BY DANIEL CANTY
Including two new licenses of slightly more frontier nature in our Kurdistan portfolio gives Maersk Oil an opportunity to participate in a broader selection of projects, reflects Esbern Hoch, Country Manager.
The Zagros Mountain range is a 1500 kilometre long spine protruding 4000 metres above sea level, effectively marking Iran’s western reach down its length. The foreground hills on the range’s western periphery fall in the Kurdistan Region of Iraq. They are quiet, scenic and seem a galaxy away from most people’s pre-conceived ideas of the day-to-day reality of working in the region. Maersk Oil kicked off 2014 with news that the Kurdistan Regional Government (KRG) had approved its acquisition of a 40% non-operating interest in the Piramagrun and Qala Dze Production Sharing Contracts (PSC) from Repsol. The blocks in question are a good illustration of how close to the range prospective exploration has moved, since exploration began in the area a decade ago.
Maersk Oil’s story in the Kurdistan Region of Iraq predates this year’s PSC tie-up starting with a 2011 entry through its shareholding in HKN Energy. Lessons from this time convinced the company of its strategy going forward, explains Esbern Hoch, Country Manager.
“We went into Sarsang in 2011, and prior to that we spent some years looking at the region and zooming in on Kurdistan. When we became a shareholder in HKN, it was an excellent opportunity to learn more about the subsurface and surface – which includes understanding the challenges, opportunities, the local culture and environment first-hand,” explains Hoch.
In essence, he says, successful developments are usually based on a thorough understanding of both subsurface and above-ground conditions. “To establish long-term access to the subsurface potential it is essential to understand the above ground conditions, including people and culture. We have to make sure people see people before trucks,” reflects Hoch.
Evaluations of the political and economic landscape affirmed that the Kurdistan Regional Government (KRG) was consistent in its messaging and had created an
environment which suits the long term outlooks of Maersk Oil. “The progress of the KRG led us to decide that this is a country in which we can do business, and we should be ready to bring technology, experience and investments,” he says.
The 30% stake in HKN gave Maersk Oil the opportunity to second personnel into key roles. Hoch says this was crucial in gaining a greater understanding of operating in the onshore environment in the midst of a local population in close proximity to the fields.
“Our onshore experiences in Kazakhstan, where we operate the Dunga Field, and Algeria, where we are a partner in an extremely remote location operation in the Sahara Desert, have been invaluable in terms of prepapration," he says.
Sarsang is an important asset and a building block in Maersk Oil’s ambition to grow further in Kurdistan. The Sarsang block is making the transition from discovery to development. The new acreage with Repsol poses new and interesting geological set of questions, explains Hoch.
“What has happened over time, is the exploration frontier has moved from the foreland areas towards the Zagros Mountain range. In this context, the new Piramagrun and Qala Dze blocks, closer to the Zagros Mountains as they are, are more frontier in nature. However, the potential of the new blocks is significant,” he enthuses.
Several recent discoveries have been made up towards the marginal Zagros Mountains, where the new acreage sits.
When exploration first began in the area, one of the key subsurface concerns was how far the oil had moved away from the basins. With every well test conducted, more is learnt about the geology which is contributing to a better definition of the best technologies to mature the block’s potential.
“A good understanding of the subsurface is essential, and Maersk Oil’s experience from fractured carbonate reservoirs, such as in the North Sea, remarkable as it sounds, is very relevant to the fractured carbonates of the Kurdistan Region of Iraq and will make a significant contribution,” says Hoch.
An important difference to consider is that compared to offshore exploration, onshore work usually has limited seismic imaging of the subsurface. That said, data on the new acreage was collected prior to Maersk joining the PSC, through both 2D seismic and an aerial gravity survey, in which sensitive equipment mounted on a plane collects data from the subsurface structure, based on the differences in densities of the subsurface rocks.
“We have been impressed with the work programme carried out by Repsol, especially the fact that they were the first operator in the region to get a gravity survey by plane,” he says.
The target zone being drilled in and around the area is at approximately 3,500 to 4,000 metres depth. The wells take around four months to drill and test. Once the target depth is reached, it is hoped the Jurassic and Triassic reservoirs, similar to those in the offset areas around the blocks , will yield positive test results.
“We see ourselves adding more value to the partnership by being engaged in several areas of the work. Since we are there for the long term, we take responsibility in the transition into development, as we are doing in the Sarsang block right now.”
The horizon to large scale export from these blocks remains years away, but recent developments, including an export artery pipeline through the Taq Taq-Khurmala-Fish Khabur pipeline, which has a capacity of sending 300,000 barrels of oil a day to Turkey, is now operational.
“We see the potential in Kurdistan and are now becoming more ambitious. We see the potential, and given the right conditions we are ready to invest in Kurdistan,” he concludes