Rebirth of Rumaila

Just to the south of the fertile lands of Al-Qurnah, the meeting point of the Tigris and Euphrates rivers, and 60 km west of Basra in south-eastern Iraq lies a stony desert with a bleak landscape that is decorated only by oases of small shrubs, isolated sand hills and dry river beds. However underneath this wasteland lies Iraq’s biggest treasure – the supergiant Rumaila field, estimated to contain 15% of country’s oil reserves. Maxim Lyashko reports.

“Rumaila is clearly a brownfield development with a huge amount of kit in the ground and on the surface. This fact has important implications for our confidence in our ability to reach the initial production target ”
-Michael Daly, BP

Rumaila's turbulent history started over half a century ago when it was discovered by Basra Petroleum Co. in 1953. Since then the development of the field has been closely linked with Iraq's transformation into the world's major oil producer and exporter as well as with country's infamous war conflicts in the not so distant past. Oil production at Rumaila started just a year after its discovery at a rate of 20,000 barrels per day (bpd) and reached its peak of about 1.6 million bpd in 1980, which represented an astonishing 45% of Iraq's total output that year. However the subsequent history of oil extraction at this field had a cyclical nature due to numerous military conflicts starting with the Iran-Iraq War, during which the production from the field was completely halted. Moreover, it was Rumaila that became one of the main reasons for Iraq's invasion of Kuwait who were accused of using directional drilling technologies to pump oil from underneath the border and allegedly stealing US$2.4 billion worth of Iraqi crude. Finally, it was on this oilfield where the last battle of the Gulf War took place in 1991.

Bearing strategic importance to Iraq's economy, Rumaila was the first field in the country to restart production after the Gulf War; however subsequent years of UN sanctions, post-2003 violence and long-term underinvestment in Iraq's petroleum sector took their toll on the field's development. Even water injection system projects at Rumaila, which were part of US-directed aid programmes aimed at the reconstruction of Iraqi oil sector in the 1990's, have not resulted in the expected improvement, and for the past two decades Rumaila remained damaged from over-drilling and poor reservoir management.

However now all that is about to change after BP and its partner China National Petroleum Corporation (CNPC) won the right to develop the field in a historic televised auction in June 2009 and later in November of that year it formally signed a 20-year technical service contract - the first long-term oilfield development contract of the post-Saddam era.

The workhorse of Iraq's oil industry

It seems that Rumaila is as important to Iraq as it is to BP. The British oil major helped to discover the field back in 1953 and gained further information on its structure through a reservoir study contract awarded by the Iraqi Oil Ministry in 2005. This early interest by BP is not surprising - Rumalia is among the world's last remaining pockets of so-called "easy oil", meaning that it does not require expensive ultradeep drilling or pioneering production techniques. Its estimated recoverable reserves of 17.77 billion barrels are larger than the total proven oil reserves of China, Qatar or Algeria. So it is no wonder that BP has agreed to develop Rumaila without getting an ownership stake in the field while also accepting the government's low remuneration fee of only US$2 per barrel once the production has been raised by 10 percent from its current level.

The Rumaila field is an 80 km long anticlinal structure that was found to be trending from south to north and historically divided into two parts. "When Rumaila was discovered it was believed to be a single domal structure confined to the south of extensive marshland to the north," explains Michael Daly, Group Vice President for Exploration at BP. "This area later became South Rumaila as prospecting moved northwards and discovered the North Rumaila continuation in 1961." The total reserves of North Rumaila are estimated at some 31 billion barrels with only just over three billion barrels produced so far. This section has three reservoirs in development including the Mishrif limestone, Upper Zubair sandstone and the heterogeneous Nahr Umr Formation. Mishrif is the biggest reservoir in North Rumaila accounting for over 70 percent of its reserves. The South Rumaila section is thought to have 30 billion barrels, but because of the inclined nature of the formation it has so far produced three times more oil than its northern part. There are four reservoir units which have already been appraised and produced from and which are distributed between the Mishrif and Zubair formations. The Zubair reservoirs are the Upper Shale and Upper Sandstone (collectively known as the Main Pay) and Lower Sandstone members. Currently, according to Daly, the volumes are well-described only in the Main Pay and Mishrif reservoirs. "Other reservoirs still require significant definition before a definitive volume can be determined," he says. "Suffice to say the volume is large." Moreover, there are additional hidden treasures for BP. First, it is discovered but undeveloped reservoirs - Nahr Umr, Upper Shale Member, Yamama, Najma, Alan and Mus/Adaiya in North Rumaila and Lower Fars, Nahr Umar, Fourth Pay and Yamama in the South. Second, it is the undiscovered potential reservoirs which the consortium can explore and develop over the course of their 20-year redevelopment project.

Path to recovery

At the end of 2009, the struggling field was producing approximately one million bpd which is far from its potential and the peak achieved in 1980, but still accounted for almost half of Iraq's annual oil production. The consortium led by BP (38 percent) with partners CNPC (37 percent) and State Oil Marketing Organisation, the sales arm of the Iraqi Ministry of Oil (25 percent), has agreed to nearly triple the Rumaila field's output to 2.85 million bpd in only six years. This would make it the world's second largest producing oilfield after Saudi Arabia's Ghawar and would alone lift Iraq's total oil production capacity from about 2.5 million bpd to 5.35 million bpd.

The 20-year contract, however, comes with a spending commitment of US$15 billion. The first stage is the 33-month remedial programme involving three steps starting with a halt to any non-optimal operations that Iraqi oil engineers had to revert to in past years, often due to the lack of other options; then arresting the production decline; and finally achieving a sustainable and improved production rate of 10 percent above the initial rate prevailing at the start of the contract. BP is looking to spend a minimum US$300 million in order to carry out the appraisal programme including acquiring, processing and interpreting 1,500 square km of 3-D seismic survey over the two fields' area and preparing the much needed geological and reservoir engineering studies and 3-D simulation for the reservoirs. The most important objective for BP is achieving an improved production target rate, since it will be able to recover its costs and receive US$2 billion worth of oil once this initial incremental production is brought on stream. "The current infrastructure in place on the field consists of over 800 wells - over 550 producers and more than 150 injection wells - feeding 10 gathering and degassing centres," says Daly. "Just over half of the producing wells are flowing today; but it is the wells that are not flowing where the short term oil opportunity lies."

Since the Rumaila service contract entered into effect on December 17, BP hasn't been wasting time - in January the consortium held the first joint management committee meeting and decided on a US$1.7 billion budget for 2010 with the target to add between 150,000-200,000 bpd by December 2010. On top of that, 10 firms (including Halliburton, Schlumberger, Baker Hughes, Weatherford, Iraq Drilling Company as well as companies from China and Turkey) were invited to drill 56 new wells and do workover projects on 30 others.  Currently, the field has 10 rigs (six belonging to Iraq Drilling Company and four to Weatherford and Akkad). BP's plan is to add five new rigs this year and another 10 in 2011. The consortium is also looking to drill 200 additional wells next year to pump output at Rumaila up to 1.5 million bpd. This rehabilitation and expansion project is managed by the Rumaila Field Operating Organisation (ROO) staffed mainly by employees from South Oil Company (field's original operator) and a small number of technical experts and managers from BP and CNPC.  "The job BP has now taken on is to work with the South Oil Company and our partners to renew investment in the field and to bring new and innovative technology with the singular intent to grow production beyond the previous peak; sustain it for several years; and in doing so increase the expected recovery factor of Rumaila", explains Daly. "Rumaila is clearly a brownfield development with a huge amount of kit in the ground and on the surface. This fact has important implications for our confidence in our ability to reach the initial production target."

The BP solution

BP's development plan starts with a focus on securing the base production from both the Main Pay and the Mishrif reservoirs. Daly continues: "A full field surveillance programme will be established on the existing Rumaila well stock. From our earlier work we have more than a year's work of well workovers already identified, largely involving the addition of electric submersible pumps (ESPs) to improve well deliverability and workovers of the old wells.
Longer term we will enter the enhanced redevelopment phase, which will grow the well stock through a major drilling campaign, eventually deploying 20-25 drilling rigs and a number of workover rigs. This early work will focus on the Main Pay reservoir and also start the full field development of the Mishrif. The Main Pay will be the main story in the early years; the Mishrif peak will follow and sustain the field. This will be accompanied by a field-wide waterflood campaign to maintain field pressure." According to Daly, BP will use a number of its proprietary technologies, including its smart field or Field of the Future technology to provide real time management and remote monitoring of wells; Bright Water injection of a polymer to help improve the efficiency of water flooding; and POWERlift ESPs which will allow for downhole repair and replacement. But in addition to refurbishing the production plants and the water injection facilities, another important task BP is facing is to first supply all 12 production units and 10 water injection plants in North and South Rumaila with an Internet connection.

BP has a lot of experience of taking on brownfield developments, so Daly is confident in achieving ambitious targets set by the contract. However, there are a number of key challenges. "Regionally several large development issues remain such as access to sufficient water for large water flood projects, gas capture and utilisation and sufficient export ullage for the oil production growth", explains Daly. "A number of logistical issues could also impact the pace of development. There will now be 10 developments competing for resources; skilled people, oil field services etc." Despite these challenges, which are currently being addressed by the consortium, Rumaila is finally entering the 21^st century after over 50 years in development. Iraq is currently the world's eleventh biggest oil producer, but the invitation of foreign oil majors with their cash and expertise and rehabilitation of its supergiant oilfields give it the potential to climb to third place or higher, rivalling Russia and Saudi Arabia. An increase in production to just over four million bpd in the next five years will also pour approximately US$1.7 trillion into the country's battered economy and would finance major infrastructure projects across Iraq. Both BP and CNPC see rejuvenation of Rumaila as a key step in the post-war reconstruction of the country, and with such remarkable history this field is without doubt going to play a crucial role in Iraq's future.