Operating consortium boosts production from giant Iraqi oil field 10%; targeting 1.2M barrels per day within 6 years
05 December 2010
Eni announced the first production milestone under the Zubair Technical Service Contract (TSC) with Iraq’s state-owned South Oil Company (SOC). Eni, with a 32.81% share, is the lead contractor of the consortium formed for the redevelopment of the giant Zubair field (Eni puts the recoverable reserves at more than 6 billion barrels of oil equivalent), near Basra in southern Iraq.
Other partners are the Iraqi Missan Oil Company (25%), Occidental Petroleum Corporation (Oxy, 23.44%) and Korea Gas Corporation (Kogas, 18.75%).
The Zubair field production rate has increased from approximately 183,000 barrels of oil per day—the initial production rate on the TSC effective date of 18 February 2010—to a sustained rate of more than 201,000 barrels of oil per day (the minimum required production rate to trigger cost recovery). With this successful increase in production, the consortium’s contract cost recovery commences, with the group additionally earning a Remuneration Fee of $2 per barrel on incremental oil production.
Eni said the increase in production is the result of the close cooperation and coordination between the Zubair Field Operating Division (ZFOD), which has been formed by the consortium in cooperation with SOC to operate the Zubair field. ZFOD is staffed mainly by employees from Iraq’s South Oil Company with expert support from the consortium.
The consortium plans to increase production from the Zubair field to 1.2 million barrels of oil a day, representing an increase of nearly 1 million barrels of oil per day. Target production is expected to be progressively reached within the next six years and maintained for seven years thereafter.
It is nice to see what is done under ordinary circumstances, but why is not more effort being spent to increase the production faster? It is actually wartime, and in wartime Germany, half the gasoline was comming from coal after only four years of war. Obviously there is no chance of reaching peak oil production in Iraq any time soon, and as long as there is money and coal, there will be no peak liquid fuel production anytime soon.
China is abandoning at a rapid pace the use of petrochemicals for the more cost effective coal derived chemicals in the face of continuing artificially high cost petroleum products. The failure to bring about rapid production in Iraq is just one of many causes of the artificially high cost of petroleum products. The lobbies against Nuclear power and coal power and energy is a major cause. What money supports these lobbies even without their knowledge?
If all of the wastes and spills of the oil industry were considered, it is doubtful that a coal to liquids factory could be justly accused of putting more CO2 into the air for the same amount of energy delivered to the tanks of automobiles, and certainly there would be no massive floating oil spills. The factories also have the option of carbon dioxide capture. How many oil tankers or pipeline pumps capture the carbon dioxide that they produce, and what about the oil spills everywhere that bacteria is converting to CO2 or to the more damaging methane.
The US could have liquid automotive and airplane fuels made from coal at less than $1.00 a gallon production costs. The average price received for a ton of coal in the US by Peabody energy is about 20 dollars a ton. A ton of coal produces about as much energy as three barrels of oil, so the energy cost is about seven dollars a barrel or less. This is less than twenty cents a gallon. Waste coal not suitable for shipping can be had at the mine for far lower costs even and made into the best diesel available. The rest of the cost is in the building and operating of the factories.
..HG..
Posted by: Henry Gibson | 05 December 2010 at 09:50 AM
Oil and Coal lobbies do not always see eye to eye. What is good for one is not necessarily good for the other. In the end, we will get oil produced by the strongest lobby. For the last century or so, oil lobbies have won. Who will win in the near future...coal lobbies, corn lobbies, NG lobbies, shale gas lobbies, ethanol lobbies, butanol lobbies, other bio-fuel lobbies etc etc?
The same lobbies war is going on with regards to e-energy production. Coal fired power plants lobbies have won for the last century or so. Will that change in the near future? Will nuclear lobbies rise to the task? Will Wind lobbies get stronger? Will clean Solar power lobbies beat them all?
Lobbies rule USA and are not ready to give up. We will get whatever they want us to get. USA is crumbling from within at the hands of very powerful lobbies. WE THE PEOPLE has lost its meaning. Flower Parties financed by interested lobbies have replaced them.
Posted by: HarveyD | 05 December 2010 at 10:26 AM
Despite the leftist propaganda of "War for Oil", Iraqi Oil production has yet to return to pre-war levels.
It is getting there now, that "Peace",or at least the absence of violence is breaking out.
Furthermore, America has let Iraq award production contracts to the World's Oil firms without restricting them to American Oil companies. Iraq can be the World's second largest producer of conventional Oil.
That is from known and (formerly) producing fields. Not to mention the enormous Oil finds, in Shiite and Kurdish areas, that had never produced before.
Iraqi production has been off-line for more than a decade. As it returns, Oil will be in a surplus capacity situation for a decade or two, restraining Price increases, and/or precipitating another Oil Price collapse.
Posted by: Stan Peterson | 05 December 2010 at 12:03 PM
Iraq is believed to have the second largest reserves in the region behind Saudi Arabia. Iraq's oil fields have been neglected for most of the years under Saddam's rule, so now they can be brought back online, if the security concerns can be addressed after all these years since the U.S. invasion.
Posted by: SJC | 07 December 2010 at 02:09 PM
It is actually in America's best interest for Iraq to develop its reserves. Not only will it enable Iraq to raise revenue to provide for its own security to allow US forces to get out, but they will also want to spend money on improving their country and buy arms from the US to protect themselves from Iran. It will weaken OPEC a little, and devalue oil from Venezuela as well.
Here's an excellent recent article on Iraq's current oil situation...
Iraq's Oil Patch Opens the Spigot
http://online.wsj.com/article/SB10001424052702303467004575574142765620652.html?
Posted by: ejj | 07 December 2010 at 06:00 PM