Focus: Chevron – steamflooding the neutral zone

What is Chevron’s regional presence?

We are the only international oil company operating in the partitioned neutral zone (PNZ) between Saudi Arabia and Kuwait, and the exciting news is that we’ve just extended our concession for another 30 years to 2019. We’ve had a concession there for over 60 years. Chevron has a long history in the region, dating back to the 1930s when we first discovered oil in Dammam at Well No 7. We also, through our predecessor company, discovered the Burgan field in Kuwait, and the Ghwar field in KSA.

What are you doing in the PNZ?

We’re producing around 250,000 barrels of oil there each day and we may, through the steamflooding technology we are deploying, we are looking to enhance the production of heavy oil there. We have completed the first part of a pilot last year. Now we are moving to 25 wells. Additionally we are looking to boost production at Wafra field. The tests will take about three years, and if that’s successful we anticipate that it has the potential to be applied to other carbonate reservoirs in the Middle East. We’ve been using this technology for four decades in California and for two decades in Indonesia.

What does the technology entail?

It involves super-heated steam being injected into the reservoir to boost production. This has been very successful in sandstone reservoirs and, this is our first go with a carbonate reservoir. Our initial results are really good. In California we’ve actually been able to eliminate decline, so we are confident it has the potential to increase production.

Do you manage a healthy ration of local employees?

In the Middle East our direct employees run to several thousand, and around 90% of those are Gulf Nationals. We have a very strong commitment to emplying local employees wherever we do business. Around 90% are Saudi Nationals, and that includes a significant portion of the management structure there too.

Are you engaged anywhere outside KSA and the PNZ?

We have a presence in Qatar which includes a marketing arrangement with the GTL ORYX facility. We have just inaugurated an energy efficiency centre at the Qatar Science and Engineering Park, which represent a $20 million commitment over five years looking at energy efficiency solutions for the Middle East climate, including solar technology. Also, Chevron has downstream operations throughout the region, including aviation services. Our primary focus on E&P is going to be in the Partitioned Neutral Zone, but we are looking at opportunities more broadly.

What opportunities are most exciting at the moment?

Iraq is particularly exciting. We are very interested in participating there, but clearly the terms and conditions have to be right. We were prequalified for two of the bid rounds. The first two were for brownfield production boosting at exisiting facilities. Iraq is interesting for us because we already have a programme, which has been running for five years, to train Iraqi engineers and scientists. Most of that training takes place in the US, and we have trained about a thousand engineers already, so that has really been quite successful.

Why would an NOC partner with Chevron?

Our long history in the region means we are very familiar with the business landscape. There are three core parts to the offering we bring to deals with National Oil Companies. Project management skills – and that’s notable because there are over 40 ongoing projects in which Chevron has a net $1 billion-plus interest, in terms of capital committed. Also, there is the technology we bring and that’s across the whole deepwater, LNG, heavy oil spectrum. Thirdly, there’s the capital we can bring. We have a $23 billion capital programme this year, which is unchanged from previous years. We understand the need to invest for the long term, whilst acknowledging the fact that demand is down at the moment. As economies of the world rebound we want to make sure that there is supply and ways to meet that demand.