Nooreddin SHAHNAZIZADEH

Our priorities set focus on the development of the shared oil and gasfields.

Nooreddin SHAHNAZIZADEH Managing Director Petroleum Engineering & Development Company

Win-win situation in Iran

January 30, 2018

Nooreddin Shahnazizadeh, managing director of Petroleum Engineering & Development Company (PEDEC), talks to TOGY about Iran’s priorities for the development of the country’s greenfield and brownfield upstream projects. PEDEC is responsible, on behalf of National Iranian Oil Company (NIOC), for the development of Iran’s oil and gasfields, including shared fields.

On increasing recovery: “The main objectives that PEDEC follows are to increase the fields’ recovery coefficient, using state-of-the-art wells alongside the use of EOR and IOR technology. Iran had been using conventional technologies at these fields, and the West Karoon oil shifted from light to extra heavy, with an API of between 19 and 22. Therefore, production was reduced, and investments must be made.”

On IPC benefits: “For the IPC, in addition to development there is also production for two years with a fee per barrel payable to IOCs as remuneration, which is a highly motivating factor for contractors involved in production. This is a win-win situation, using the latest EOR and IOR technologies. It means more profits would be generated for IOCs during their long presence in the field.”

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What are PEDEC’s upstream development priorities?
Our priorities set focus on the development of the shared oil and gasfields. The largest ones are located in the West Karoon of which Yadavaran, the northern and southern parts of Azadegan, and North and South Yaran play a leading role. Another priority field is Azar, in the Ilam province. The production from these fields is about 350,000 bopd. For the West Karoon and Azar fields, the objective is to reach 380,000 bopd by March 2018.

 

How will the Azadegan field be developed?
Azadegan includes four different reservoirs, namely in the Sarvak, Kazhdomi, Gadvan and Fahlian structures. According to studies, these reservoirs could produce a combined 32 billion barrels of oil. The field currently produces more than 210,000 bopd, and the final objective is to increase production to 250,000 bopd by March 2018.
The objective is to develop this field under new contracts with IOCs. PEDEC has invited 14 IOCs to participate in the tenders for the Azadegan oilfield development. The winner would form a consortium with a domestic E&P company as a JV partner. Negotiations are ongoing, and we are in the final stages of preparing the appendixes related to this tender. We hope by next April the consortium will be established.
The field will be developed using EOR and IOR technology to maximise production. Our target is to produce 600,000 bopd and we are basing the plans for surface facilities on this objective of two plants with around 320,000-bopd capacities. It is presumed that in future, we would be capable of producing even more.

What are the plans for other key West Karoon fields?
Another major development is the Yadavaran field, which like Azadegan, includes four reservoirs in the same structures, also with about 32 billion barrels of recoverable oil. Production now stands at about 110,000 bopd.
The Yaran field is divided between a north and a south section, which are planned to be unified into a single field. The Yaran field has one main reservoir in the Sarvak structure with 1.5 billion barrels of oil in place. The field currently produces 30,000 bopd, but also based on EOR and IOR technologies the objective is to reach 45,000 bopd in 2018.
Darquain, also in West Karoon comprises three reservoirs: Ilam, Sarvak and Fahlian. Ilam contains 2.2 billion barrels of oil, Sarvak 1 billion and Fahlian 5.4 billion barrels.  Fahlian was tapped under a two-phase development which is now completed. The first and second phases of the project were developed by Eni and they have been handed over to Arvandan Oil and Gas Company for production operation.
Negotiations are ongoing with IOCs to develop Darquain’s other two reservoirs, as well as a smaller part of Fahlian. That will be the third phase, which, by using the latest EOR and IOR technologies, will increase production to 250,000 bopd.

What are the other priorities for PEDEC?
The development of the Azar field, in the Ilam province, is part of PEDEC’s development plans. The reservoir is Sarvak. According to studies, it holds 2.2 billion barrels of oil in place.
The field’s early production was 15,000 bopd in March 2017, but it stands at 30,000 bopd as of November 2017, with an objective of 65,000 bopd by the beginning of 2019. Negotiations are ongoing with IOCs and domestic E&P companies to further develop the field and to increase production to 100,000 bopd using EOR and IOR technology.
In the same area, the Changouleh field contains an estimated of 5.6 billion barrels of oil and shares similarities with Azar, such as reservoir pressure. Negotiations with IOCs and domestic E&P companies are also ongoing to bring production to 150,000 bopd.
In the Persian Gulf, we have a plan to develop the Kish gasfield, which holds 66 tcf [1.87 tcm] of gas in place. The development will be divided into several phases; each has been designed to produce 1 bcf [28.3 mcm] per day, for a total of 5 bcf [141.6 mcm] per day for the whole complex once finished. Phase 1 subsurface activities are almost completed with 19 wells drilled and the trunk lines are in operation. PEDEC has decided to earmark the gas of this first phase for petrochemical feedstock, LNG and C2+.
Another offshore field to be developed is Ferdowsi, and negotiations with IOCs are also ongoing to develop the onshore Kuh-e-Mond and Zireh fields.

What is your strategy to increase production at these fields?
The main objectives that PEDEC follows are to increase the fields’ recovery coefficient, using state-of-the-art wells alongside the use of EOR and IOR technology. Iran had been using conventional technologies at these fields, and the West Karoon oil shifted from light to extra heavy, with an API of between 19 and 22. Therefore, production was reduced, and investments must be made.
We need optimal reservoir management for these fields. Injection of gas for light oil and water flooding techniques for heavy oil will help increase the recovery coefficient. We will run some tests in labs and carry out pilot projects to decide which type of EOR or IOR technology is the best fit.

Have you already started implementing EOR projects with IOCs?
Yes. We started using some IOR in Yaran in order to increase the production from 20,000 to 30,000 bopd. We are now purchasing 10 pumps to increase capacity beyond the current production. The final stage of EOR and IOR will be executed by the IPC [Iran Petroleum Contract] contractor to be chosen for the field soon.
The IPC format is much more flexible than buy-back contracts. In buy-backs, the deadline for development and repayment was definite, but with the IPC, the contract involves development and also production operations for a period of 20 years.
For example, up to now, Darquain 1 and 2 and North Azadegan phase 1 have been carried out under buy-back contracts with Italian and Chinese companies, respectively. Both of them have been finished but the second one is still at the payment stage. However, for the IPC, in addition to development there is also production for two years with a fee per barrel payable to IOCs as remuneration, which is a highly motivating factor for contractors involved in production.
This is a win-win situation, using the latest EOR and IOR technologies. It means more profits would be generated for IOCs during their long presence in the field.

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