Targeting Giants in Kurdistan

C O U N T R Y P R O F I L E

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GEO ExPro January 2006 15

Great Wall Drilling Company (GWDC) rig #9 mobilized from China and commenced drilling operation on thewell Tawke #1, the first well to be drilled by DNO in Kurdistan. This is a new rig fitted with a top-drive dril-ling system and capable of drilling to 5,000 meters depth. GWDC is also providing most of the well servicesfor DNO, including mud-logging, electric logging, cementing, coring and testing. In December of 2004 DNOestablished a local office and an organization in the city of Erbil situated a few hours drive from the Tawke#1 well. An expatriate management team for the Kurdistan operations has been established in Dubai, whichtoday can be reached with a non-stop flight from Erbil. Dubai has got the infrastructure and service provi-ders to serve the entire Middle East region including Iraq.

Most of the Kurdistan region is part of the foothills of the Zagros with an undulating landscape and a fewsporadic mountaintops. Geologically, Iraq can be divided into five main geological provinces: a) the stableArabian platform, b) the Mesopotamian Foreland Basin, c) the Zagros Low Folded Zone, d) the Zagros HighFolded Zone, and e) the Zagros thrust Zone. The Oil discoveries are mostly in the Zagros Low Folded Zoneand the Mesopotamian Basin. DNO is carrying out their operations in the Zagros Low Folded Zone northwestof Kirkuk and close to the border with Syria and Turkey. Some of the larger fields have been highlighted (gre-en: oil; red: gas).

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Halfdan Carstens

Late November the Tawke #1 well wasspudded in the prolific Zagros FoldBelt of northern Iraq with DNO ASA

(DNO) as the operator. It is estimated totake 60 days to drill the well that is target-ing three different reservoir zones in theTertiary and the Cretaceous, down to adepth of 3,000 meters.

"The structure is huge and has greatpotential for significant commercial disco-veries," says Magne Normann, ProjectDirector for DNO in Iraq. He adds that thefirst well will have to be drilled before oilquantities can be announced, but it is notuncommon that billion barrels fields in Iraqhave been placed on production. This firstexploration structure to be drilled is relati-vely close to existing pipeline infrastructureexporting crude oil from Iraq through Tur-key to the Mediterranean coast.

Needless to say, not only the operator,but the entire petroleum upstream sector,is excited about this first well being drilledby a foreign company in the autonomousKurdish region of Iraq, following the collap-se of the Iraqi regime in 2003.

Tawke # 1 well, located northeast of theriver Tigris, is the first well being drilledunder the existing Production SharingAgreements (PSA) that covers some 4,000km2.The small and independent oil compa-ny DNO signed the PSA agreements withthe Kurdistan Regional Government (KRG)in June 2004. DNO has a 40% interest in thelicenses. The initial drilling campaign inclu-des three wells, but DNO is already plan-ning a further four exploration wells in theagreement areas. "Additional appraisal dril-ling is highly likely, and DNO is alreadynegotiating terms for a second drilling rigto be mobilized to Kurdistan," Normannsays.

DNO is already present in the MiddleEast and is producing approximately17,000 barrels per day from three fields inYemen. The company also has an activeexploration campaign going on in Yemen(GEO ExPro No. 3, 2004), where prospectswith both Cretaceous sandstones and Pre-cambrian crystalline rocks are being tested.

Iraqi oil production"We consider northern Iraq as the most

promising geological province in the worldfor the next 20 years," says Magne Nor-mann. It is easy to agree with him, as almost200 billion barrels of oil equivalent is already proven in the Zagros Fold Belt (Iranand Iraq combined).

According to the BP Statistical Review ofWorld Energy 2005, the Iraqi oil productionaveraged 2 million barrels of oil per day in2004. As can be seen from the graph (page17), however, the oil production has had aturbulent history the last 25 years.

Since 1969 it was rising continuously,reaching a record level of almost 3.5 millionbarrels per day in 1979. Major drops in crude oil production accompanied boththe 10-year long war with Iran and the1991 Gulf War. Output dropped fromalmost 3.5 million barrels per day in 1979 to900,000 barrels daily in 1981, following theonset of the war with Iran, and from 2.9 mil-lion barrels per day in 1989 to 300,000 bar-

rels daily in 1991, following the embargoon Iraqi oil exports. In September 1991, theUN proposed a plan to allow Iraq to raiserevenue for humanitarian purchases andwar reparations by exporting limited quan-tities of oil.

For most of the 1990s, the US-imposedtrade embargo reduced Iraqi access to oilindustry technology, supplies, and invest-ments. Some four years ago it was indica-ted that of Iraq's 73 oil fields, only 24 wereactually in production.

Iraq’s target is reportedly 6 million bar-rels of oil per day. With reservoirs possiblybeing damaged because of lack of reser-voir management attention through seve-ral decades, this is going to be a tough case.New discoveries will certainly help to meetthe ambitious target.

"We estimate that it will take approxima-tely 18-24 months from project sanction tobring a discovery in northern Iraq into pro-duction, if we hit commercial quantities ofoil," says Normann.

C O U N T R Y P R O F I L E

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Oil is flowing to the surface in several seeps within the license area, and nearby giantfields have been producing for decades. The well Tawke # 1 is certainly being drilled ina proven petroleum province, and the first well by a foreign company in Kurdistan isnow testing a huge structure delineated by modern seismic data.

Magne Normann is Project Director for all of DNO’s activities in Iraq and has an international background asa petroleum engineer. He has held senior positions for oil companies as well as drilling contractors in severalcountries including Norway, USA, UK, Singapore and Yemen. In the background we see a satellite map of thearea where the operations in Kurdistan is taking place.

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Oil seeps everywhere"The first hydrocarbon exploration licen-

se in the area was operated by Iraq Petro-leum Company (IPC) who had a large con-cession area east of the Tigris River (mostlyKurdistan) back in the early 1920’s andonwards. Until the IPC exploration conces-sion ceased in 1960/61, there is little docu-mentation indicating that the DNO acrea-ge was properly evaluated at that time.Only field geology in the highly foldedzones to the north is documented. Sincethe early 60’s, little or no hydrocarbonexploration has taken place in the area,"says Nils Bang, Project Geologist with DNO.

Nils has spent several months for DNOdoing the necessary mapping and sam-pling in order to analyze the outcroppingformations that the company will hit whiledrilling. "It’s a beautiful country to do geo-

logical fieldwork in," he says.Some seismic of fair to bad quality had

already been acquired in the area beforeDNO entered the scene, but there was anurgent need for more data to define 4D-closures that made drillable prospects. Alt-ogether, 440 km of 2D seismic were acquir-ed across selected areas of the Dohuk andErbil PSAs agreement areas; the PSAs arenamed after the cities with the same name.

"Before the seismic campaign, however,we did a lot of regional geological studiesto get a better grip on the prospectivity.Some data was located in Iraq, but most ofit was located outside, and it became appa-rent that we had to search wide to esta-blish a reasonable database. We have alsobeen doing geological mapping within thelicense area," Bang explains.

"This part of Iraq belongs to the Zagros

GEO ExPro January 2006 17

The Iraq oil production has a complicated story since1965, reflecting political

turmoil. Source: BP StatisticalReview of World Energy 2005

Mertz 18 vibrators were used to acquire 2D seismic in Kurdistan. They all belong to DNO but were operatedby Terra Seis International of Canada.

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Iraq – A lake of oilAccording to the BP Statistical Review

of World Energy 2005, Iraq has oil reser-ves of 115 billion barrels and gas reservesof 3,17 trillion m3 (135 oil equivalents alt-ogether). Iraq is thus only trailing behindSaudi Arabia and Iran with respect to con-ventional oil reserves. If we include heavyoil, however, the Canadian oil sands reser-ves ranks higher than both Iraq and Iran,and possibly also higher than Saudi Ara-bia (GEO ExPro No. 5/6, 2005).

Estimates of Iraq’s potential oil reser-ves, i.e. undiscovered oil resources, arevery speculative, as the country as a who-le should be considered underexplored.Another factor adding to the uncertainty isthe lack of knowledge about the petro-leum systems that stems from the mini-mal amount of geological studies carriedout during the last decades.

"Of all the uncertainties in assessingworld oil resources, one of the greatest isthe future of Iraq," says Thomas Albrandtwho was in charge of the USGS WorldPetroleum Assessment 2000 (GEO ExProNo. 1, 2004).

Nevertheless, it is widely believed thatIraq may soon prove oil reserves in theorder of 200 billion barrels, close to a100% increase. Iraq will then rank as no.2 in the world with respect to oil reserves.Others are of the opinion that the Iraqireserves eventually will be proved to be300 billion barrels.

"Iraq contains whole petroleum sys-tems: world-class source rocks, overlainby excellent reservoirs and terrific evapo-rite seals," says Ahlbrandt (Geotimes,2002). Their assessment of Iraq is, howe-ver, not as optimistic as that of manyother unofficial sources. The USGS meanestimate for undiscovered resources inIraq is 45 million barrels of oil and 21 bil-lion barrels of oil equivalents of gas.

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vations he has made. "There are severalnice structures with good oil seeps inmany places, which is a good reason to beoptimistic about this area," he says.

Nils Bang points out that the reservoirsmay be problematic, often with very vari-able matrix porosity and complex fractu-ring. "One of the biggest challenges is todevelop a high reservoir understanding sothat the recovery of oil from each structurecan be increased from the very low 10-15%which is so common in the area," he says.

Provided that DNO makes a discovery,there appears to be a lot more work in thepipeline for reservoir geologists with expe-rience in carbonate rocks!

Completed in four monthsHaving made the decision to acquire

seismic data with the plan to continue withdrilling, the initial task was to establish asecure environment for all personnel invol-ved."We first hired a risk management com-pany with good understanding and experi-ence from similar activities in Iraq. Conside-rable efforts were made to have a securityplan implemented, which would provideprotection and security for all personnelinvolved in our operations. We worked clo-sely with the Kurdistan Regional Govern-ment (KRG) on this issue, and KRG is provi-ding all security guards for the operations.There is no doubt that we have an excellentsecurity team in place," says Normann.

Fold Belt that strikes southeast-northwestthrough both Iran and Iraq. Numerous oilfields have been discovered in both coun-tries, and a sizeable discovery was recentlyannounced by Norsk Hydro operating inIran close to the border with Iraq."

"The DNO PSA agreement area containsa number of structures of different magni-tude. Not all of them are, however, conside-red highly prospective. Some of the struc-tures are uplifted and breached during thePliocene and Pleistocene folding anduplift," Bang says.

The experienced geologist, who can addseveral years working in the Zagros FoldBelt for another company on his CV beforejoining DNO, do like the geological obser-

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C O U N T R Y P R O F I L E

KurdistanThe Kurds are an Iranic people inhabiting a mountainous area of Southwest Asia that includes parts of Iraq, Turkey,

and Iran as well as smaller sections of Syria, Armenia and Lebanon. Ranging anywhere from 25 to 27 million people,the Kurds comprise one of the largest ethnic groups without their own country in the world.

The Iraqi Kurdistan, also called Southern Kurdistan, is a large area situated in northern and northeastern parts of Iraq,including Erbil (Hewlêr), one of the largest cities in Iraq, and the capitol of the Kurdistan Regional Government. The Kur-dish Autonomous Region is a political entity established in 1970 following the agreement of an Autonomy Accord bet-ween the government of Iraq and leaders of the Iraqi Kurdish community.

For over a century, many Kurds have campaigned and fought for the right to 'self-determination' in an autonomoushomeland known as "Kurdistan". The governments of those countries with sizable Kurdish populations are actively opp-osed to the possibility of a Kurdish state, believing such a development would require them to give up parts of their ownnational territories.

The city of Dihok is the centre of the Dihok Governorate. Kurdistan region cover three governorates and those are Dihok, Erbil, and Sulemania. P

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"Our first international contractor mobi-lizing to Kurdistan was Terra Seis Internati-ona (TSI)l of Canada. At the time of biddingthis work, there were many concerns raisedby the contractors. Those were rangingfrom political concerns; i.e. contractorsbeing blacklisted for future work in Iraq, toconcerns related to the security of expatri-ate personnel. It was a must to involve theinternational contractors as much as possi-ble in preparing and implementing securi-ty plans. It initially turned out that very fewcontractors were interested in this oppor-tunity. This has now changed," says Nor-mann.

"TSI is offering geophysical services tomany oil companies operating in challeng-ing geographic, economic and politicallands. Their specific focus is to work in tro-pical, transitional or mountainous terrains."

The seismic acquisition executionmodel for DNO was somewhat differentthan normal. TSI brought the core expatri-ate crew to Kurdistan, predominantlysupervisors, whilst the rest of the crew wasrecruited locally by DNO. Instead of usingdynamite source, it was decided to usevibro-source technique. As TSI did not ownany vibrators at that time, DNO procuredfive second hand vibrator units with theassistance of TSI which were tested and

upgraded in Canada before being mobili-zed to Kurdistan via Turkey. "This was hardwork for all parties involved. Working out-doors in 50 OC in the middle of the summeris hard for anybody. TSI did a professionaljob," concludes Normann.

The seismic acquisition survey took fourmonths to complete, starting May 17thand ending September 20th. The data wastransferred via the Internet and processedcontinuously by the company PSS-Geo inOslo, Norway.

"Interpreting the data was done whilst itwas recorded , and prospects were definedfrom late summer through to Octoberwhen we had ranked all the prospects wewere able to define," says Bang.

Need for training"The Iraqis have lost one generation of

petroleum geoscientists because decadesof unrest," says Normann. "This is really sadbecause Iraq was once a centre of excellen-ce within the petroleum sector in theMiddle East. There are still a lot of highlyskilled personnel, but they would typicallybe 60+ years today and there are very fewin the country to replace the older genera-tion. Extensive training of the youngergenerations is an absolute must, and DNOis heavily involved in providing special

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Kirkuk – and thereafter

Drilling for oil and gas dates back to thedawn of the 20th century. In 1902 the veryfirst exploration well was spudded in theZagros Basin in northeast Iraq. However, ittook another 20 years before the firstsmall discovery was made in 1923.

Iraq’s dramatic entry into the oil era,however, began in 1927 when the first wellon the structure Kirkuk – Baba Gurgur # 1– struck oil under high pressure and suffe-red a severe blowout. Close to 1 millionbarrels of oil was wasted before the wellwas controlled. Kirkuk, named after thetown with the same name, has later pro-ved to be a supergiant oil field (for defini-tion, see page 50) with original reserves of17 billion barrels, approximately one fifthof the original reserves in Ghawar (SaudiArabia), the world’s largest oil field.

Kirkuk is a large, narrow anticline, stret-ching some 150-200 km, striking north-west-southeast with three domal accumu-lations and with a 610m oil column. Theprincipal reservoir is a reefal late Eocene toOligocene (Tertiary) limestone. Oil is alsofound in younger limestones and olderCretaceous reservoirs. The overlying saltand anhydrite beds have formed a slightlyimperfect seal that has allowed oil and gasseeps in localized areas. Certain gas see-pages have long been known as "EternalFires". The source rock is thought to beCretaceous dolomites and limestones.

The city of Kirkuk, 370 km north ofBaghdad, with close to 1 million inhabi-tants, is now the centre of the northern Ira-qi petroleum industry.

As of today a total of 75 major oil andgas fields have been discovered in Iraq.Nine of them are considered supergiants(including Kirkuk, Rumalia South, RumaliaNorth, Majnoon) and 22 giants, accordingto Mohammad Al-Gailani (Geotimes,2003).

Kurdish flag from a nearby village. The Kurdishflag has three horizontal bands with a goldenemblem at the center. The sun emblem has areligious and cultural history among the Kurds,stretching into antiquity.

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One of several oil seepages discovered during geological fieldwork. These tar beds, covering more than 1km2, are close to the area where the 1st exploration well is being drilled. Jurassic marine shales and carbo-nates are the major sources of hydrocarbons produced in the Zagros Fold Belt.

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Mark MartinTEL: +44 1932 266497mark.martin@pgs.com

Tor ÅkermoenTel: +47 6751 4221tor.aakermoen@pgs.com

A Clearer Imagewww.pgs.com

We have NW Europe CoveredMegaSurveys

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courses and on-the-job training at MiddleEast and European training centers.

There is a great need for geologists,geophysicists, reservoir engineers andpetroleum engineers to fill in for the oldergenerations," he says and adds further, "It isour duty to support an educational pro-gram for the young students that aregoing to build this country in the years tocome.We have signed a Memory of Under-standing with the Ministry of Oil in Bagh-dad which focuses on training as well asproviding university education at Masterof Science degree level for initially six stu-dents".

From high to low riskBoth Iraq and Kurdistan have come a

long way since the fall of Saddam Hussein."We firmly believe that progress will bemade towards stability in the country,"Normann says.

"While the political risk may have see-med sky-high at the time of signing theProduction Sharing Agreements in June2004 with the Kurdistan Region Govern-ment (KRG), this risk has been more or lessremoved with the introduction of the newConstitution in October 2005, giving theKurds rights to ‘new’ oil discoveries withintheir region," he adds.

"Kurdistan has a unique position underthe new Constitution to explore and deve-lop ‘new’ oil under their own control, andDNO was the first international oil compa-ny in more than two decades to perform

seismic and drilling in Iraq. The high disco-very potential of mega size oil fields makesan interesting future for our stakeholders.Both KRG’s and DNO’s combined efforts is amove towards an interesting future", conc-ludes Magne Normann, Project Director forDNO in Iraq.

Making a discoveryThe first well within DNO's PSA's loca-

ted in the Kurdish area of Northern Iraq,Tawke # 1, has already encounteredmovable oil at the top of the first prospec-tive reservoir interval.

Tawke # 1 had by late December reach-ed the first prospective reservoir intervalat approximately 350 meters. While dril-ling into the top of the reservoir sectionthe well took influx of oil under pressure.The oil was circulated out and flared off ina controlled manner. Samples of the oilwere taken confirming an API gravity ofapproximately 24 API. This API grade cor-responds to oil produced from other fieldsat similar reservoir level in Northern Iraq.

The forward plan is to continue drillingthe full reservoir section, which could beup to 800 meters thick according to theprognosis. Thereafter wireline logging willbe undertaken to evaluate the reservoirwith respect to reservoir characteristicsand movable oil content, DNO said in apress release.

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C O U N T R Y P R O F I L E

The Prime Minister of the Kurdistan Region, HE Nerchirvan Barzani, performing the formal opening of thecommencement of the 1st exploration well, Tawke-1, being drilled in Kurdistan, Iraq. Magne Normann hasthe overall responsibility of all activities related to Iraq.

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One of several oil seepages in an area close to the 1st well being drilled. The local population has for genera-tions used oil from these oil seepages for domestic needs.

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