Editor’s note: The Iraqi government reported disappointing results from its first public auction of oil and gas fields at the end of June, with only one deal struck from among the six giant oil fields and two gas fields it had put up for bid.
The lone contract went to a joint venture of BP and the China National Petroleum Corporation for Rumaila, near the southern city of Basra, which has proven reserves of more than 17 billion barrels. It was the largest field offered.
The sources quoted below for the EXPLORER story were contacted before the auction.
Iraq ranks right up at the top of hydrocarbon-rich countries worldwide with the potential to overtake any country in production, according to geological consultant Harry “Bud” Holzman.
Holzman, an AAPG member, should know.
The retired Army officer and petroleum geologist advises the U.S. Central Command on Iraq oil and gas.
In 2004, the Army placed Holzman in charge of evaluating the entire Iraqi infrastructure system, from oil and natural gas to electricity – including how to estimate what the country has and how to rebuild it. He was charged with looking at everything from refineries to power generation plants and also to determine how many oil and gas fields are there.
“Out of approximately 85 major fields discovered to date, only 24 are producing,” Holzman said. “The others never produced at all, yet some of these are classified as super-giant, each with over 12 billion barrels of proved reserves.
“In 2004, I talked to an Iraqi engineer who told me they were only producing to get up to their OPEC quota of 3.5 MMbo,” he said. “They could do that out of just a few fields.”
Holzman noted he began his assignment by looking at the available captured data.
“There were so many fields, and the first one I worked on was East Baghdad,” he said. “There were 1,100 barrels coming out of one well, and that was it.
“I started looking at all the data, and there were 16 billion barrels sitting under my feet,” Holzman exclaimed. “The field was 110 kilometers long and 20 kilometers wide and had 10 pays, Cretaceous through Miocene.”
He noted the field could produce a million barrels a day, but the existing infrastructure could only accommodate as much as 25,000 barrels.
After reviewing data for numerous fields and conferring with Iraqi engineers, Holzman concluded the total amount of oil and natural gas reserves in Iraq had been vastly underestimated.
“I estimated with the data I had there were 230 billion barrels for the 84 fields at the time,” he said, “and there’s another new field now in the Kurdish region. Then I started looking at natural gas reserves, especially in the Western Desert, and I got almost 200-plus trillion cubic feet.
“I looked at the old figures (115 Bbo and 100 Tcfg) and asked engineers what these figures were, and they said they just gave them out from years ago,” Holzman noted. “They were told to say that, and no one knew where the numbers came from.”
It gets more intriguing.
“I asked an Iraqi engineer why there were so few Permian and Jurassic tests in the south – the same that produce in Saudi Arabia and Kuwait,” Holzman said.
“They had so much production coming out of the Cretaceous, the engineer just said, ‘Why? The oil will still be there in the future.’”
Holzman noted there’s huge potential for Permian and Jurassic production in the southern part of Iraq, adding that the Triassic in the north will be attractive. Out of the 2,300 wells he determined to have been drilled in Iraq, Holzman said he counted less than 15 holes drilled into the Jurassic.
A major obstacle to production in Iraq is the horrendous condition of the infrastructure. Most everything is broken or stolen, including pumping stations and compressors.
Holzman noted waterflood projects had broken down, especially in Kirkuk.
The workers were re-injecting processed crude and residual oil back into the sands because there was no other place for it.
“The key to Iraq is not in finding the oil, which doesn’t take a genius,” Holzman said. “They need an oil law.
“In 2007, this got bogged down in Iraqi politics,” he said, “and that’s where it sits today – except in Kurdistan where they formed their own oil law.”
AAPG member Bob Fryklund, vice president IHS, concurs.
“Some political steps have to take place before things move forward,” he said. “But the government is going ahead with bid rounds – the rules are fairly clear there, and … they have sweetened the pot a little bit on the take.”
Holzman is confident that if Iraq gets its act together with a good hydrocarbon law and brings in the service companies to repair the infrastructure, there’s no reason why the country couldn’t overtake any place in the world in production.
To put it even more into perspective, the veteran geologist emphasized the country is the size of Texas with only 2,300 wells drilled.
“They have the oil, they just need to get it out,” he said. “It’s easy to get to, and the exploration costs are extremely low.”
An added attraction for the rock hounds working the area: The geology is exciting.
“There’s glacial in the west, paleozoics all the way through deltas and salt in the south, and all the way to plate tectonics in the north,” Holzman said. “Everything in geology you’ve ever learned in school, you can use across Iraq.”
As the industry kind of re-groups during these times of low commodity prices and decreased demand, folks clearly have their collective eyes on a coming turnaround.
Many may ultimately zero-in on Iraq.
“There are going to be great opportunities for both major and independent oil companies to become involved in both the development of current fields and the exploration for new reserves in Iraq,” Holzman asserted.
“Oil service companies will be needed not just to repair but also replace infrastructure,” he said, “and there will be a great need for up-to-date seismic and gravity surveys, given that most of Iraq hasn’t been properly explored.”
Harry T. “Bud” Holzman Jr. has experienced some real adventure – and seen some really impressive geology along the way.
A native Texan who grew up in California, Holzman left college to join the U.S. Marines and later transferred to the Army to become a helicopter pilot, serving in Vietnam where he flew Huey helicopters and gunships.
Holzman’s decorations include the Distinguished Flying Cross, two Purple Hearts, a Bronze Star, 40 Air Medals, the Vietnamese Cross of Gallantry and several others. He left active duty in 1971 and joined the Texas National Guard where he says he “got to fly helicopters for free.”
After graduating from Trinity University in 1974, he went to work for Geomap as a geologist and stayed with that company for the next 26 years, where he eventually became its president. He became an AAPG member in 1976.
Bud transferred from the Texas National Guard to the U.S. Army Reserves in 1976 in order to serve as a medical evacuation helicopter pilot in Houston.
In 2004, Holzman was called to active duty, received special training and was deployed to Iraq as a counterintelligence agent.
He also was assigned as the “chief analyst-Iraq Oil and Gas Infrastructure.”
In that capacity Holzman authored numerous – mostly classified – papers on Iraq future reserves and exploration potential of the country. He also has worked with the Iraq Oil Ministry and government agencies to rebuild their infrastructure, and was involved in giving advice on several oil and gas articles of their constitution.
He is now working with McCombs Energy/Hupecol in the Kurdish region of Iraq and advises the U.S. Central Command on Iraq oil and natural gas issues.