Chevron Ignites Steamflood Injection in Saudi

Back in March, Ghawar Guzzler posted a snippet about Chevron embarking on a steamflood injection pilot program in Saudi Arabia's Wafra Field, located in the Neutral Zone, to see if it can unlock potential tens of billions of oil trapped in the Middle East. Now, Chevron announced the program is underway...

The $340 million LSP, which is the final test phase for the steamflood project, is expected to lead to full-field steamflooding of the First Eocene reservoir, marking the first commercial application of a conventional steamflood in a carbonate reservoir anywhere in the world.

"Full-field deployment of steamflood technology in the PNZ would significantly increase recovery of crude oil reserves, confirm the technology's potential applicability in other carbonate oil fields and build on Chevron's steamflood capabilities that date back five decades," said George Kirkland, executive vice president, Chevron Global Upstream and Gas.

The LSP is the third in a series of staged tests to validate the feasibility of applying the enhanced oil recovery technology of steamflooding to unlock the producing potential of the heavy Eocene oil of the PNZ's carbonate reservoirs. Previous tests included the Small Scale Test (SST), which was successfully completed in 2008, and simple steam stimulation testing, conducted in the late 1990s.

Steamflooding involves injecting steam into heavy-oil reservoirs to heat the crude oil underground, reducing its viscosity and allowing its extraction through wells.

Chevron has successfully employed steamflooding to produce heavy oil from sandstone reservoirs at Kern River, Calif., for more than 40 years and at
Duri in Sumatra, Indonesia, for 25 years. The company is recognized as the world's leader in steamflood technology.

- Brewskie

Saudi Gaining Jerry Falwell Appetite for Offshore Crude

The oil kingdom evidently is getting a little "Petrobras envy:" it's got big plans to ramp up offshore production by 20%, and its been signing up platforms (link)...

In fact, the NOC holds the world's largest offshore field, Safaniya, with an estimated 20 billion barrels of oil and daily production of 1 MMbopd. Other major producing offshore fields for Saudi Aramco include Zuluf, which has a daily production capacity of 500,000 bopd, and Marjan, which produces 270,000 bopd.

In a five-year plan starting in 2009, Saudi Aramco is increasing drilling exploration and investment in the oil sector, which includes increasing drilling by a third. A priority has been placed on offshore areas, and the company is presently investing in an effort to increase production capacity by 20%. That includes both development to achieve first production and re-development of producing fields. Major upstream projects include works on offshore fields Berri, Zuluf and Safaniyah. Also under development, Manifa is expected to hold between 10 and 20 billion barrels of oil and is scheduled to come on-stream by the third quarter of 2011.

Saudi Aramco has not always been very active offshore or focused on its offshore resources. At the start of the decade, the NOC only had one rig working in the waters offshore Saudi Arabia, and it was a rig that the company owned. That number increased over the next year to four rigs by the close of 2001. Following that pattern of increased offshore activity, the number of rigs Saudi Aramco contracted from 2002 through mid-2005, continued to increase with nine rigs contracted in June 2005.

By the close of 2005, Saudi Aramco had 16 rigs contracted, and that number continued to increase. By mid-2007, the company had 23 rigs contracted for work.
Through 2008 and into the start of 2009, the number of rigs increased further, with Saudi Aramco's contracted rig count peaking at 29 rigs in January of this year.

[...]

Looking forward, the total number of jackups contracted by Saudi Aramco slips to 19 by the close of 2009. In 2010, the average number of rigs the company has contracted is 17, and 2011 starts with 15 rigs contracted so far.

Although the company has not signed new contracts as of late, the length of Saudi Aramco contracts is significantly longer than the typical jackup rig contract. In fact, the worldwide average contract length for all currently ongoing jackup contracts is 857 days. In contrast, the contracts Saudi Aramco has signed since 2008 are an average of 1,115 days long, which is 258 days, or 30%, longer than the current worldwide average length.

Taking into account that jackup contracts are shorter in the Gulf of Mexico than other areas of the world, the worldwide average jackup contract length is 917 days if you disregard the GOM jackup contracts. Nonetheless, Saudi Aramco contracts remain 198 days, or 22%, longer.Furthermore, the number of contracts signed in the last year has dwindled, but that may be part of a strategic pattern, rather than a lessening in activity. The only contract signed by Saudi Aramco in the last twelve months was an extension of the already contracted Arch Rowan. This is in contrast to the number of contracts signed in 2008, which were six. Prior to 2008, Saudi Aramco had signed just one new offshore rig contract in 2007, but had signed six new contracts in 2006.

If this pattern of a busy year followed by a slow year continues, the company may be ready to sign a number of new contracts at the start of 2010. Given that the company has openly expressed its plans to increase production and focus on its offshore fields, as mentioned above, it seems likely that Saudi Aramco will be launching rig tenders and signing a significant number of new contracts or extending existing contracts in the relatively near future.

Since the King of Peak started screaming like the King of Pop, back in 2003, about Saudi's upcoming oil collapse, I wonder how such oil prospects reflects on his sanity? Hey, according to him, we're still in big trouble in respect to natural gas. Too bad the difficulty of labeling someone legally insane becomes apparently more difficult with each million made...

- Brewskie

Chevron Looks to Unlock Massive Middle East Oil Reserves

Chevron is pumping hard work and money to prove there's a lot more oil out there to pump than some critics give credit - and they're doing it in the Middle East, in the neutral zone, sandwiched between Kuwait and Arabia.

From the Financial Times:

Chevron, the second-biggest US oil company, will in the next few months begin large-scale testing of a production technique that could unlock tens of billions of barrels of reserves across the Middle East.

The technique, for producing heavy oil that cannot be extracted using conventional methods, will be used in the partitioned neutral zone between Saudi Arabia and Kuwait.

[...]

Chevron revealed last month in its annual filing to the US Securities and
exchange Commission that the neutral zone deal had contributed “the majority” of
a 384m barrel increase to the proved oil reserves of the consolidated group.

Without that contribution, additions to its proved oil reserves last year would have fallen well behind the consolidated group’s production of 520m barrels.

Chevron, which makes its annual strategy presentation to analysts on Tuesday, now hopes to add much more than that in reserves of heavy oil that it has not previously been able to extract.

The additional oil accessible in this way could run into the billions of barrels in the neutral zone alone, and there are potentially much larger reserves in both Saudi Arabia and Kuwait.

[...]

Chevron is experienced in producing heavy oil in California and Indonesia using “steamflooding”: injecting steam into the reservoir to warm the oil until it reaches a syrupy consistency and can be pumped out.

Those fields are sandstone, however, while the fields in the neutral zone, like most of the fields in Saudi Arabia and Kuwait, are of carbonate rock such as limestone. Steamflooding has never been used in carbonate fields, because the steam would dissolve minerals in the rock, clogging up the reservoir and the wells.

Chevron will engage in a pilot program this summer to see if problems in the Wafra field, located in the neutral zone, can be overcome.

- Brewskie

China, Saudi Arabia Team Up for Desalination Projects

Ironic: two-thirds of the world is covered with water, and only 3% is fresh water. Even with 3%, there's still plenty of water; the problem - its availability in particular parts of the world, the scarcity of clean water, or diminishing sources of water because of climate change.

China and the Middle East are remedying this by building desalination plants. Desalination isn't cheap: it's expensive, energy-intensive; but with a growing population, the availability of drinkable water is a must.

Shanghai Electric Power Generation Group (SECPG), and Saudi Arabia’s ACWA Power International recently announced a partnership to work on power and desalination projects. The article can be read here.

The two countries also singed a deal that allows Chinese companies to explore and develop oil and gas projects.

- Brewskie

New Saudi Blood to Double Spare Capacity

The Tiger Woods of oil giants is proving ever more that she's still in her prime, that she still has magic buried in the depths of those enormous fields (the Ghawar Oil Field takes eight hours to drive around!).

The mighty oil titan reports it will more than double spare capacity to 4.5 mbpd by the middle of this year. This will be achieved by bringing the Khurais project online, which will add 1.2 mbpd to reserve capacity. The article can be read here.

Saudi's target spare capacity for this is 1.5-2.0 mbpd.

- Brewskie