Water Injection Problems Reducing Southern Oilfields Pressure, Says US Report

The periodic failure of the two 48in pipelines supplying injection water for the southern oilfields is the main factor behind falling pressure, the April quarterly update report to Congress by the US State Department said. The system for water injection is comprised of the Qarmat ΄Ali water treatment plant, two 48in pipelines to transport water to the various field locations and cluster pump stations to inject the water into the formation. “Although the water treatment plant and six of eight cluster pump stations are operational, the system has injected only minimal amounts of water due to the frequent failure of the 48in water pipelines,” the report said. Meanwhile attacks on the northern crude pipelines have halted the export of crude oil via Turkey, and the shipment of crude from Kirkuk to Baghdad, limiting northern crude production to the amount that can be refined at the Baiji and Kirkuk refineries (280,000 b/d) and shipped to Baghdad via truck (20,000 b/d).

The report said that the impact of these problems meant that crude oil production and exports in the first quarter of 2005 remained little changed from the last quarter of 2004, although well below September 2004 levels. It added that continued attacks on the northern crude pipelines and the almost complete outage of the 22in product pipeline that is used to transport products from the Baiji refinery to the Baghdad area precipitated a near crisis in fuel availability for the Baghdad area during the month prior to the elections. However, increased imports and the utilization of truck convoys to move crude and products throughout the country averted a potential crisis and product supply is now at adequate levels.

The report criticized southern area contractor Kellogg, Brown, and Root (KBR) for a failure to adequately control and report costs and said that KBR’s response on the issue was awaited. In general terms, it noted improvements in the way that state-owned companies were working with foreign contractors whereby selected projects had been structured to provide engineering, procurement, and technical support during construction and commissioning through the foreign contractors, while the operating companies provided the labor and equipment for the construction. “This collaborative approach has afforded the program the funds to complete more Gas Oil Separation Plants (GOSPs) and wet crude treatment facilities. This approach has allowed the oil sector to increase the number of de-salter units to be installed at GOSPs in the south from three to six. Efficient operation of the de-salter Units will increase the market value of the produced oil by up to $10/B,” the report said.

1Q Progress Report And Prospects For 2Q

The report said that since the last update was published in January, construction and commissioning of the Bai Hasan South 100,000 b/d GOSP had been completed and work had been started on the revamp of the Bai Hasan North GOSP. The revamped unit will process 100,000 b/d of wet crude oil as compared to the current capacity of 45,000 b/d and should be completed in July 2005.

The study said that there had been no reportable progress on the Qarmat ΄Ali cluster pump stations project, with commissioning of the final two cluster pump stations delayed due to electrical problems and failures of the water pipelines. As a result, Qarmat ΄Ali pressure maintenance has been upgraded to an approved task order. “The first phase of this project will assess and repair the 48in pipelines that transport water to the cluster pump stations. This priority project is tentatively scheduled for completion in December 2005,” the report said.

The study went on to say that procurement of the long-lead equipment for the $135mn NGL/LPG project in the south, designed to increase LPG production from the current 1,200 tons/day to 3,000 t/d and supply additional dry gas to the pipeline system had commenced with completion scheduled for late 2006.

Looking forward to the second quarter, the report said several projects were under review and were expected to be added to the work program, including engineering assistance and critical spares for the North Gas second gas train, and engineering assistance and critical spares for the East Baghdad field. As well as the finalizing of remaining projects worth $323mn, construction is due to start on the NGL/LPG projects detailed above, well workovers ($37mn) and the Qarmat ΄Ali water pipelines ($26mn). In the north, the program will focus on the pipeline crossing of the Kirkuk canal/Al-Fatha river ($66mn); repair of two gas-turbine generators switchgear ($6mn); two GOSPs ($16mn); two gas compression plants ($10mn) and procurement of $24mn worth of equipment including equipment and spare parts for drilling rigs.

Iraqi Crude Oil Production And Exports, December 2004 – February 2005

(Mn B/D)