Chevron Moves Ahead with PNZ Steam Pilot, Sees Huge Potential

KUWAIT CITY (Dow Jones), Nov. 4, 2009

Chevron said Wednesday it will drill 25 producing wells as part of the last phase of its $340 million pilot steam flood project aimed at boosting crude oil output in the partitioned neutral zone, or PNZ, shared between Saudi Arabia and Kuwait.

As part of the enhanced oil recovery, or EOR, project in the PNZ, Chevron will also drill 16 injection wells and 16 observation wells, and install water treatment and steam generation and distribution facilities, according to a company statement.

The project, which covers four fields--Wafra, South Umm Gudair, South Fuwaris and Humma--is aimed at boosting output of heavy crude from the carbonate reservoir in the PNZ, which presently produces an estimated 550,000 barrels a day between Kuwait and Saudi Arabia.

"With 12 billion barrels in place in this Eocene reservoir, every 1% increase in recovery would yield more than 100 million barrels of additional reserves," George Kirkland, Chevron's executive vice president for global upstream and gas, said in the statement.

EOR techniques such as injecting steam or gas into an oil reservoir are used to extend a field's life cycle as it depletes.

The PNZ pilot will run for three years and may lead to a full-field steamflooding of the reservoir, "marking the first commercial application of a conventional steamflood in a carbonate reservoir anywhere in the world," Chevron said.

Chevron's concession to operate in the PNZ was extended in September until February 2039. The 60-year agreement was originally awarded in 1949 to the U.S.' Getty Oil Co., which in 1984 was taken over by Texaco, the oil major that later merged with Chevron.  

Copyright (c) 2009 Dow Jones & Company, Inc.