Phoenix rising

With Khaled Al-Sumaiti, Exploration Chief, Kuwait Oil Company

Today Kuwait Oil Company is a giant on the global energy stage with plans to dramatically increase its output by 2020. Eighteen years ago however the company was on its knees following the burning of its oil fields during the 1990 Iraq invasion. Khaled Al-Sumaiti, exploration chief at KOC, describes what the future now holds for the company following its remarkable recovery.

“The entire North Kuwait region offers the potential for further discoveries”
-Khaled Al-Sumaiti, Exploration Chief, Kuwait Oil Company

FEW can forget the dramatic images of burning oil fields in Kuwait when Iraq invaded the country in 1990. For the Kuwait Oil Company the effects of the war were devastating – hundreds of the country’s oil wells were set ablaze resulting in an economic and environmental catastrophe for the country. Eighteen years on however, having undergone a remarkable recovery, the company is going strong, with an ambitious strategy to fully unlock the potential of Kuwait’s hydrocarbon reserves by 2020.

Khaled Al-Sumaiti, Deputy Managing Director for KOC’s Exploration and Production Development Directorate, reflects the company’s determination to succeed against all odds when he outlines these plans: “Our goal is to face new plays and prospects in deeper settings. We plan to identify and map stratigraphic and combination traps, and explore unconventional reserves. This will involve exploring super deep targets and pushing the limits of technology and logistics in order to achieve this.”

KOC was formed in 1934 by the Anglo-Persian Oil Company, now known as the British Petroleum Company and the Chevron Corporation and first found oil in commercial quantities in the Burgan field in 1938. It is state owned by the Kuwait Petroleum Corporation, which was established in 1980 to bring all state owned companies under one entity. The company received a major boost in 2005 when it discovered super light crude oil in the Sabriya field reflecting the company’s highly successful exploration strategy and abilities. It now hopes to emulate this success through the discovery of new oil fields through speeding up the time cycle between the prospect and production phases. Describing the company’s efforts to reach this goal, Al-Sumaiti says: “The Exploration Group has minimised the time cycle from prospect to production through a holistic approach of exploratory and delineation drilling and production facilities. It is using expertise and technology to identify, evaluate and drill new opportunities in complex geological targets.”

This he says will be achieved by “undertaking integrated studies and creating static and dynamic models at exploration delineating stages to grip the uncertainties associated with new geological opportunities as well as preparing a sound platform for development of fields.”

Continuous investment in the latest technology is also a keystones of the company’s exploration strategy, Al-Sumaiti went on to say.

Like all oil and gas companies, KOC is using sophisticated 3D modeling and digital oil field techniques to increase its exploration abilities: “State of the art technologies in geological and geophysical data acquisition, interpretation and geomodeling is used on a routine basis,” says Al-Sumaiti. “Real-time data monitoring and execution, including mud logging and LWD, have been introduced for new exploration wells,” he went on to say.

To boost export of the oil it discovers the company recently announced the start of its Oil Export Facilities Project, which aims to help increase KOC production and export capacity by up to three million barrels per day by the end of 2010. Carried out in conjunction with Hyundai Heavy Industries Company, the project will include constructing 19 tanks in south and north farms, laying down new gravity pipelines, supplying and installing new pumps and laying down four marine pipelines. Work on the project will take place in four phases and in the first phase five tanks will be operated in the north farm, which will increase the company’s storage capacity by 3.4million barrels and export capacity by 0.32million barrels per day.

As well as identifying and exporting new sources of oil the company is also keen to increase its gas exploration activities. In  2005 gas was discovered in the deep Jurassic reservoirs at several fields across the country including Rahiya, Mutriba and Um Niga fulfilling country’s goal of being self sufficient in gas for use in power generation. Al-Sumaiti says this discovery represented a major milestone for KOC “The discovery in SA-153 opened the avenues for exploring the North Kuwait Jurassic interval. A long-term testing of the well through EPF (early production facility) enabled us to assess production sustainability and reservoir behaviours, Subsequent wells confirmed the value of the test. Similarly UN-01 was the first commercial gas/condensate discovery in Kuwait within Jurassic formations and this has boosted the gas exploration in the country. He goes on to say that the discovery allowed the country to fulfil a long-held goal of becoming self-sufficient in gas which could then be used for power generation: “The results allowed KOC to change its strategy towards gas exploration and since then all steps are at hand to deliver gas to the nation.” KOC now hopes to discover further sources of gas in Jurassic formations: “The potential exists in Jurassic and deeper Paleozoic reservoirs which have the promise to offer further discoveries,” says Al-Sumaiti. “The entire North Kuwait region offers the potential for further discoveries.”

Earlier this year it announced it had officially commenced production of free gas from gas fields discovered in North Kuwait and that gas production from the country was expected to reach 175milion feet per day. The company has also signed a contract with the Italian company, Snamprogetti to build a gas booster station in the South East area of Kuwait which will be the main source of clean energy in the country and will produce 500 million cubic feet of gas a day.

While KOC has ambitious targets for increasing exploration and discovering further sources of gas, like all energy companies it faces significant challenges from rising costs, fluctuating oil prices and a shortage of skilled manpower. In the fight to recruit sufficient staff Middle East based oil and gas companies have been forced to raise employee salaries. Coupled with the rising cost of materials for both upstream and downstream activities and the pressure to dig deeper for more oil the industry is operating in difficult conditions. Listing what exploration costs have increased, Al-Sumaiti, says: “Exploration of unconventional traps needs which need specalised studies, man and material costs in the industry have gone up, there are deeper targets and HPHT environments coupled with H2S needs specialized equipment and hence has additional costs.” These factors could pose challenges to KOC’s 2020 Strategy, which has the theme, ‘Unlocking the Potential of KOC’.

The 2020 Strategy has seven main objectives: To develop Kuwait’s hydrocarbon reserves, infrastructure and operational capability; to maximize reserves using exploration, integrated reservoir evaluation and technology; increase production of gas resources; ensure the health and safety of its people; be an early adopter of the latest technologies; develop a skilled, competent and motivated workforce; be a performance-based and customer-focused organization Al-Sumaiti says he does not believe that rising costs and increased pressure to increase exploration activities will jeapordise the company’s 2020 Strategy because the company believes in taking a long term approach and not reacting in the short term to market conditions. “KOC is working according to a long term strategy,” says Al-Sumaiti. “This is updated every five years so we are not reacting to the market.”

Another major part of KOC’s strategy is to ensure that it operates in an environmentally friendly way and to minimize the impact its exploration activities have on the environment. Al-Sumaiti says the company will achieve this through a combination of factors: “Minimised drilling footprint, proper handling of the drilling mud and limited flaring during test.”
He is aware that the road ahead to KOC’s 2020 Strategy will fraught with challenges on many different levels. However if the company’s resilience in the face of war is anything to go by, its success will be assured.