Iraq’s Oil Reserves: Untapped Potential according to EIA
While its proven oil reserves of 112 billion barrels ranks Iraq second in the work behind Saudi Arabia, US Energy Information Administration (EIA) estimates that up to 90-percent of the county remains unexplored due to years of wars and sanctions. Unexplored regions of Iraq could yield an additional 100 billion barrels. Iraq’s oil production costs are among the lowest in the world. However, only about 2,000 wells have been drilled in Iraq, compared to about 1 million wells in Texas alone.
Eric J. Fox, is the founder of Brittain Capital Management, claims that Iraq’s ambitious plans to boost oil production are just getting started as the world’s biggest oil companies work on development plans to reinvigorate existing fields and explore in new areas. If Iraq is successful, the country would rival Saudi Arabia and Russia as the one of the largest oil producers in the world. (For more insight, read Oil And Gas Industry Primer.)
Iraq announced a plan to increase oil production from the current level of 2.5 million to 12 million barrels per day by 2017. While most investors and analysts scoff at the viability of this plan, Iraq is moving forward quickly with outside oil companies to try to reach these goals. Iraq also recently set a more reasonable five-year goal of production of 4.5 million barrels per day by 2014. If Iraq is successful in increasing capacity to its goal of 12 million barrels per day, this will help meet the demand for energy over the next decade and keep a lid on oil prices. (For related reading, see Unearth Profits in Oil Exploration and Production.)
The Players
Exxon Mobil (NYSE:XOM) is involved in the re-development of the Iraqi oil fields, and is working on phase one of the West Qurna fields. Exxon Mobil plans eight new wells here in 2010, and the workover of 50 more to increase production. The current production at West Qurna is 244,000 barrels of oil per day, and the company has committed to increasing this output to 2.325 million barrels of oil per day.
Royal Dutch Shell (NYSE:RDS.A, RDS.B) is also involved in Iraq, and is partnering with Exxon Mobil at the West Qurna field. The company also won a concession at the Majnoon field.
At Majnoon, current production is 45,000 barrels of oil equivalent (BOE) per day, and the company has plans to get production up to 175,000 BOE per day by 2012. Royal Dutch Shell believes that the Majnoon field has the potential to produce 1.8 million barrels per day by 2017.
Eni SpA (NYSE:E) was awarded the concession at the Zubair Field, along with Occidental Petroleum (NYSE:OXY). The baseline production at this field was set at 182,000 barrels per day, and the companies expect to increase gross production to 1.2 million barrels per day in 7 years. The companies are planning on having 150 employees in the country by the end of 2010.
The Zubair field is located in Southern Iraq, and started producing in 1951. Eni estimates that only 7% of the original oil in place has been produced to date. The company plans to drill 46 new wells and 100 walkovers from 2011 to 2013 to get production moving higher.
CNOOC Ltd. (NYSE:CEO) just finalized an agreement with the Iraqi government to develop the Missan Oil Field in the southern part of the country. The Chinese oil company has agreed to increase production here to 450,000 barrels per day within six years from the current level of approximately 100,000 barrels per day.
The Iraqi goal of increasing oil production capacity to 12 million barrels per day may seem like a dream to some, but Iraq and its foreign partners are not wasting any time getting started. The success of this endeavor will have a large impact on future oil prices
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