Renovations made to GUPCO sites will add more production to reserves. What scientists predicted to be the production rate of petroleum in the Gulf of Suez in the 1960s has proved to be much more.
venture between British Petroleum (BP) and Egyptian General Petroleum Corporation (EGPC), which is the regulatory body delegated with the task of carrying out joint exploration and production schemes with multinational entities. GUPCO was created in Egypt in 1965 and started its production with Morgan oil field in 1967. The company operates in several areas across Egypt, but the Gulf of Suez is by far its main focus of attention.
GUPCO’s 40 year concession agreement ended in 2005, but on May 10, 2005 Egypt’s Minister of Petroleum, Eng. Sameh Fahmy, and BP Egypt’s President and General Manager Hesham Mekawi, signed another agreement to extend the Merged Concession Agreement by 20 years.
Since the signing of the concession extension, the company has decided to dedicate $1.4 billion to implementing major renovations and to eventually wholly upgrade its existing facilities. Of the total, $600 million will be allocated to renovating the infrastructure of the fields, while $800 million will go towards the development of new discoveries. Twenty-five manned vessels have been sent out to repair and renovate the company’s wells and pipelines.
The state-owned contractors, ENPPI and Petrojet, will be conducting the engineering, construction and installation work. The task is scheduled to take at least two years, with over 100 platforms as well as more than 200 pipelines totaling 3000 kilometers, to be worked on.
ENPPI’s services will include basic and detailed engineering, procurement services, construction, commissioning and start-up and overall management. This essentially means the rehabilitation of GUPCO’s offshore and onshore facilities. The facilities will not only be renewed, but also improved on with additions. GUPCO plans to create four more pipelines in the Gulf in order to increase production by 15,000 barrels of oil.
Gulf of Suez Discoveries
The Gulf of Suez contains approximately 70% of Egypt’s oil, but 40 years of operation has rendered many of the huge, older fields less productive. In the 40 years since the concession agreement, the Gulf of Suez has yielded over 4.5 billion barrels of oil. In 1983 the daily production rate of the area stood at around 616,000 barrels, however, this rate has greatly diminished.
GUPCO is hoping to add 4.5 million barrels to its production through its upgrade. The company, along with the government, views this recent overhaul as not only a major step toward producing more oil, but ultimately greater investment in the country. According to Dr. Ahmed Rashdan, President of Tiba Investment Group, the investment is a welcome development because it “brings in more advanced technological techniques in the petroleum sector,” something, which at the moment is sorely needed.
The upgrade will guide the way to the introduction of better technology in the field. This will, in due course, lead to more discoveries and improved statistics. This will also allow for the mapping of already found new discoveries such as the Saqqara well and the GS327 well.
The new mapping system is welcome news to those who have been aspiring to keep track of recent discoveries. Such discoveries include the 2001 discovery of two wells with combined proven reserves of 35.5mm barrels. The first find had a capacity of 10,000 bpd and proven reserves of 29mm barrel and the second had a capacity of 3,000 bpd and proven reserves of 6.5mm barrel. Another recent discovery was in 2000 when the company discovered eight wells with total proven reserves of 28.65 mm barrels.
In 2006, GUPCO announced yet another discovery in the Gulf of Suez. The site of the discovery is nine kilometers southeast of the Morgan offshore field (the Gulf’s largest field) and seven kilometers Northwest of Tor City at a depth of 133 feet. The estimated reserves and rate of production are 10 million barrels and 5000 barrels per day respectively.
The company is also adding a new drilling rig to its arsenal. The new marine drilling rig will be used to drill crude from the Red Sea. The estimated cost of the rig is $50 million and it will be constructed by Balayeem Petroleum, Petrobal.
After the heydays of the company’s high production rate in the mid-1980s, production levels began to fall dramatically reaching a low of 190,000 barrels per day. This, of course, was explained by natural decline due to the fields’ maturity, but today new hope faces the company.
The revamping efforts of GUPCO come at a time when energy concerns are high. The company hopes to achieve improved production rates by executing better waste management and by investing in advanced research and development for exploration.
Better Technology, Smaller Wells
It must be noted that GUPCO has not been the only company making new oil discoveries in the Gulf of Suez. In September of 2006 the Arab Oil company announced a new discovery in the Gulf. The new discovery was made at 1,700 to 1,900 meters below the seabed and is expected to yield 4,900 barrels per day of crude production.
All in all it has been a good year for the Gulf of Suez, a year which has exceeded the expectations of not only the 1960s predications, but also the predications of only a decade ago. But one must not get overly enthusiastic about the new discoveries. While there have been many, they are in large part small wells that are being discovered.
Technology has undoubtedly become more advanced over the years. The seismic technology available in the 1960s could only detect large reserves, but as the world technologically advances the exploration tools used by oil companies can detect smaller wells, hence all the recent discoveries.
It is also possible that GUPCO’s renovations amount to little more than means of enhanced oil recovery; meaning that the infrastructure will allow for the use of alternative methods of extracting oil from a well. This includes mining oil with electrical or hydraulic pumps or injecting water or gas into the wells in order to pressurize the oil out, something that Saudi Arabia has been doing for several years and which is now adding to its growing water shortage problem.
This is not meant to discourage any excitement over the indisputable fact that discoveries are being made, it is only meant to stress that conservation will always be the solution in the background. Companies can pursue all the technology in the world to maximize oil recovery, but eventually it will dry out, as all non-renewable energy must.
However, for others, like Dr. Rashdan, these methods are an encouraged necessity and not a whimsical luxury. “Searching for alternative plans is crucial to decreasing and ultimately avoiding the waste in daily production,” he said. He is hopeful when it comes to the renovations, earnestly believing that “the domains of research and production necessitate the use of new more developed techniques, which will increase oil production.”