Recently developed technologies will help find and extract more crude from the Middle East.

Recently developed technologies will help find and extract more crude from the Middle East, the world’s richest-oil region, according to oil ministers and executives.

In an interview with Dow Jones Newswires at an oil technology conference here, Royal Dutch Shell PLC Executive Director Malcolm Brinded said he is seeing ‘more usage of advanced technologies in the region than is very often recognised.’

If their use gets extended it will mean in the ‘long term, more supply, no doubt about it,’ through ‘more exploration success and more recovery from existing fields,’ he said.

‘Raising average conventional oil recovery from 35 per cent to 45 per cent’ by using new techniques in the Middle East and around the world ‘could add some 20 years of current production,’ Brinded said during an earlier speech at the conference.

The Middle East holds 62 per cent of the world’s proved estimated oil and gas reserves, or 733.9 billion barrels, according to BP PLC’s (BP) annual statistical review.

As of October, Middle Eastern countries produced 71 per cent — or 21.1 million barrels of oil a day — of the total output of the Organization of Petroleum Exporting Countries, according to the International Energy Agency. Those figures don’t include the US or European countries.

But the resources take significant time and money to find and extract. Brinded’s remarks suggest that using techniques not previously applied in the region may help ease tensions in global oil markets. Oil prices rocketed to $ 70 a barrel in September and still remain near $ 60. Rising consumption from China and India have led some experts to warn that the world could start using more oil that it discovers in a few years.

Saudi Arabia, Oman Lead Way: Brinded cited Saudi Arabia and Oman as examples of Middle Eastern countries where innovative techniques to explore and produce oil more efficiently are being used.

State-owned Saudi Aramco ‘can be credited as the largest user of smart fields technology,’ he said, referring to the real-time monitoring, model updating and control of oil wells.

Brinded also pointed to Petroleum Development Oman, or PDO, which Monday formally launched the use of a technology called enhanced oil recovery, or EOR, to raise the percentage of extractable crude from the current 10 per cent of the reserves to over 40 per cent. PDO is 60 per cent controlled by the Oman government, with 34 per cent owned by Shell and the rest by Total SA (TOT) and Partex.

PDO is using EOR — a technique that involves re-injecting gas into the reservoir to extract oil – for the first time at the Harweel field development in southern Qatar. ‘It requires injection pressures approaching 1,000 bars…which is like a significant number of elephants walking on a postage stamp,’ Brinded explained.

The executive also cited ‘seabed logging’, or gathering data on an undersea reservoir, ‘which is used today in deep waters but should be used in a few years in shallow waters in the Gulf.’

At the conference, which Brinded said was the first to focus on oil technology in the Middle East, oil ministers appeared to agree with the executive’s views. Qatar Energy Minister Abdullah bin Hamad Al-Attiyah said recently developed drilling techniques and computer modelling had been used to increase the country’s oil output.

Iraqi Oil Minister Ibrahim Bahr Al-Uloum said that ‘with the right technology…the level of oil production from existing fields will reach 6 to 7 million barrels a day in the next few years’ compared with 1.96 million on average in the past 10 months. Bahr Al-Uloum, though, also pointed out that a lack of security and investment were the most pressing issues for the Iraqi oil industry.

But the increased diffusion of technologies not previously used in the region may also be a commercial argument for majors such as Shell, which find themselves increasingly squeezed out by national oil companies in their quest for new oil.

Countries such as Saudi Arabia, Iraq or Kuwait have yet to open their oil-producing fields to foreign companies, and the majors face increased competition from Indian and Chinese players expanding abroad when they bid for new licenses.

But to compete for new resources in the Middle East, Shell offers ‘a toolbox, global experience and global integration.’ Brinded said. ‘A single technology doesn’t solve a problem, it’s the conjunction of putting them together,’ he added.

The same goes in ‘the oilfield where the integration of different technologies in the way you develop (multiple technologies) help you to maximise recovery from existing fields,’ he said.

As for exploration, Brinded said the South Rub Al-Khalil Co. Ltd., a Saudi gas joint-venture in which Shell owns 40 per cent, was also ‘ focused’ on using state-of-the-art technologists Tom Ellacott, an analyst at consultancy Wood Mackenzie, said that all ‘supermajors are investing in proprietary technologies in a big way, not just Shell, but also BP PLC and ExxonMobil Corporation (XOM) to better compete.’

Smaller, independent players, such as Occidental Petroleum (OXY), which is using EOR in Oman, are also implementing new technologies in the Middle East, he said.

Shell has a strong historical presence in the Middle East. This year, it won the right to participate in two large-scale projects in Qatar, the $ 6 to $ 7 billion Qatar Gas IV liquefied-natural-gas project and a $ 2 billion petrochemicals plant.

However, accessing new reserves in the oil-rich region may help rebuild its dwindling reserves after it dramatically cut its estimates in a scandal last year.

Brinded stepped in as head of exploration and production in March 2004, three months after the issue surfaced. For 2004, Shell announced a reserves-replacement ratio of 45 per cent to 55 per cent, before factoring in the impact of year-end pricing and divestments. The reserves-replacement ratio is the difference between reserves additions and depletion by production for a given year.

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