Kuwait, Saudi boost Neutral Zone oil capacity

Web posted at: 4/28/2010 1:22:28
Source ::: REUTERS
KUWAIT: Saudi Arabia and Kuwait have boosted output capacity from their shared Neutral Zone to 610,000 barrels per day from around 550,000 b/d, a Kuwait oil official said yesterday.
But the two Opec producers have drawn back from long-term plans plans to further boost capacity to 700,000 to 900,000 barrels per day (b/d) by 2030. A project undertaken by oil major Chevron to increase the percentage of oil recovered from the fields would aim to maintain onshore output, Bader Al Khashti, the managing director of the Kuwait Gulf Oil Company told Reuters. KGOC operates the Kuwait side of the zone.
“Bearing in mind that this is a declining field, our target now is sustainability,” Khashti said on the sidelines of an energy event. “Any increase is welcome, and that will depend on recovery factors at the project. But we don’t have a practical target (to increase capacity).”
The two completed a development plan to boost offshore capacity at the offshore Khafji oilfield in the zone to 350,000 bpd last month, from 300,000 b/d, he said.
Output at Khafji was steadily rising, and had reached 310,000 b/d, he said. That was up from 272,000 b/d the field was reported as producing in February. “We completed the field development project phased one, which debottlenecked facilities there,” he said. “Since March, the capacity at the Khafji side has been 350,000 b/d.”
Kuwait and Saudi Arabia were discussing removing the zone from inclusion in Opec output curbs, transferring reductions there to other fields outside the zone, he said. “We want to leave it open rather than apply quotas, because it’s a joint operation so I think maximum production is better for both.” Saudi and Kuwait plan to spend $11bn on the zone over the next ten years on developing the enhanced oil recovery project with Chevron and maintaining capacity, he said.
Khashti declined to say which companies would win a tender for a $300m contract for drilling at Khafji. Bidding for the project closed on March 15. Chevron is completing a pilot project to inject steam into the onshore Wafra oilfield to boost output of heavy oil there. Heavier crude is more difficult to extract from oil-holding rock.
Chevron began steam injection in June 2009. If successful, the technique could boost the recovery rate of heavy oil held in the field to 40 percent from 5 percent throughout the zone. The Neutral Zone is a region between Kuwait and Saudi Arabia that dates back to 1920s treaties to establish regional borders. Chevron holds a concession to operate the Saudi side of the zone. 

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