Going digital

Kuwait Oil Company (KOC) faces both technology and staffing challenges as it bids to ramp up output in the coming years. How the country’s NOC tackles these obstacles falls on the shoulders of Khalid Al-Sumaiti, Deputy Managing Director of Exploration and Production Development.

KOC has a 2020 strategy that includes you visions, values and objectives. What is its purpose and how are you progressing with the 2030 strategy?

KS. Now we are almost finished with the 2030 Strategy, which has been endorsed by the board. We will aim to hit four million barrels per day by 2020 and continue at this level up to 2030. But we need to focus on people because the main challenge is to have the right resources in place at the right time. We are focusing on gas more because our target is to reach one billion cfd (cubic feet per day) by 2015 or 2016. So the theme of the strategy is to focus on exploration, and make that exploration production as fast as we can. We also have targets for oil and I look at it as a challenge as because I am in charge of exploration. We will achieve this by working in coordination with other assets in the north, south and west of the country. But we are on target to meet the 2020 strategy and there has been a lot of success that we want to build on for 2030.

KOC is undertaking enhanced recovery (EOR) techniques, including water flooding. Could you give us an insight into these techniques and what they are achieving for your exploration efforts?

Khalid Al-Sumaiti. Enhanced Oil Recovery really a big part of our strategy and when we built our 2020 strategy we said that we have to focus on EOR. At this stage we have to select which reservoir and which technique we are going to use for EOR, whether it be CO2 or steam with heavy oil. So EOR is very much part of our strategy and we are working hard on it. We are also looking for a partner to work with us in this area. The water flooding started in north Kuwait and this is a very efficient at enhancing the pressure and increasing production. However, water flooding is not a complicated issue like EOR is, especially if we are talking about CO2 capturing. We have formed a steering committee to look at this in north, west and southwest Kuwait to see where we can implement EOR. We are at an advanced stage with this in north Kuwait but it is still in the selection stage right now.

The entire north Kuwait region offers great potential for additional discoveries. What are you doing to exploit this area and what are your targets for it?

KS. In 2005 and 2006, when we announced the discovery of light crude oil and gas in North Kuwait, which obviously became an attractive region for us. Recently, we announced another discovery of light crude and gas at the Mutreba field in the northwest of the country. So we are focusing on the north of Kuwait because we have a much better understanding of this area. We are trying to test other leads there too because the driver for more discoveries is the need for the government to generate electricity, especially in summer.

All our effort now, or the majority of our rigs in the north, are there to expedite and develop those discoveries, and put them in the pipeline as fast as we can in order to help our customer, the Ministry of Electricity. Because we have a discovery, the risk is low but the need is high to have gas, which is very important to us, from an environment point of view. Gas is clean and friendly for the environment unlike gas oil or crude oil. So the effort is on exploration for gas and light crude.

How do state-of-the-art technologies help in KOC's exploration work, such as geological and geophysical acquisition? Where else is technology critical in your operations?             

KS. Kuwait is a small country so we have to use the technology to overcome the challenges. It's not a big area that you can go and carry out new exploration. The country is small and the majority of it has been scanned by seismic exploration many times. So the technology will be very important, especially when it comes to depolarising. We are working with partners to do more research into better imaging for depolarising so we can use the seismic as a tool to tell us the depolarsing structure - where there is a possibility of more gas and light crude oil. We have carried out several pilors and we are succeeding in better imaging.

The other challenge we have is how we can identify the fracture because the majority of the fractures depend on the porosity or the matrix. We need to identify and map those fractures so we can drill horizontally or at a high angle. But is also a challenge to drill deep in high pressure and high temperature locations, but again we have already conducted several successful pilots. So technology is needed to locate an area and once a prospect is identified you need technology to develop it because you need specific tools in these pressures and temperatures. Even with drilling, you are talking about more 20,000 feet deep so there will always be a limitation with available technologies. This is why we are always doing research into new technologies with our partners, be it a university, an institute, IOC, or service provider.

How will your Oil Exports Facilities Project boost production and KOC's export capacity?

KS. Whilst being focused on finding oil, you also need to think about your gathering centres and facilities. And if there are limitations at your export facility then there will be bottlenecks. So we have increased the number of storage tanks and transit lines so that we can now export three million barrels from our existing export facility. This is part of a big project we completed to upgrade the export facility, whilst we also upgrading all existing gathering centres.

Although oil is your primary concern, how important is gas to KOC's operations and how much potential do you see in Kuwait?

KS. In the 2020 Strategy, there was a target, an objective to discover and to produce gas - the target being four TCF (trillion cubic feet). We have over-achieved that target, when we discovered North Kuwait's Jurassic fields.   Now we are working to build another target in order to meet the country's needs because gas is the top priority in our activity, whether it is in exploration or in development. With gas, as soon as you produce it you have to market it - you cannot just store it. It's similar to oil in that respect. So although KOC is known as an oil producer, we are focusing more on gas and as I said before, the driver behind this is the environment and the need to use clean fuel for generating electricity. It also makes sense for us to produce gas from an economic point of view because in the summer we sometimes have to use diesel, which is very costly. So we need explore for and find more gas as soon as we can and get it into production.

For years, the oil and gas industry worldwide has suffered from a skills shortage. How has KOC been affected by this and which areas of the company have been affected the most?

KS. This is an excellent question. When the oil prices got to more than US$140 it was difficult to find the right skills. Then the recession came in he fourth quarter of 2008 and there was an opportunity to get some skills. So it seems to be cyclic. But this cycle is affecting our business so we look at it as a long-term strategy and focus on the fresh graduates and the right number of people from the universities, train them well and put them into operation as fast as we can. We also have to keep them as resources for the country and for the future. We also need to recruit from outside because we need experts so we look to recruit from all over the world. Are we meeting the target on everything? No, we still have difficulty in this area. This is a market and good people are moving from place to place so we're thinking of ways to retain our people, especially if they are experts.

However, this is not just a challenge for Kuwait or the region - this is a problem the whole industry is facing. If you look at the average age of people in the upstream business it is 53 years. They account for 70 percent of all staff. Also, the number of people entering the industry as graduates has reduced because they choose to go into other industries like IT or law. So we have to work very closely with the universities to encourage people to go into the oil business. I think people like the SPE (Society of Petroleum Engineers) have to play a big role in this, while the IOCs need to work very closely with the universities too to ensure the right people  are attracted to go into the oil industry businesses, like petroleum or geology or geophysics. Every conference that we go to is an opportunity to share our experience and listen to other people on how they are trying to retain their staff. We think of it in the long term because you have to focus on the existing graduates and quickly get them into operation.

You say this situation is cyclical but how do you plan staffing levels and recruitment strategies alongside the volatile nature of oil prices?

KS. We have numerous recruitment campaigns where we go to the US, Canada, India or Egypt. When the industry is booming it is difficult to find people like geophysicists because there is a big need for them. When it goes the other way and oil declines to US$35 a small company cannot afford it so there are more geophysicists available. Our philosophy is that when we get good people we need to keep them in the country, make it attractive for them to stay in Kuwait, have good facilities and good working environment. We try to keep the good people. However, we don't have much flexibility on salary because we are a national oil company. Other companies can be flexible and dynamic and change salary scales in line with market conditions. We are fixed, so we try to solve this through special technical career ladders.

FACTOIDS

Kuwaiti oil was first discovered in commercial quantities in 1938

78% of Kuwait's oil is sold to non-Arab state.

The country's reserves account for 8% of the world's total