Koc

COMPANY PROFILE

2014

KUWAIT OIL COMPANY

www.kockw.com | 00965 – 23989111

KOC reduces flaring to achieve record low

Editorial: Roland Douglas

Kuwait Oil Company is always looking for ways it can improve on an already sterling reputation when it comes to HSE. In November, the company announced that it had significantly reduced gas flaring, as part of its commitment to the World Bank-led Global Gas Flaring Reduction Partnership.

Kuwait’s oil-driven economy is one of the success stories of the

importing nations around the world.

And many other benefits from a

become the largest oil exporter in the Persian Gulf region in 1952.

development of the Middle East.

Because of the success of oil production and export, Kuwait has managed to position itself as one of the prominent economies in the Middle East and a strategic partner for many petroleum

prosperous oil business have arisen such as the Kuwaiti dinar becoming the highest-valued currency unit in the world and the era 1946-1982 is widely known as the ‘Golden Era’, a period of renowned prosperity driven by oil which saw the country

A lot of this success is down to the innovative organisations that have operated in the oil sector in the country for many years. Some of the world’s best oil production engineers and professionals work in Kuwait and the energy sector is

PAGE 2

KUWAIT OIL COMPANY bursting with expertise and a desire to improve. This is demonstrated

by Kuwait Oil Company, the State’s national oil business with a mission to explore, develop and produce hydrocarbons within the State of Kuwait, promote the care and development of people and deliver on commitments to stakeholders in a compliant, profitable, safe and environmentally responsible manner.

Oil in Kuwait was first discovered on February 22nd 1938 in the Burgan field. People had often noticed black patches of a rough bituminous substance in the Kuwait desert but it was not until the matter was investigated in 1935 that it became apparent that Kuwait was sitting on a wealth of resources. On December 23rd, 1934, His Highness Sheikh Ahmad Al-Jaber Al-Sabah signed the first Kuwait Oil Concession Agreement

that was awarded to the newly founded Kuwait Oil Company Limited (KOC).

In 1946 Sheikh Ahmad Al-Jaber Al-Sabah inaugurated the export of Kuwait’s first crude oil shipment and construction of new export facilities and exploration of new fields quickly followed.

KOC was founded by the AngloPersian Oil Company (today known as BP) and Gulf Oil Corporation (today known as Chevron) but in 1975, the Kuwait Government took 100% control over Kuwait Oil Company, and by 1980, the Kuwait Petroleum Corporation was established to bring all state owned oil companies under one entity.

Since then, the company’s expertise has grown dramatically, seeing huge leaps forward in exploration capabilities and operational proficiency and earlier this year the company was

recognised by the World Bank for its efforts in reducing gas flaring across all operational divisions.

FLARING SUCCESS Since 2008, Kuwait has imported its natural gas because it uses more than it produces. The government has had to deal with the issue of keeping up with demand for electricity and one of the ways that it found to assist in this regard was through capturing associated gas, instead of wastefully releasing and flaring it during oil production.

The company represents the country in the World Bank-led Global Gas Flaring Reduction Partnership (GGFR) which was launched at the World Summit on Sustainable Development in Johannesburg in 2002. GGFR supports the efforts of oil producing countries and companies to

PAGE 3

PAGE 4

KUWAIT OIL COMPANY increase the use of associated natural gas and thus reduce flaring and venting, which wastes valuable resources and damages the environment.

KOC is working towards a goal of reducing gas flaring to less than 1% of total production by 2017. This will be achieved by following a number of key strategic ideas including; ensuring a solid commitment from all levels of the company to make flare reduction a priority, making significant financial investments in state-of-the-art facilities and operations, holding periodic reviews of the gas value chain from producing well to end user in order to identify all sources of waste or potential optimisation, and working closely with GGFR to ensure the target is met.

KOC’s Manager Gas Operations Group, Mohammed Al-Zuabi said in the World Bank report: “We are strongly committed to creating a healthier environment, and have dramatically reduced gas flaring.

We are steadfast to further reduce it to as low as possible.

“I firmly believe it was only possible because there was a complete change in the employee mind-set towards better understanding the environmental consequences of gas flaring and preserving a very valuable resource,” he added.

GGFR has many partner companies and countries around the world, all committed to the initiative, including; Algeria (Sonatrach), Angola (Sonangol), Azerbaijan, Cameroon (SNH),

Qatar, the United States (DOE) and Uzbekistan; BP, Chevron, ConocoPhillips, ENI, ExxonMobil, Marathon Oil, Maersk Oil & Gas, Pemex, Qatar Petroleum, Shell, Statoil, TOTAL; European Union, the World Bank Group and Wärtsilä.

Flaring has received much attention in the past few months following a report which highlighted the amount of useable gas being flared in North Dakota’s Bakken shale formation in the USA. According to the report from the Wall St. Journal, 10.3 billion cubic feet (BCF) of gas were flared there during April 2014 representing 30% of total gas production in the state

for the month.

The majority of GGFR partners have now agreed to endorse and voluntary Standard to eliminate venting and reduce flaring significantly within five to ten years by finding commercial uses for the associated gas through increased collaboration between countries.

INCREASING PRODUCTION One of the company’s other targets for the next five years is to increase production capacity to four million bpd by 2020 from a capacity of around 3.4 million bpd. According to reports, the state plans to spend $40 billion as part of this ramp-up.

Ecuador (PetroEcuador), Equatorial Guinea, European Bank for Reconstruction and Development (EBRD), France, Gabon, Indonesia, Iraq, Kazakhstan, KhantyMansijsysk (Russia), Mexico (SENER), Nigeria, Norway,

PAGE 5

“There are plans to spend $40 billion to lift the capacity up to four million by 2020 and maintain that figure till 2030,” Saeed al-Shaheen, manager of well surveillance at KOC told news agency, Reuters at a recent industry gathering.

“We are a state oil company, we always look at the long-term picture and at a time when the oil price is low, it’s more economical to invest in expansion,” he added.

This investment aligns with KPC’s ‘2030 Strategy’ in which the company details its ambitions for the next decade and beyond.

Two of the key elements in this strategy involve maximising the strategic value from oil and growing reserves for a sustainable

acquisitions, and the application of appropriate reservoir management practices.

And it looks as though this focus is paying off after reports have suggested that the company has managed to stimulate 90 oil wells south and east of the country that produce 90,000 bpd and the other 22 wells in the west with 15,000 bpd. This has been achieved through the use of a method known as ‘layer fissuring’ which facilitates oil gushing from these wells.

Saeed Al-Shaheen said that the results had been “amazing” and beyond what the company had originally expected. KOC started using layer fissuring two years ago and Al-Shaheen says that different

In the north of the country, KOC has signed contracts for the construction of three Gathering Centers which is again part of a drive to increase oil production in Northern Kuwait from 700,000 bopd to one million within the next five years.

Gathering Centers stabilise the crude through a multi-stage stabilisation process and separate gas and water from the crude to meet its quality required for downstream operations.

Originally, there were 26 Gathering Centers in KOC operating oilfields prior to invasion of the country. The first center or ‘GC-1’ was commissioned on 7th June, 1946 at Burgan Oilfield

future. Growing the company’s reserves for a sustainable future will involve optimising and promoting a portfolio of hydrocarbon resources that supports and sustains growth through aggressive onshore and offshore exploration and new

methods are always considered for each individual well depending on the production case and geological nature. One major method is artificial lift, used for producing one third of Kuwait’s daily production, about one million bpd.

and the last center ‘GC-26’ on September 1980, at the Ratqa oilfield. Presently 21 Gathering Centers are operational and receive crude from various wellheads located in the producing oilfields The contracts for the new

PAGE 6

KUWAIT OIL COMPANY Gathering Centers were signed with PETROFAC, Larsen & Toubro and Dodsal with PETROFAC building GC-29 for around KD 194 million, Larsen & Toubro building GC-30 for around KD 240 million and Dodsal building GC-31 for around KD 228 million.

PETROFAC’s contract is expected to last for around three years and Subramanian Sarma, Managing Director of Petrofac’s Onshore Engineering & Construction business, commented: “We have a long track record with KOC which extends over the last 14 years and the award of GC29 represents our tenth project in the country to date.

With ongoing projects for both KOC and Kuwait National Petroleum Company and good visibility of the future pipeline, Kuwait is, and will continue to be, of strategic importance to PETROFAC’S ambitions in the Middle East market.”

During a special ceremony held on the occasion of signing the contracts KOC CEO, Hashem Sayed Hashem affirmed the importance of these projects and described them as critical to boosting production capacity in North Kuwait. He also emphasised the need to comply with HSE regulations and expressed hope that the projects will be executed within the set timeframe and allocated budget.

already planning ambitious plans to survey the entire State. This will involve a high-resolution, fullazimuth and long-offset 3D land survey to achieve its exploration and development multi-objectives where more than 210,000 single-sensor channels will be utilised; the highest ever in the industry.

The company’s exploration group is also planning offshore surveying and currently has a 2D offshore seismic survey underway with the objective of oil and gas exploration for both Cretaceous

and Jurassic reservoirs.

Then there is further plans for the Greater Burgan where of several high-resolution land 3D surveys are underway with more in the pipeline for North-West Kuwait.

All in all, this is a company that is definitely delivering what it says it will deliver and with its continuing focus on improving HSE principles, this is a company that will become more and more important to the global energy market as we move into 2015 and beyond

STRONG FUTURE The future of KOC looks increasingly positive. With the new Gathering Centers and many other projects coming on line in the very-near future, there is no reason why this company cannot climb to even greater heights, further benefitting the economy of Kuwait and OPEC. KOC’s exploration division is

PAGE 7

+44 (0) 1603 411569 info@totalworldenergy.com East Coast Promotions Ltd, 2 Ardney Rise Norwich, Norfolk NR3 3QH

www.totalworldenergy.com