered in these?
KOC is doing intense work on exploring and developing new fields so the oil and gas production capacity can be maintained and increased. We expect to incorporate oil and gas production within the upcoming five years from several new prospects in all assets. The oil and gas production contribution from new prospects is critical to achieving our production targets in the medium and long term.
Some of those prospects are deep and with high hydrogen sulphide content, which has made their development more complex, but we are confident that KOC professionals have the technical capabilities to deal with these and other challenges that may arise. We also have the support of excellent service companies that will continue working with us to tackle the challenges we will confront to develop these new prospects.
We also have high expectations for the offshore development. We recently signed a contract with Halliburton to drill six exploratory and development wells in the offshore; such drilling activity will start as early as 2020 and it will last for three years. Further offshore development could add important volumes to boost KOC’s oil and gas production. However, it is still too early to have an accurate estimation of such volumes.
How are developments of light oil and non-associated gas from Jurassic fields advancing?
KOC continues to successfully develop light oil and non-associated gas from Jurassic reservoirs located in North Kuwait. The level of challenges is high since those reservoirs are very deep and contain high concentrations of hydrogen sulphide. Nonetheless, in fiscal year 2018/19 KOC increased its production capacity to over 170,000 bopd of light oil from a previous level of 70,000 bopd, and to over 500 mcf [14.2 mcm] per day of non-associated gas from the previous 200 mcf [5.66 mcm] per day.
Furthermore, due to its production increase, a new segregation of Kuwait Crude was created, named Kuwait Super Light Crude, of which the first export cargo took place on July 1, 2018, contributing to the diversification of the crude oil mix for exports.
Further expansion of capacity to produce both light oil and non-associated gas is taking place with the commissioning by year 2022 of the new Jurassic Production Facilities, JPF 4 and 5. Each of them will have the capacity to handle production of 160 mcf [4.53 mcm] per day of non-associated gas and 50,000 bopd of light oil, providing a significant contribution to increasing the overall production capacities of our company.
What modernising technologies and recovery techniques are being implemented to ramp up Kuwait’s production rates in brownfields?
One of the biggest challenges that KOC currently confronts is to maintain and increase production capacity in our mature reservoirs, as the pressure of the reservoir decrease for natural depletion, and the water content increases in the produced oil and gas flow. Several projects to implement secondary recovery through water injection and enhanced oil recovery through chemical injection are underway.
New water injection plants in NK and SEK were commissioned to increase the recovery factor from their reservoirs. Additionally, new water handling facilities have been set up in all the assets to manage the increased amount of produced water. The third train of the Wara Pressure Maintenance Project in SEK will be in operation in 2021.
Regarding enhanced oil recovery, several pilots on chemical and miscible gas injection are in place to test the feasibility of their application for full field development. Two pilots are already signed testing polymer injection and miscible gas injection, and they are expected to be completed by 2021 and 2023, respectively. Another two chemical injection pilots are planned to start next year and expected to conclude by 2023-2024.
What plans has KOC set in place to further enhance Kuwait’s heavy oil production?
An extensive number of wells to develop heavy oil were drilled in previous years in South Ratqa, and we expect to commission a new central production facility to handle heavy oil production by the end of this year. The commissioning of this new facility will add 60,000 bopd of heavy oil to the KOC production mix, reaching a total of 75,000 bopd of heavy oil production. This heavy crude will be sent to the new Al Zour Refinery to produce high-quality low-sulphur fuel oil for power generation that will fulfil the energy needs of Kuwait.
Could you identify the key milestones found within KOC’s Plan of Action for 2019/2020 and beyond?
KOC’s strategy is set to keep positioning the company as a reliable and world-class oil and gas producer, key to supplying the energy needs of Kuwait and the requirements of our international customers.
Significant capital expenditures will be required to sustain our current positioning, estimated at approximately USD 50 billion for the next five years. Those capital expenditures include the development of secondary and tertiary recovery methods on existing reservoirs and the development of new fields that will result from an extensive exploratory effort. It will also include the further development of non-associated gas and heavy oil reservoirs, as well as the initiation of offshore activities.
A strong focus will continue on the optimised use of resources across all of KOC to keep operational and capital expenditures as efficient as possible, placing emphasis on delivering projects on time and with strict cost control, while at the same time performing our operations with the highest safety, security, environmental and health standards.
All of these oil and gas production growth objectives will be achieved as long as we continue providing our Kuwaiti professionals with attractive career development opportunities so they are prepared to tackle the challenges of the future.
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