Iraq Oil Potential: Recent Developm
ents and Current Events Bud previously presented "Iraq Oil Potential" to
DGS in January 2014. Here he will discuss many of the recent devlopments
in the region,including the attacks by militants in central and western Ir
aq and the drilling of horizontal wells in the Kurdish region. Overview:
Iraq ranks right up at the top of hydrocarbon-rich countries worldwide
with the potential to overtake any country in production, according to geo
logical consultant Harry “Bud” Holzman. The retired Army officer and
petroleum geologist has advised the U.S. Central Command on Iraq oil and
gas. In 2004, the Army placed CW4 Holzman in charge of evaluating the en
tire Iraqi infrastructure system, from oil and natural gas to electricity,
including how to estimate what the country has and how to rebuild it. He
was charged with looking at everything from refineries, pipelines, and ele
ctric power generation plants and also to determine the real hydrocarbon r
eserves of Iraq. Out of approximately 89 major fields discovered to date
, only 29 are producing. The others never really produced at all, yet some
of these are classified as super-giant, each with over 12 billion barrels
of proved reserves. He was puzzled by the small amount of oil produced
from such large reserves until he talked to some Iraqi engineers. In 2004,
several informed him that they were only producing enough oil to get up t
o their OPEC quota of 3.5 MMBO. They could do that out of just a few field
s. Vastly Underestimated Reserves He began his assignment by looking
at the available captured data. There were so many fields, and the first
one he worked on was East Baghdad since he was living just west of the fi
eld. There were 1,100 barrels coming out of the field, and that was it. He
started looking at all the data, and there were 16 billion barrels sittin
g under his feet. The field was an anticlinal structure 80 kilometers long
and 15 kilometers wide and had 10 pays, Cretaceous through Miocene. The f
ield could produce a million barrels a day, but the existing infrastructur
e could only accommodate 25,000 barrels. After reviewing data for numero
us fields and conferring with Iraqi engineers, he concluded the total amou
nt of oil and natural gas reserves in Iraq had been vastly underestimated.
He estimated with the data he had that there were 230 billion barrels for
the 84 fields at the time. Since then there are a few new fields recently
discovered (9-14 BBO—9 TCFG) in the Kurdish region. He started looking
at natural gas reserves, especially Akkas field in the Western Desert and
unexplored regions of Kurdistan, and calculated almost 200-plus trillion c
ubic feet (TCFG) of reserves. Other geologists put the figure closer to 35
0 TCFG. Most of the current gas is being flared off. He looked at the ol
d figures (115 BBO and 100 TCFG) and asked Iraqi engineers and Oil Ministr
y officials what these figures were, and they said they just gave them out
from years ago. They were told to say that, and no one knew where the num
bers originated. Since then, Iraq has revised its estimate upward to 150 B
BO. There is good reason to believe that there is even more. One day he as
ked an Iraqi engineer why there were so few Permian and Jurassic tests in
the south – the same reservoirs that are so productive in Saudi Arabia a
nd Kuwait. They had so much production coming out of the Cretaceous, the e
ngineer just said, why drill deeper. The deeper oil reserves will still be
there in the future. Also, the Silurian, Jurassic and Cretaceous source r
ocks of Iraq will one day be the target of oil companies. Some of the sour
ce rocks have a TOC of 16-17 and cover most of Iraq. A World Leader? T
here is a huge potential for Permian and Jurassic production in the southe
rn part of Iraq, adding that the Cretaceous, Jurassic, Triassic and Permia
n in the north will also be attractive. The Paleozoic, Silurian and Ordovi
cian, will be productive in the west. There have been several recent major
discoveries in Kurdistan in the last two years. Out of the 3,200 wells (
mostly vertical-a few recent wells in Kurdistan and Akkas in the Western D
esert are horizontal) drilled in Iraq\; there are less than 400 holes dril
led into the Jurassic or deeper. Most wells are less than 12,000 feet deep
. There are few stratigraphic tests in the south. One day huge reserves wi
ll be found along the western margins of the Gotnia basin in southern and
central Iraq, since oil migrates from east to west across the southern reg
ion. A major obstacle to production in Iraq is the horrendous condition
of the infrastructure. Most everything is broken or stolen, including pump
ing stations and compressors. Most of the water flood projects had broken
down, especially in Kirkuk and the southern part of the country. The worke
rs were re-injecting processed crude and residual oil back into the sands
and carbonates because there was no other place for it. This procedure lik
ely damaged the reservoirs. The other major obstacle is security, especial
ly in the northern, western, and central part of Iraq. The security situat
ion in the Kurdish region is considerably better. With the recent attack o
f the militants from Syria into Iraq, the Kurds have regained all of their
former territory to include Kirkuk, one of the largest fields in the worl
d. I do not believe that they will give it up. Even if the central governm
ent in Baghdad repels the militants, they will have to come to an agreemen
t with the Kurds on the control of the fields around Kirkuk. The key to
Iraq is not in finding the oil, which doesn’t take a genius. A first yea
r geologist, engineer and geophysicist could find oil in the major structu
ral traps scattered across Iraq. In Kurdistan the geology becomes a little
more complex, with plate movement and some complex faulting. There are ov
er 400 2-D structures that have not been drilled yet. This 2-D data was ac
cumulated by majors and the Iraq government in the late fifties, sixties a
nd early seventies. They need an oil law. In 2007, this got bogged down in
Iraqi politics and that’s where it sits today – except in Kurdistan w
here they formed their own oil law. The Kurdish and Baghdad governments ha
ve been discussing (fighting) over the law for years. If Iraq gets its
act together with a good hydrocarbon law and defeats the militants in the
central and northwestern section of their country and brings in the servic
e companies to repair the infrastructure, there’s no reason why the coun
try couldn’t overtake any place in the world in production. To put it
even more into perspective, the country is the size of Texas with approxim
ately only 3,200 wells drilled. The recent bidding process for service con
tracts to develop the large fields in Iraq was somewhat a success. All of
the majors wanted to be involved in the future exploration of Iraq, even i
t means accepting marginal terms today on the development contracts. The b
idding for exploration blocks was not a success, due to the poor terms off
ered by Baghdad. Kurdistan is doing far better in their effort to attract
oil companies into their region. This is due to the PSA type of contracts
offered for exploration blocks. The Kurds have just completed a major oil
pipeline from their region into Turkey. This will make the Kurdish region
far more attractive to oil companies, as they do not have to use a Baghdad
controlled pipeline system to export their oil and gas. They have the o
il\; they just need to get it out. It’s easy to get to, and the explorat
ion costs are extremely low. Geologic Wonderland An added attraction f
or the rock hounds working the area: The geology is exciting. There’s
glacial in the west, deltas and salt in the south, and all the way to plat
e tectonics in the north. Everything in geology you’ve ever learned in s
chool, you can use across Iraq. My thanks to Dr. Roy, Dr Freed and Dr Copp
enger of Trinity University for preparing me for this task. There are go
ing to be great opportunities for both major and independent oil companies
to become involved in both the development of current fields and the expl
oration for new reserves in Iraq. Oil service companies will be needed n
ot just to repair but also replace infrastructure and there will be a grea
t need for up-to-date seismic and gravity surveys, given that most of Iraq
hasn’t been properly explored. http://dgs.org/events/142/
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