Strategic importance of heavy oil to Kuwait

Strategic importance of heavy oil to Kuwait

Apr 09, 2017
7 min read
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Pipeline Magazine’s Julian Walker got an exclusive insight into Kuwait Oil Company’s heavy oil strategy and why the resource is seen as such a strategically important resource for the sustainability of Kuwait’s oil industry

Deputy Chief Executive Officer, (North Kuwait Directorate), of Kuwait Oil Company,
Badria Ali Abdul Rahman

How does the development of heavy oil resources fit into KOC 2030 strategy?
The strategic plan of Kuwait Petroleum Corporation (KPC) and its subsidiaries, “2030 strategy”, lays out an ambitious future to explore, develop and produce oil and gas at a greater scale and complexity than at any time in the history of the Kuwait. The aim is to increase the strategic production target of Kuwait to 4 million barrels of oil per day, of which the 11 per cent will be achieved by developing the heavy oil resources in the North Kuwait Directorate.
 The heavy oil resources are pivotal for the sustainability of Kuwait’s oil industry, and one of the strategic development objectives for the country.
The development of the heavy oil resources have been planned in two phases:
•    Phase I, known as “Building capability” phase, to build a strategic capability to produce 60 MBOPD, from 2018/19, maintaining it afterwards.
•    Phase II, known as “Gap Filler” phase, to grow KOC’s heavy oil production to 270 thousand barrels of oil per day by 2030.
How has the low oil price environment impacted KOC’s heavy oil ambitions?
As KOC’s heavy oil projects are classified as strategic projects, the development of heavy oil has not been impacted by the low oil price.
The key to success for KOC is its rapid adaptation to global changes, taking strategic decisions in a timely fashion.
Using a mixed workforce supported by IOCs and service companies to support and help KOC become self-reliant, we have involved strategic partners in helping us adopt new technologies. The low-price of oil affects all producers and partners in our sector. The approach of KOC to tackle this situation has been a balanced one, optimising costs in the current operations and projects, while maintaining the level of investment in strategic projects with a long-term vision.

Is KOC maintaining the investment levels in the heavy oil projects?
Yes. As KOC is proactively allocating resources based on key long-term projects, in advance of business needs, and in alignment with overall company’s priorities and objectives, we are maintaining the level of investment in heavy oil development projects.
Kuwait is destined to remain a pivotal force amongst the oil exporting nations. Our national plans are aimed to maintain Kuwait’s solid rank as the seventh largest oil-exporter country.

What are the main opportunities and challenges facing KOC’s heavy oil projects?
Our main opportunities come from the decision of maintaining the level of investment in heavy oil projects, which triggers our sustainability into the future.
The biggest challenges, given the complexity of the heavy oil operations, are the management of costs, the energy consumption optimisation and enabling long-term sustainability. A special challenge is to overcome the scarcity of experienced human resources. Our aim is to ensure the competency development of the young Kuwaitis, as they will be handling the future in the oil sector of the State of Kuwait.

What can attendees at MEHOC expect to hear from KOC at the Congress?
We will showcase our recent progress in the development of heavy oil in Kuwait, covering the following topics:
•    Heavy oil development history in Kuwait
•    KOC heavy oil production strategy and targets  
•    Ongoing piloting programs and projects in South Ratqa heavy oil field   
•    KOC HO phase I commercial project
•    Overview on a new explored heavy oil at Umm Niqa Field.
Manager Fields Development (Heavy Oil), of Kuwait Oil Company, Ibrahim Abdulla Al-Sammak

What technologies are you implementing in your heavy oil development and production projects?  
Putting always in mind the expected oil price fluctuations and the high cost associated with heavy oil development, KOC has launched several pilot programs to assess the more efficient exploitation strategies for our heavy oil which always consider the environmental impact, in addition to focusing on technologies that  will lead to higher recovery with efficient costs. We are evaluating the reservoir response to cold flow in horizontal wells, cyclic steam stimulation, and steam flood. The pilots consider vertical and non-conventional wells, different schemes and spacing. Various new artificial lifts were tested. Additionally, different steam monitoring technologies were tested such as 3D VSP (Vertical Seismic Profile) which was designed in a worldwide pioneer approach for shallow reservoirs. Other initiatives I want to mention are the application of solar energy to generate steam and co-generation, to substantially increase the efficiency of the system.
However, the heavy oil resources in Kuwait are wide, and with a complex fluid distribution. Hence, it is unlikely that a single recovery process would ideally suit our targets, and we will keep conducting pilot projects to assess the best way forward.

Can you provide an update on the Lower Fars Heavy Oil Project?
On January 2015 Kuwait Oil Company (KOC) awarded contracts for US$4.1 billion, to execute the engineering, procurement and construction  (EPC) of the Lower Fars project.
The project encompasses a comprehensive set of segments, from upstream to downstream. It includes a steam injection facility, a central processing facility (CPF), a production support complex, a tank farm and pipelines. It is worth mentioning that a novel water treatment plant, and hazardous waste disposal treatment plant for water effluent is being considered in the design. As the water supply inlet pipeline to the CPF from Utilities Development Company’s Sulaibiya water treatment plant, will utilise the reject water into the sea, to be as the source water for the steam generation. The project is currently in the detailed engineering and construction phase. The expected turnover is scheduled for May 2019.

What opportunities do you see for IOCs and technical service providers to get involved in Kuwait’s Heavy Oil Projects?
KOC acknowledges the special nature and complexity of working on heavy oil development projects, which definitely require a skilled workforce, not yet available as this is the first project of its kind in the company’s history.
We have established an Enhanced Technical Service Agreement (ETSA) with Shell, as a strategic initiative to develop the heavy oil resources of Kuwait along with intense focus on Kuwaiti staff development who are working closely with Shell technical staff. It is aimed to provide technical advisory support and assist in enhancing the production efficiency through technology and knowledge transfer.
Our ETSA with Shell is already providing early wins, particularly for the optimisation of the development plans, in which we have to match tough production targets in tight timeframes.